Park Plaza agreed to acquire from a subsidiary of Elbit, the interests in, and related loans to, the Park Plaza Sherlock Holmes Hotel, Park Plaza Victoria Hotel and Park Plaza Riverbank Hotel ("the Hotels") which the group does not already own. The consideration will be £21m subject to adjustments as described below. The acquisition will be made by Park Plaza Hotels Europe Holdings BV ("the Buyer"), a wholly-owned subsidiary of Park Plaza and is conditional on, among others, the admission of 1,000,000 Park Plaza shares (which form part of the consideration as detailed below) to trading on AIM on 31 December 2010.
The Buyer will acquire the issued shares not currently owned by the Park Plaza group in, and related loans to:
i) Grandis Netherlands Holdings B.V. ("Grandis"), the owner of the Sherlock Holmes Park Plaza Hotel; ii) Victoria London Hotel Holding B.V. ("Victoria"), the owner of the Victoria Park Plaza Hotel; and iii) Riverbank Hotel Holding B.V. ("Riverbank"), the owner of the Riverbank Park Plaza Hotel.
Currently the Park Plaza group owns 50 per cent. of Victoria and 55 per cent. of each of Grandis and Riverbank. The Hotels are operated under the direction of Park Plaza Hotels Europe BV.
The consideration will be satisfied as to:
a) the Euro equivalent of £8m as at completion in cash to be paid by the Buyer in 7 equal quarterly instalments with interest payable quarterly, with the first instalment payable at completion of the acquisition; b) the Euro equivalent of £8m as at completion in cash to be paid by the Buyer in December 2013 with interest payable quarterly; c) £1.5m by the issue of 1,000,000 Park Plaza shares ("the consideration shares"). Elbit is subject to a lock-up until the first anniversary of completion, following which Park Plaza will have a right of first refusal in respect of the consideration shares; and d) £3.5m, to be paid as to £1.75m in December 2015, £0.875m in December 2016 and £0.875m in December 2017. This amount may be reduced depending on the performance of the Park Plaza shares during the five-year period following completion.
Park Plaza has been granted the option to buyback all of the consideration shares which Elbit may own from time to time at a price of £5 per share. If this option were exercised, the balance of the £3.5 million under (d) above will be reduced by an amount equal to £3.5 multiplied by the number of shares actually purchased. Any such exercise would require shareholders' approval under Guernsey law.
Based on the most recent valuation of the Hotels after the deduction of debt, the assets to be acquired have a net value of £26.2m. For the year ended 31 December 2009 the three hotel companies made a loss before tax of £5.4m. The loss before tax is stated after accrued but unpaid management fees of £7.5m payable to Park Plaza Hotels Europe BV. No management or other fees were payable to Elbit.
As at 31 December 2010 the three hotel companies are expected to have bank debt of £179m of which Park Plaza would have consolidated £95m had it not acquired Elbit's interests.
Boris Ivesha, Park Plaza's Chief Executive Officer, commented:
"We are delighted to announce this transaction which will result in Park Plaza owning 100 per cent of Park Plaza Sherlock Holmes Hotel, Park Plaza Victoria Hotel and Park Plaza Riverbank Hotel. These three well established London hotels, which Park Plaza operates under contract, continue to perform well. Our experienced management team remains as always focused on delivering great facilities and service to our customers."
This information is provided by RNSThe company news service from the London Stock Exchange