By Vanda Carson
THE chairman and chief executive of the debt-stricken pub property trust Redcape could pocket up to $8 million in bonuses between them as reward for the sale of the funds' hotels.
Just two months after the company posted a record $179 million loss due to a large write-down of the value of its pubs, Redcape's chairman, Colin Henson, confirmed to BusinessDay that he had proposed the bonus to the group's syndicate of nine banks, led by ANZ, in August.
The bonus was to be based on management's success in selling up to 31 freehold pubs for prices above book value. Funds from the sales will be used to reduce debt.
It has not been difficult to sell the hotels for more than book value: the four hotels sold so far have realised 14 per cent above book value.
The write-downs in October meant that all but one of the 34 NSW hotels owned by Hedley Leisure and Gaming were worth less than their cost price.
''I floated the idea [of a bonus] with the banking syndicate a number of months ago,'' Mr Henson said.
He said the bonus was to be paid to him, the chief executive, Peter Armstrong, and the fund's chief financial officer, David Charles.
''I said to the banks that [we] are throwing everything at the company to make sure we maximise salary and build value for shareholders.''
The proposed bonuses amount to 10 times the trio's current salaries.
Mr Henson said the ultimate decision about the bonuses would be made by the remuneration committee. The chairman and Mr Armstrong sit on the four-member committee.
Mr Henson said the banking syndicate was ''keen for the management team to be properly remunerated''.
The hotels were heavily written down in its accounts for the 2008-09 financial year.
Redcape slashed $93 million from the value of its $962 million hotel portfolio in October, and most of this came from its NSW pubs.
The write-down of four NSW hotels triggered a swift sale last month. Those four were written down by an average of 34 per cent, but sold for an average of 14 per cent above book value.
Another four hotels have also been sold, but those sales have not been confirmed to the market.