Thunderbird Resorts Inc. ("Thunderbird") (FSE: 4TR; and
Euronext: TBIRD) is pleased to announce that its 2021
Half-year report has been filed with the Euronext ("Euronext
Amsterdam") and the Netherlands Authority for Financial Markets
("AFM"). As a Designated Foreign Issuer with respect to
Canadian securities regulations, the Half-year report is intended
to comply with the rules and regulations set forth by the AFM and
the Euronext Amsterdam.
Copies of the 2021 Half-year report and Unaudited Consolidated
Financial Statements Report in the English language will be
available at no cost at the Group's website at
www.thunderbirdresorts.com. Copies in the English language are
available at no cost at the Group's operational office in Panama
and at the offices of our local paying agent ING Commercial
Banking, Paying Agency Services, Location Code TRC 01.013,
Foppingadreef 7, 1102 BD Amsterdam, the Netherlands (tel: +31 20
563 6619, fax: +31 20 563 6959, email: iss.pas@ing.nl). Copies
are also available on SEDAR at www.SEDAR.com.
Below are certain material excerpts from the full 2021 Half-year
report, the entirety of which can be found on our website at
www.thunderbirdresorts.com.
Dear Shareholders and Investors:
The below summarizes the Group's performance through June 30,
2021.
A. EBITDA: Peru property EBITDA decreased by
$268 thousand for the six months ending on June 30, 2021, as
compared to the same period in 2020. During the same period,
Nicaragua property EBITDA experienced an improvement of $1.4
million. Corporate expense reduced by $118 thousand. After netting
out corporate expense and expenses from our proportional ownership
in a Costa Rican real estate holding company, adjusted EBITDA
increased by $1.2 million and $687 thousand as compared to through
half-year 2020 and 2019, respectively.
B. Profit / (Loss): Based on continuing
operations, the Group experienced a profit of $210 thousand, an
improvement of $1.4 million and $1.7 million as compared to the
same period in 2020 and 2019, respectively. The improvement was
primarily due to higher revenue and to other corporate gains.
C. Net Debt: Due to a change in accounting
policy as required by IFRS 16, the Group is now required to account
for the net present value of real estate operating lease contracts
as Obligations under leases and hire purchase contracts.
Approximately $4.1 million of our net debt is comprised of
Obligations under leases and hire purchase contracts. Our Net
Debt reduced between 2020 and 2021 by $926 thousand.
1. IMPACT OF COVID-19 ON 2021 AND BEYOND
Covid-19 continues to impact our markets harder than in much of
the world. Having said that, Management has stabilized its
operations and its cash management. To be prudent, however, we
maintain unchanged our Management Statement on Going Concern, as
last updated in our 2020 Annual Report.
2. SHAREHOLDER MANDATE AND OUR ASSETS
We continue to pursue decisions that support the best interest
of shareholders according to the shareholder mandate set forth in
the Sept. 21, 2016, Special Resolutions. Please read the
following carefully.
A. Peru Real Estate Assets: As of the
publication of this 2021 Half-year Report, the Group continued to
operate and wholly own a mixed-use tower containing a 66-suite
hotel, approximately 6,703 m2 of rentable-sellable office space,
and 158 underground parking spaces. Please note the
following:
- The Group has begun a conversion of the 66-suite hotel into
condominiums. Of the 66 suites, 60 suites have a small
kitchen, living room, one bedroom and one-and-a-half
bathrooms. The remaining six penthouse suites have a full
kitchen, living-dining room, two bedrooms, two-and-a-half bathrooms
and a large balcony with views of the city and the ocean at a
distance. The Group is waiting for two final regulatory
approvals of the conversion. The suites, with 5,878 sellable
meters and public areas, will require approximately $600
thousand in upgrades. The Group is pleased that, as of the
date of this publication, it has signed pre-sale contracts (subject
to regulatory approvals) for 53 apartments containing approximately
4,509 m2. It has also signed pre-sale contracts, as part of
those apartment pre-sales, for 32 parking spaces. It is
important to understand that Peru is facing some political
uncertainty based on recent elections. The Group believes the
regulatory approvals will be achieved by the end of 2021 but has
absolutely no confirmation that this will be the case. Should
this be the case, the Group would expect a liquidity event from
this transaction in the first half of 2022.
