NERVOUS local investors are waiting on a sharemarket announcement on Monday by undersiege Hedley Leisure Gaming Property Fund to explain the collapse of its share price.

The company called a halt to trade in its shares before the opening of the Australian Stock Exchange yesterday in a bid to stop any further slashing of the company’s value.

The halt will last until Monday morning when HLG says it will "properly respond to the price query from the ASX".

That will "allow the fund time to ensure that all possible relevant matters have been factored into the response".

In trading on Thursday, Hedley shares were savaged by investors who wiped more than $55 million from the real estate (hotel) investment trust and more than $26 million from Mr Hedley’s private wealth.

Commentators yesterday advanced a wide range of theories for the fall of the stock price from $1.48 on Monday to Thursday's 93c close.

The most common theme among the reports was uncertainity about the long-term value of the 90 hotels owned by HLG.

With possible changes to poker machine licensing, there is uncertainty about how the hotels' value will hold up given poker machines are their main revenue stream.

There also has been speculation of short selling by some investors, fuelled by the profile of HLG, which has a high debt level, $805 million, and possible exposure of Mr Hedley to margin loans, or loans secured by shares.

Mr Hedley's private company holds 70  million shares in HLG.

Company financial director Stephen Donnelly was reported as saying on Thursday "there was a temporary cash shortage at the Hedley private company level, which had no impact on the listed vehicles (HLG) and was simply a matter of waiting for loans to be processed".

Other reasons for investor nervousness included uncertainty about the future of one of its major hotel tenants, NLG, where Mr Hedley had to underwrite a failed rights issue costing him $10 million and a possible rejection by Wesfarmers of the favourable lease conditions of some hotels Wesfarmers inherited when it bought Coles Myer.

HLG is reported to have a strong cash flow and analysts believe its debt position is not jeopardising the company’s future.

"It doesn’t make any sense that (the share price) should be below a dollar," Mr Donnelly said yesterday. "Our income is solid and we have reduced debt by $45 million."

ABN-AMRO Morgans recommendation on HLG stocks yesterday was for a holding position based around the untested position of the hotel portfolio’s future value.

It suggested a realistic 12-month stock price for HLG of about $1.55.

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