Page 17 - Stakis C Case Study

purchase of the £327m purchase of Lonrho' s five
four-star Metropole Hotels Michels commented:

''We will not necessarily go on expanding this way, by
acquisition.”

''Our highest rates of return are still going to come from

the extension and development of our existing hotels,
casinos and leisure clubs. That's where we want to spend

our money--not in going out and buying more. We may

acquire the odd hotel or casino, but I don't think we'll buy

very many."
The deal, which is being financed by a £222m cash call,

will boost Stakis' market value by nearly 50%.

"After all that we have bought, another five hotels isn't in-

digestible. Our gearing is still at the 50% mark where we

insisted on keeping it for five years and our interest cover

is approaching four times. We may be going fast but, in
financial terms, it is in an awfully cautious manner."

However, about £18m worth of investment had been ear-

marked over the next three years to create six Riverboat
casinos similar to the prototype opened in Glasgow in the

Summer of 1996.

The City responded to these developments. The new Stakis

management were seen as being capable of developing

the company. Moreover, they were seen as being able to

deliver what they promised within the constraints they had