- The Group is evaluating the conversion of its 6,703 m2 of
offices to apartments: Given the pre-sale performance of the
hotel conversion into condominium apartments, the Group has begun
an analysis of the conversion of its office complex (located in the
same building). We have contracted for construction plans and
are in the budgeting mode. We have active tenants; the
construction budget would likely be in excess of $3 million, and
the timing of such a project could take one to two years. The
Group will keep shareholders apprised.
- Nicaragua Gaming and Real Estate
Assets: As of the publication date of this 2021
Half-year Report, continued to own a 56% interest in a Nicaraguan
holding company that owns the following assets: i) Gaming: Five
full casinos and two slot parlors with a combined approximately 858
gaming positions; and ii) Real Estate: Approximately 4,562 m2 of
land divided among five parcels, and some with tenant
improvements, as more fully detailed on page 10.
- Costa Rica Real Estate Asset: As of the
publication of this 2021 Half Year Report, the Group continues to
own a 50% interest in a Costa Rican entity that owns the
11.6-hectare real estate property known as "Tres Rios". Tres
Rios, with its own, dedicated off-ramp, is located close to the
country's second-largest mall on the highway between the capital
city of San Jose and the commuter city of Cartago.
- Evaluation of change in business
model: While the Group continues to perform on the
shareholder mandate and is actively working on ways to liquidate
assets, it is also evaluating a change to its business
model. That change, if it were to occur, would likely involve
bringing blockchain-based, decentralized finance tools and/or
platforms to the finance of real estate funds and/or to the capital
stack of professionally managed real estate developments in
emerging markets. The Group has been actively investigating
the space through conversations with industry players,
conversations with counsel in various jurisdictions, participation
in conferences and the like. The Group's current position is
one of increasingly visible investigation, which visibility is
requiring it to notify the market at this time. Regardless,
the Group has no material announcements and has made no decisions
while in active learning and engagement mode, but the Group does
note that decentralized finance will over years likely change how
real estate is acquired, collateralized, developed and monetized
and believes there is a possible role for it in emerging markets of
which the Group has developed substantial expertise over 25 years
of real estate development in Latin America and Asia.
GROUP OVERVIEW: The Group's consolidated
profit/ (loss) summary for the six months ended June 30, 2021,
as compared with the same period of 2020, is contained in the
Group's 2021 Half-year Report, located at
www.thunderbirdresorts.com. In summary, Group revenue increased by
$1.0 million or 18.0%, while adjusted EBITDA increased by $1.2
million or 143.7%.
During the half-year ended June 30, 2021, the Group engaged in
the following listed material events:
- The Group has begun a conversion of the 66-suite hotel into
condominiums: Of the 66 suites, 60 suites have a small kitchen,
living room, one bedroom and one-and-a-half bathrooms. The
remaining six penthouse suites have a full kitchen,
living-dining room, two bedrooms, two-and-a-half bathrooms and a
large balcony with views of the city and the ocean at a
distance. The Group is waiting for two final regulatory
approvals of the conversion. The suites, with 5,878 sellable
meters, and public areas will require approximately $600 thousand
in upgrades. The Group is pleased that, as of the date of this
publication, it has signed pre-sale contracts (subject to
regulatory approvals) for 53 apartments containing approximately
4,509 m2. It has also signed pre-sale contracts, as part of
those apartment pre-sales, for 32 parking spaces. It is
important to understand that Peru is facing some political
uncertainty based on recent elections. The Group believes the
regulatory approvals will be achieved by the end of 2021, but has
absolutely no confirmation that this will be the case. Should
this be the case, the Group would expect a liquidity event from
this transaction in the first half of 2022.
