Acquisition : Crowne Plaza
Redefine International plc ("Redefine Internationa" or "the Company"), is pleased to advise that the Company's subsidiary Redefine Hotels Reading Limited ("RHR") concluded an agreement with Pedersen (UK) Limited ("the seller") in terms of which RHR has acquired the Caversham Hotel Thames Side Promenade Reading ("the hotel") and the leasehold on which the hotel is situated for a purchase price of GBP12.75 million ("the transaction").
RATIONALE FOR THE TRANSACTION
The hotel is well located close to the town centre of Reading on the banks of the River Thames. It was originally opened in 1979 and was extensively refurbished in 2005 when it was branded a four star Crowne Plaza hotel under a franchise agreement ("the franchise agreement") with Six Continents Hotels Inc. RHR has entered into a new franchise agreement with Six Continents Hotels Inc on similar terms to the existing agreement.
The hotel has conferencing and banqueting facilities as well as a Health, Fitness and Beauty Centre including an indoor pool. There is a 200 space car park within the property. The hotel forms part of a portfolio of 4 hotels that was placed into administration in 2010 and that have now been brought to the market individually by the administrators. The transaction is in line with the Company's objective of increasing its presence in the UK hotel market and is expected to be earnings enhancing for shareholders in the medium to long term.
The acquisition complements the Company's existing hotel portfolio of 5 high quality hotels.
SALIENT TERMS OF THE TRANSACTION
The effective date of the transaction is 1 June 2011.
The purchase price of GBP12.75 million (inclusive of the deposit) plus transaction costs of GBP0.80 million, has been funded as follows:
- Debt of GBP7.65 million has been secured on favourable terms from Aareal Bank AG.
- Bashir Hakanmali Nathoo, Enderle International Limited and Corovest Mezzanine Capital Limited will subscribe for, in aggregate, approximately GBP5.7 million, in Redefine Hotel Holdings Limited ("RHH"), reducing the Company's 77.82% shareholding in RHH to approximately 71.04%.
- The balance of approximately GBP0.2 million has been funded using internal cash resources of the Company.
The sale and purchase agreement contains limited warranties typical for acquisitions of this nature.
RHR has, at its cost, entered into a new franchise agreement with Six Continents Hotels Inc. to operate the hotel as a Crowne Plaza Hotel.