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The Cuban Investment Letter *** Investment Alert *** Leisure Canada Inc. (LCAN) Price: $1.60 52 Week High/Low: $5.00 - $1.27 Shares Outstanding: 21,701,342 (Dec.31/97) Company Address: 213 - West 1st Street North Vancouver, B.C. Canada V7M 1B3 Company Web Site: www.leisurecanada.com Major Shareholders: International Capital Inc. (controlled by Walter Berukoff) - 43.3% Robertson Stephens Investment Mgmt. Co. (subsidiary of Bank of America) - 26.2% (fully diluted) Societe General - 4.5% LCF Rothschild - 4.5% Management: Walter Berukoff, CEO &Director Bill Kerby, President & COO Christopher Pollard, Vice Chairman Graeme Lempriere, Vice President Lyall Knott, Director Peter Macleod, Sr .Vice President (Design and Development) Marcelo Montenegro, Vice President - Wilton Properties Leisure Canada Inc. (LCI) is creating unique four and five star resort facilities in the Republic of Cuba. The facilities will include golf courses, marinas, equestrian riding centres, cruise ship facilities, tennis courts, convention centres, health spas, eco-tourism and shopping facilities. These development sites are amongst the most attractive in Cuba. Considerable time and investment have brought LCI to an unique position in Cuba and LCI's partnership with its Cuban Government counterpart, Gran Caribe, has evolved significantly over the past five years. All the properties are being built to "international" four and five star standards and include fully equipped kitchens, dining areas, stereos, TVs, VCRs and large balconies - all with ocean views. Other key features include swimming pools, tennis courts, conference centers, Jacuzzis, golf, cycling, boating, restaurants, equestrian riding facilities, shopping and retail facilities with personalized maid and valet services. All the properties are ocean side with spectacular beaches and unique views in what are among some of the most attractive areas on the Island. All the properties are also within easy access of a major airport. The Company has also taken into consideration U.S. building codes including fire and safety standards. A major component of the financing used in the construction of these properties will be through joint-ventures, land sales and potentially....vacation club programs. Involvement by major hoteliers such as Hilton, Marriott and Disney has paved the way to reforming timeshare. This industry has undergone dramatic change and most programs today offer significant flexibility for destination, length of stay and time of year, giving the consumer more vacation choices and value for their dollar than ever before. Today, virtually every one of the world's largest hoteliers have created or become part of existing timeshare programs as the benefits to the hoteliers are numerous.They include : - Longer stays and higher expenditure by the tourist, creating stable income and employee patterns - Increase in occupancy rates from industry norms of 72.4% to 88.9% on a year round basis - Larger groups of visitors with participation averaging 3.1 persons per time share unit versus 1.68 persons per traditional hotel unit. - Up front payment and yearly maintenance fees to ensure the quality of the property remains extremely high. This change in attitude towards time share ownership has paved the way for a spectacular growth industry. The company's first two projects, which will be started at the same time are: Havana A large waterfront hotel site that is planned to be the only resort located in Havana. It is situated in the high rise centre of the city, surrounded by shopping centres, office towers and a planned world trade centre. The hotel has been designed not only to cater to commercial and resort travellers, but has special facilities for the businessman with individual bungalows equipped with fax, phones, computer modems, kitchens and maid services for longer term stays. The high rise hotel is close to the heart of Havana with an exceptional night life nearby including the Tropicana Club. Jibacoa This is the largest destination resort undertaking of the Company. It includes a 5.8 sq. km site which when fully developed will have 6 resort hotels with 650 golf bungalows, signature 18 and 27 hole golf courses, marinas, an equestrian riding facility, a dude ranch, retail shopping village, tennis facilities and convention facilities. Centrally located within 35 kms of both Havana and Varadero on the Trans-Cuban Highway, this will become the golf capital of Cuba and a major draw from both the City of Havana and the resort of Varadero. When you look at companies, sometimes the corporate operating structure will give you a clue as to how astute the management is. Just to give you an idea of how sharp the management of this company is - Leisure owns 20% of a company called Points North Digital Technologies which has two divisions..... ....its Information Technologies division which has developed the Online-4Travel solution and ....its Travel division which includes Canadian and European air charter operations as well as the ownership of TravelPlus, one of Canada's three largest travel agency networks. Points North also announced recently that it had entered into a letter of intent to acquire 100% of the assets of International Tours, a well established U.S. travel agency network with approximately 1,100 locations in major U.S. centres. (In my opinion, an ideal way to be able to funnel tourist traffic into Leisure's resort properties in Cuba) Of interest: Doug Casey (Editor of International Speculator) has commented very favourably on this company, James U. Blanchard (Editor of the Gold Newsletter) recently devoted four pages to a very positive article on Leisure Canada Inc. and Yorkton Securities Inc. just issued a research report on the company. There is a growing investor interest in Leisure (especially in the U.S. and Europe) as people realize that the situation in Cuba will continue to move forward to a relaxing of and an eventual removal of the U.S. embargo. The value of Leisure's properties in Cuba would increase substantially when a such a resolution to direct investment by U.S. citizens and companies occurs. I want to give you a better feel for what is really happening in Cuba so here are clips from numerous news articles which have appeared within the last month: "The Jamaican hotel chain Super Clubs said it was expanding rapidly in Cuba and would be operating six resorts across the island by the end of 1998." - "The Spanish hotel company Sol Melia will operate four new 5-star hotels in Cuba, representing a total of 1,375 rooms. The new hotels, currently under construction, will be operational between the last quarter of the year and the early months of 1999. They will be located in Havana, Holguin, Ciego de Avila and Matanzas. This will bring the total number of hotels it manages on the island to 12." - "During a recent trip by French companies to Cuba on a trade mission, the formation of a joint venture between the PAN-SEA Resorts hotel chain and the Cubanacan group of Cuba for the construction of eight hotels in various provinces throughout the island was established, with four of them to be built in the next 18 months." - "Cuban state tourism company Cubanacan S.A. signed an agreement with Italy's La Cascina and Simest Spa during a recent Caribbean tourism conference in Havana. The accord anticipates the construction of a 250-room hotel in the resort of Santa Lucia and 150 bungalows in the resort of Varadero, both on Cuba's northern coast." - "A Japanese travel agency, Tokyu Kanko, has announced its decision to become the first Japanese tour company to send tourists to Cuba. Tokyu Kanko, Japan's fourth largest travel agency, sends more than a million people abroad every year." - "Air France, one of the largest airlines in the world, announced its first nonstop Paris-Havana flight on June 21st, 1998." - "Buoyant Cuban tourism officials hope to welcome between 2.3 and 2.5 million tourists a year by the year 2001, said Eduardo Rodriguez de la Vega, Deputy Minister for Tourism, up from 1.2 million in 1997 and an estimated 1.4 million in 1998. He said that the number of visitors coming to the island in the 1990-1997 period reported an average annual growth of 19.03 percent, while gross income in the sector rose from $243 mln. at the beginning of the decade to $1 bln. by the end of last year. Hotel capacity should rise from 28,000 rooms at the end of 1998 to 49,000 by the turn of the century." Call me to discuss this company or any other situation in Cuba............ Jim Hitchie, Editor (604) 929-9694 or email me at jhitchie@direct.ca THE CUBAN INVESTMENT LETTER P.O. BOX 30003, North Vancouver, B.C.Canada V7H 2Y8 (US$50 or CDN$70/year includes numerous updates by fax or email) | ||||||||||||
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