8 January 2013
PPHE HOTEL GROUP LIMITED
("PPHE Hotel Group" or the "Company")
SALE OF SITE IN THAILAND
The Company today announces that it has entered into a conditional agreement with Red Sea Hotels Limited ("Red Sea") for the sale of all the Company's shares in its subsidiary, Leno Finance Limited ("Leno"), the company through which PPHE Hotel Group owns its interest in the site in Pattaya Bay, Thailand, and certain related loans and receivables, for a total consideration of US$20 million (the "Disposal").
Red Sea is controlled by Mr Eli Papouchado, the Chairman of PPHE Hotel Group, who, together with his family trusts, owns 44.63% of the voting rights in the Company. Mr Papouchado (and his family trusts) are deemed to be acting in concert with Mr Boris Ivesha (the Chief Executive of PPHE Hotel Group) and his family trust, which owns 19.25% of the voting rights in the Company.
The Company acquired the Pattaya Bay site in August 2011, since then development facilities have been obtained from United Overseas Bank ("UOB") and work has commenced on the construction of a mixed-used development comprising condominium units and serviced apartments (the "Project"). The Project has progressed satisfactorily to date. However, having had the opportunity to review the Project and the Thai market over the last 18 months, the Board has decided to take advantage of the opportunity afforded to exit from the Project in a timely manner and, in due course, recover a surplus over the amounts invested in the Project by PPHE. Under the terms of the Disposal the Group will have an option to manage the completed development and/or acquire the serviced apartment element of the Project for US$20 million. However, the Group will not be under any obligation to the Buyer to proceed with either.
The consideration for the Disposal will not be payable on completion of the Disposal ("Completion"), but the whole of the consideration will be payable by Red Sea in cash by no later than January 2017 (by when it is expected that the Project will have been completed). However, Red Sea will be required to pay the consideration (in whole or in part, as applicable) earlier to the extent either that revenues from the sale of condominium units and serviced apartments exceed the aggregate of the total Project development costs (including all financing costs) and related tax liabilities or that value from the Project is otherwise released to Red Sea. As security for payment of the consideration, the Company will be granted a charge over the shares in Leno to be held by Red Sea, being no less than 63% of Leno's share capital.
As at 31 December 2012 the total amount invested by PPHE Hotel Group in the Project amounted to approximately US$12 million (including loans and receivables). Bali Hai Company Limited (the owner of the site and in which Leno owns directly and indirectly a 93.2% legal interest and a 99.9% economic interest) has entered into a Thai Baht 1,100 million (US$36.1 million) development loan agreement with UOB. This loan will remain in place to fund the development of the Project. Under the terms of the UOB facilities the Company is currently obliged to provide certain financial support in the event of a cost overrun or funding shortfall in relation to the Project and, in certain circumstances, may be required to purchase serviced apartments after completion of the Project for a maximum consideration of Thai Baht 600 million (c.US$20 million) to fund any amounts that are outstanding under the UOB facilities. Red Sea has agreed to use all reasonable endeavours to obtain the release of the Company from these obligations on Completion.
Completion is subject to the fulfilment of various conditions, including the consent of UOB, by 8 April 2013 (or such later date as the Company and Red Sea may agree).
Commenting on the disposal, Boris Ivesha, Chief Executive Officer of the Company, said:
"Having had the opportunity to review the Thai market over the last 18 months, the Board has decided to take advantage of the opportunity afforded by Red Sea and mitigate the uncertainties of development activity in Thailand and, in due course, recover a surplus over the amounts invested in the Project by PPHE."
Enquiries: PPHE Hotel Group Limited |
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Chen Moravsky, Chief Financial Officer |
Tel: +31 (0)20 717 8603 |
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Hudson Sandler |
Tel: +44 (0)20 7796 4133 |
Wendy Baker / George Parker |
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Note to editors:
PPHE Hotel Group (formerly Park Plaza Hotels Limited) is a Guernsey registered company, which, through its subsidiaries, jointly controlled entities and associates, owns, leases, operates, franchises and develops full service upscale and lifestyle hotels in major gateway cities and regional centres, predominantly in Europe.
The majority of the Group's hotels operate under two distinct brands, Park Plaza(R) Hotels & Resorts and art'otel(R). The Company has an exclusive licence from Carlson(SM), a global privately owned hospitality and travel company, to develop and operate Park Plaza(R) Hotels & Resorts in Europe, the Middle East and Africa. The art'otel(R) brand is fully owned by the Company.
The Group has a minority ownership interest in the Arenaturist group, one of Croatia's leading hospitality companies. The Group's portfolio of owned, leased, managed and franchised hotels comprises 39 hotels offering a total of more than 8,300 rooms. Its development pipeline includes three new hotels and two mixed-use developments (including the development in Pattaya Bay, Thailand), which together are expected to add nearly 900 rooms to the portfolio by the end of 2014.
Our company:
www.pphe.com
Our brands:
www.parkplaza.com
www.artotels.com
www.arenaturist.com
For images and logos visit www.vfmii.com/parkplaza
