Forum Archive Index - March 2002

["DR" <kat47@bigfoot.com>]

Is this the reason?

 

Thistle Hotels PLC
12 March 2002

March 12, 2002





                               THISTLE HOTELS PLC
                          ('THISTLE' OR THE 'COMPANY')

                      Proposed Disposal of 31 Regional and
               6 London Hotel Businesses (the 'hotel businesses')
                                for £600 million

Transaction Highlights

Thistle announces that it has today reached agreement with Gamma Four Limited
(the 'Acquirer'), a wholly-owned subsidiary of Euro & UK Property Limited (a
private venture capital company and the ultimate parent of the Orb group),
regarding the terms of the proposed disposal of a group of subsidiary companies
of Thistle which together own 37 Regional and London hotel businesses
(the 'Disposal').

The principal features of the transaction are:

- Total payment to Thistle of £600.4 million, comprising £1 to be paid in cash
on completion by the Acquirer to Thistle for the shares in three companies (the
'Sale Companies') that own the hotels and carry on the Hotel Businesses, the
repayment on completion by certain of the Sale Companies and certain
subsidiaries of the Sale Companies of approximately £555.4 million in settlement
of outstanding inter-company indebtedness due to Thistle and £45 million payable
no later than 1 January 2005 pursuant to a loan note issued to Thistle by one of
the companies to be sold to the Acquirer.

- Upon completion of the Disposal, Thistle Hotels (Management) Limited, a
wholly-owned subsidiary of Thistle, will enter into agreements under which it
will undertake the ongoing management of each of the hotels for a period of 30
years from completion of the Disposal.

- A relationship agreement will be entered into between Thistle and the Orb
group which will contain, among other provisions, a guarantee by Thistle in
relation to the level of earnings before interest, tax, depreciation and
amortisation ('EBITDA') derived from the Hotel Businesses.

- The cash proceeds of the Disposal will amount to approximately £555.4 million,
before transaction costs, a working capital adjustment and the repayment to
Thistle of the loan note. No significant tax liability is expected to arise for
Thistle on the Disposal of the Hotel Businesses. £174.0 million of the net cash
proceeds will be applied in the first instance to repay Thistle's bank loans and
the balance of the proceeds will increase the Company's cash position by
approximately £381.2 million (before transaction costs), thereby providing
Thistle with greater resources to pursue potential strategic acquisition
opportunities for further growth and development.

- The 37 Hotel Businesses being disposed of comprise Thistle's Regional hotels,
excluding Thistle Heathrow and Thistle Edinburgh, and six London hotels.

- For the year ended 30 December 2001, the Hotel Businesses had turnover of
£140.8 million and operating profit of £42.1 million, after charging
depreciation and amortisation of £13.4 million (giving EBITDA of £55.5 million).

- Due to its size, completion of the Disposal requires the approval of Thistle's
shareholders. Irrevocable undertakings to approve the Disposal have been given
by shareholders representing approximately 59 per cent. of the issued ordinary
share capital of Thistle.

A circular will be posted to shareholders shortly setting out details of the
Disposal and convening an Extraordinary General Meeting to approve the Disposal.
The Disposal is expected to be completed following its approval at the
Extraordinary General Meeting.

Commenting on the Disposal, David Newbigging, Chairman of Thistle, said:

'This disposal represents a further significant step in the re-positioning of
the Company and both improves and rebalances Thistle's hotel portfolio. By
concentrating on delivering growth through our core hotel management business,
with a reduced emphasis on the capital intensive ownership of hotel properties,
we expect to benefit from increased operating flexibility. This transaction
significantly strengthens our balance sheet and leaves us well placed to pursue
potential strategic acquisition opportunities for further growth and
development, with the objective of delivering value to our shareholders and
improving the return on shareholders' equity.'

Ian Burke, Thistle's Chief Executive Officer, added:

'The Board believes there will be opportunities for the continuing Thistle group
to develop its hotel business. Over the course of the current financial year the
Board's focus will continue to be on managing the business efficiently,
improving operational cash flow generation and seeking opportunities to improve
the return on shareholders' equity.'

The Chairman of Orb Estates Plc, Samuel Nolan, commented:

'We are particularly pleased to have become involved with Thistle Hotels and to
have been part of such an innovative restructuring process.'

D.