1 May 2013
PPHE Hotel Group Limited
("PPHE Hotel Group" or "the Company")
Completion of Pattaya Bay disposal
Further to the announcement on 8 January 2013, the Company is pleased to announce that it has completed the sale to Red Sea Hotels Limited ("Red Sea") of all the Company's shares in its subsidiary, Leno Finance Limited ("Leno"), the company through which PPHE Hotel Group owned its interest in the site in Pattaya Bay, Thailand, and certain related loans and receivables, for a total consideration of Thai Baht 600 million (c. US$20 million) (the "Disposal").
Red Sea is controlled by Mr Eli Papouchado, 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 President and Chief Executive Officer 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 when 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 original agreement provided for a total consideration of US$20 million, but the parties have since agreed that the consideration should be expressed in Thai Baht rather than US Dollars, as both the UOB facilities and prices of condominium units are in Thai Baht. None of the consideration for the Disposal was paid on completion, but 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 has been granted a charge over shares in Leno representing 63% of Leno's share capital.
Under the terms of the UOB facilities, the Company is obliged, among other things, to provide certain financial support in the event of a cost overrun or funding shortfall in relation to the Project and, in the event of default by Bali Hai Company Limited (the Thai company undertaking the Project that is the borrower under the UOB facilities) after completion of the Project, UOB can require the Company to purchase the serviced apartments for a consideration equal to the amount then outstanding under the UOB facilities, subject to a maximum of Thai Baht 600 million. It was a condition of UOB's consent to the sale of Leno that the Company continues to be bound by these obligations. Red Sea and Leno have agreed to indemnify the Company in respect of certain of these continuing obligations and as security Leno has pledged the shares held by it in Bali Hai Company Limited and certain affiliated Thai companies.
The Company has also been granted a call option to acquire the serviced apartment element of the Project for Thai Baht 600 million.
Commenting on the disposal, Boris Ivesha, President and Chief Executive Officer of the Company, said:
"The successful completion of this transaction significantly mitigates the risks associated with development activities in Thailand. It is intended that the capital that will be received from this transaction will in due course be redeployed to develop our exciting pipeline of projects and to support renovation works at our existing hotels."
Enquiries: PPHE Hotel Group Limited
Chen Moravsky, Chief Financial Officer |
Tel: +31 (0)20 717 8603
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Hudson Sandler
Wendy Baker / George Parker |
Tel: +44 (0)20 7796 4133
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Note to editors:
PPHE Hotel Group Limited (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® Hotels & Resorts and art'otel® . The Company has an exclusive licence from CarlsonSM, a global privately owned hospitality and travel company, to develop and operate Park Plaza® Hotels & Resorts in Europe, the Middle East and Africa. The art'otel® brand is fully owned by the Group.
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 38 hotels offering a total of more than 8,200 rooms. Its development pipeline includes four new hotels, which together are expected to add nearly 800 rooms to the portfolio by the end of 2015.
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