Menzies plans April flotation

Fast-growing Menzies Hotels is hoping to raise £15m from its imminent flotation on the Stock Exchange, with dealing expected to start in April.

The flotation will raise the company's market capitalisation to £50m. Menzies has built up a portfolio of 21 hotels in England since it was set up in 1992 by Nick Menzies, whose 50% shareholding will reduce to 30% after the flotation.

Menzies will use £6.3m to buy the leases of four hotels (in Harrow, Walsall, Hampton Court and Coventry) from the Royal Bank of Scotland. A further £3m will be used to redeem preferential shares from three venture capital companies, and a further £5.7m will be spent paying off debt.

The move will reduce the company's gearing from more than 100% to 34% and put it in a good position to buy more hotels. Menzies is keen to expand into Scotland, Ireland, and along the M4 corridor with three- to four-star properties with 50-150 bedrooms that can offer a return on capital of 12% or more.

Menzies added that there would be no need to spendany of the proceeds of flotation on refurbishment as the company spent nearly £5m upgrading its properties during the course of last year.