- The Group is evaluating the conversion of its 6,703 m2 of
offices to apartments: Given the pre-sale performance of the hotel
conversion into condominium apartments, the Group has begun an
analysis of the conversion of its office complex (located in the
same building). We have contracted for construction plans and are
in the budgeting mode. We have active tenants, the construction
budget would likely be in excess of $3 million, and the timing of
such a project could take one to two years. The Group will
keep shareholders apprised.
- On June 15, 2021, George Gruenberg, a member of Thunderbird
Resorts Inc. Board of Directors, passed away. Mr. Gruenberg had
been a director of the Company since December 2013. The Group
further announced that Reto Stadelmann was elected to the board
pursuant to the Company's charter. Mr. Stadelmann previously joined
the Group as a Director in June 2012 and resigned that position in
February 2016 to pursue other business interests. Mr. Stadelmann
joined the Company's audit committee with a world of business and
financial experience.
- Evaluation of change in change in business model: While
the Group continues to perform on the shareholder mandate and is
actively working on ways to liquidate assets, it is also evaluating
a change to its business model. That change, if it were to
occur, would likely involve bringing blockchain-based,
decentralized finance tools and/or platforms to the finance of real
estate funds and/or to the capital stack of professionally managed
real estate developments in emerging markets. The Group has
been actively investigating the space through conversations with
industry players, conversations with counsel in various
jurisdictions, participation in conferences and the like. The
Group's current position is one of active and increasingly visible
investigation, which visibility is requiring it to notify the
market at this time. Regardless, the Group has no material
announcements and has made no decisions while in active learning
and engagement mode, but the Group does note that decentralized
finance will over years likely change how real estate is acquired,
collateralized, developed and monetized and believes there is a
possible role for it in emerging markets of which the Group has
developed substantial expertise over 25 years of real estate
development in Latin America and Asia.
RISK MANAGEMENT: For more detail on Risk
Factors, see Chapter 5 of the Group's 2021 Half-year Report.
MANAGEMENT STATEMENT ON "GOING CONCERN": This
statement is made taking into account the global health crisis and
economic fallout caused by the pandemic Covid-19. There is
instability in our markets and globally that could impact on Group
activities in ways that are currently unpredictable. To
account for the unpredictable conditions, in forecasting future
cash flows in our assessment of Going Concern, Management has made
certain extraordinary assumptions. Specifically, we have:
- Forecast a materially negative impact on revenue for the
years 2020 and 2021, with revenues returning to 2019 levels only as
of 2022.
- Forecast expenses to remain approximately at the levels
they are as on date of publication of our 2020 Annual Report,
meaning we are assuming (for Going Concern assessment only) that
the Group has no more flexibility to drive down expenses
further.
- Assumed that: a) A portion of our secured debt will be
restructured as an interest-only loan through 2021; and b) Our
remaining unsecured debt will be deferred and repaid against
liquidity events.
- Assumed no development nor material construction, but do
assume some repurposing of existing real estate to accommodate for
changes in demand.
- Forecast no extraordinary one-time events that may impact
positively or negatively on the Group's cash flows, though such
events are possible particularly given the environment.
- Assumed a stable regulatory environment in all countries with
existing operations, and have forecasted receiving no governmental
support apart from what has already been received as described in
Other Group Events on pages 11 and 12.
Management has reviewed their plan with the Directors and has
collectively formed a judgment that the Group has adequate
resources to continue as a going concern for the foreseeable
future, which Management and the Directors have defined as being at
least the next 12 months from the filing of this 2021 Half-year
Report. In arriving at this judgment, Management has prepared the
cash flow projections of the Group.
Directors have reviewed this information provided by Management
and have considered the information in relation to the financing
uncertainties in the current economic climate, the Group's existing
commitments and the financial resources available to the
Group. Specifically, Directors have considered: (i) there are
probably no sources of new financing available to the Group; (ii)
the Group has limited trading exposures to our local suppliers and
retail customers; (iii) other risks to which the Group is exposed,
the most significant of which is considered to be regulatory risk;
(iv) sources of Group income, including management fees charged to
and income distributed from its various operations; (v) cash
generation and debt amortization levels; (vi) fundamental trends of
the Group's businesses; (vii) ability to re-amortize and unsecured
lenders; and (vii) level of interest of third parties in the
acquisition of certain operating assets, and status of genuine
progress and probability of closing within the Going Concern
period. The Directors have also considered certain critical
factors that might affect continuing operations, as follows:
- Special Resolution: On September 21, 2016, the Group's
shareholders approved a special resolution that, among other items,
authorized the Board of Directors of the Corporate to sell "any or
all remaining assets of the Corporation in such amounts and at such
times as determined by the Board of Directors." This
resolution facilitates the sale of any one or any combination of
assets required to support maintaining of a going concern by the
Group.
- Corporate Expense and Cash Flow: Corporate expense has
decreased materially in recent years, but still must accommodate
for compliance as a public company.
- Liquidity and Working Capital: As of the date of publication of
this 2021 Half-year Report, the Group forecasts operating with low
levels of reserves and working capital. Selling assets will
be critical to creating a healthy level of working capital reserves
for periods beyond the Going Concern period, which ability to
liquidate assets is currently unknown.
Considering the above, Management and Directors are satisfied
that the consolidated Group has adequate resources to continue as a
going concern for at least the 12 months following the filing date
of this report. For these reasons, Management and Directors
continue to adopt the going concern basis in preparing the
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Expressed in
thousands of United States dollars) for the half-year ended June
30, 2021, were approved by the Board of Directors on Sept. 30,
2021, and are contained in the Half-year Report for 2021 posted at
www.thunderbirdresorts.com. The consolidated financial statements
and the accompanying notes are an integral part of these
consolidated financial statements.
ABOUT THE COMPANY
We are an international provider of branded casino and
hospitality services, focused on markets in Latin America. Our
mission is to "create extraordinary experiences for our guests."
Additional information about the Group is available at
www.thunderbirdresorts.com. Contact: Peter LeSar, Chief Financial
Officer ∙ Email: plesar@thunderbirdresorts.com
Cautionary Notice: The Half-year Report
referred to in this release contains certain forward-looking
statements within the meaning of the securities laws and
regulations of various international, federal, and state
jurisdictions. All statements, other than statements of historical
fact, included in the Half-year Report, including without
limitation, statements regarding potential revenue and future plans
and objectives of Thunderbird are forward-looking statements that
involve risk and uncertainties. There can be no assurances that
such statements will prove to be accurate and actual results could
differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from Thunderbird's forward-looking statements include
competitive pressures, unfavorable changes in regulatory
structures, and general risks associated with business, all of
which are disclosed under the heading "Risk Factors" and elsewhere
in Thunderbird's documents filed from time to time with the
Euronext Amsterdam and other regulatory authorities. Included in
the Half-year Report are certain "non-IFRS financial measures,"
which are measures of Thunderbird's historical or estimated future
performance that are different from measures calculated and
presented in accordance with IFRS, within the meaning of applicable
Euronext Amsterdam rules, that are useful to investors. These
measures include (i) Property EBITDA consists of income from
operations before depreciation and amortization, write-downs,
reserves and recoveries, project development costs, corporate
expenses, corporate management fees, merger and integration costs,
income/(losses) on interests in non-consolidated affiliates and
amortization of intangible assets. Property EBITDA is a
supplemental financial measure we use to evaluate our country-level
operations. (ii) Adjusted EBITDA represents net earnings before
interest expense, income taxes, depreciation and amortization,
equity in earnings of affiliates, minority interests, development
costs, and gain on refinancing and discontinued operations.
Adjusted EBITDA is a supplemental financial measure we use to
evaluate our overall operations. Property EBITDA and Adjusted
EBITDA are supplemental financial measures used by management, as
well as industry analysts, to evaluate our operations. However,
Property and Adjusted EBITDA should not be construed as an
alternative to income from operations (as an indicator of our
operating performance) or to cash flows from operating activities
(as a measure of liquidity) as determined in accordance with
generally accepted accounting principles. Thunderbird's documents
are filed from time-to-time with the Euronext Amsterdam and other
regulatory authorities.
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