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Press release from Marketwire

Royal Host Inc. Announces Proposal to Amend Terms of Its Series C Debentures Due September 30, 2013

Thursday, October 11, 2012

Royal Host Inc. Announces Proposal to Amend Terms of Its Series C Debentures Due September 30, 201309:29 EDT Thursday, October 11, 2012HALIFAX, NOVA SCOTIA--(Marketwire - Oct. 11, 2012) - La version française de ce communiqué est disponible séparément.Royal Host Inc. (the "Company") (TSX:RYL)(TSX:RYL.DB.B)(TSX:RYL.DB.C)(TSX:RYL.DB.D) announced today that it will seek the approval of holders of its Series C, 6.25% convertible unsecured subordinated debentures due September 30, 2013 (the "Debentures"), with regard to certain amendments to the Debentures at a serial meeting of the Debenture holders (the "Debentureholders") to be held on November 15, 2012 (the "Meeting").The Company unanimously recommends that Debentureholders vote for the Debenture amendments given the benefits outlined below. John Carnella, Royal Host's President and CEO added, "Our Board believes that the proposed amendments represent the best outcome for all parties as they provide a favorable resolution to our largest near term maturity and they eliminate the risk that Debentureholders will be repaid with shares at the current September 2013 maturity date." Proposed Amendments The proposed amendments to the Debentures (the "Debenture Amendments") include:EXTENDING the maturity date for the Debentures from September 30, 2013 to September 30, 2018; INCREASING the annual interest rate of the Debentures by 0.75% from 6.25% to 7.00%; and REDUCING the conversion price of the Debentures from $4.87 to $4.00 for each Common Share in the Company ("Common Shares"), resulting in a conversion rate of 250 Common Shares per $1,000 principal amount of the amended Debentures rather than 205.339 Common Shares per $1,000 principal amount of the Debentures. Benefits to Shareholders and Debentureholders The Board of Directors of the Company (the "Board") believes the Debenture Amendments provide a number of benefits to the Company and its security holders, including the Debentureholders. The principal benefit to the Company is the five year extension of its only significant near-term debt. Among the benefits which Debentureholders enjoy under the proposed amendments are:A 0.75 percentage point (or 12%) increase in the interest rate to 7.0% which represents an attractive yield especially in the current low interest rate environment. The 7.0% interest rate will be effective upon execution of the sixth supplemental indenture between Computershare Trust Company of Canada and the Company, allowing Debentureholders to benefit from this increased interest rate during a period when the 6.25% rate would have otherwise applied; An increase in the value of the conversion option imbedded in the Debentures by virtue of a reduction in the conversion price from $4.87 to $4.00. This has the effect of increasing the number of shares underlying each $1,000 principal amount of Debentures by approximately 22% from 205.399 to 250.00; and A consent fee of 0.50% (or $5 per $1,000 principal amount of Debentures) to Debentureholders that vote in favour of the proposed amendments payable on passage of the resolution. This has the effect of increasing the yield to consenting Debentureholders. Debentureholders who do not vote in favour of the Debenture Amendments will not be eligible to receive a consent fee. These amendments and incentives will only be effective if the resolution is passed in accordance with the requirements described below.For further particulars of such benefits see "Benefits of the Debenture Amendments and Recommendation of the Board" in the management information circular (the "Circular") of the Company dated October 11, 2012, which is available under the Company's profile on SEDAR www.sedar.com and which will be mailed to Debentureholders in the coming days.The Toronto Stock Exchange (the "TSX") has conditionally approved the listing of the Amended Debentures, subject to the Company fulfilling all of the listing requirements of the TSX. The Amended Debentures will trade on the TSX under the symbol "RYL.DB.C". Recommendation and Voting Instructions As a matter of good corporate governance, the Board continuously evaluates and seeks to optimize the Company's capital structure. In considering its options as regards to refinancing the debt outstanding under the Debentures, the Board believes that amending the terms of the current Debentures as proposed significantly improves the Company's maturity profile, albeit at a higher interest rate and with more shares underlying the Debentures. As such, the Board UNANIMOUSLY RECOMMENDS that Debentureholders vote for the Debenture Amendments.Debentureholders may vote by internet, by telephone or by contacting their brokers or investment advisors on or before 10:00 am (Atlantic Standard Time) on November 13, 2012. Detailed voting instructions are set out in the Circular.The Meeting is scheduled to be held at 10:00 a.m. (Atlantic Standard Time) on November 15, 2012 at the offices of the Company, at 1809 Barrington Street, Suite 1108, Halifax, Nova Scotia, B3J 3K8. The Debenture Amendments, if passed by an extraordinary resolution of the holders of at least 66 2/3% of the principal amount of the Debentures present by person or by proxy at the Meeting in accordance with the provisions of the Indenture, will be binding upon all Debentureholders. The quorum for the Meeting is the presence in person or by proxy of Debentureholders representing 25% of the principal amount of Debentures outstanding at the record date, which has been set by the Board of Directors of the Company as the close of business on October 15, 2012. As of the close of business on October 10, 2012 there are $45,166,000 Debentures outstanding.The Company has retained National Bank Financial Inc. ("NBF") as solicitation agent. NBF has undertaken to form a soliciting dealer group comprising members of the Investment Industry Regulatory Organization of Canada and members of Canadian stock exchanges to solicit votes regarding the Debenture Amendments. Each soliciting dealer will be paid customary solicitation fees in accordance with the Soliciting Dealers Fee set out in the Circular. No solicitations will be made in the United States, nor will any solicitation fees be payable in respect of consents by U.S. Debentureholders.Forward Looking StatementsThis press release may contain certain forward-looking statements relating, but not limited to, the Company's operations, anticipated financial performance, business prospects, and strategies. Forward-looking information typically contains statements with words such as "anticipate", "does not anticipate", "believe", "estimate", "forecast", "intend", "expect", "does not expect", "could", "may", "would", "will", "should", "budgeted", "plan" or other similar terms and expressions suggesting future outcomes. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from further results expressed, projected or implied by such forward-looking statements. Readers are therefore cautioned that the Company's expectations, estimates and assumptions, although considered reasonable, may prove to be incorrect and readers should not place undue reliance on forward-looking statements.Forward-looking statements contained herein are not guarantees of future performance and involve certain risks, uncertainties and other factors that are difficult to predict, and could result in the outcome of such events being materially different from those indented, planned, anticipate, believed, estimated or expected in this news release. Such factors and assumptions include, but are not limited to, general economic conditions, levels of travel in the Company's key market areas, political conditions and events, competitive pressures, changes in government policy or regulations, and lodging industry conditions. The Company does not undertaken any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances, unanticipated events or circumstances, or should its estimates or assumptions change, after the date hereof, except as expressly required by law.About Royal Host Inc.Royal Host Inc. is a diversified hospitality company that delivers shareholder value through hotel ownership, investments and franchising. The Company's hotels, which contain approximately 2,957 rooms, are located in five Provinces and Territories across Canada. Twenty of the Company's hotels operate under internationally recognized brands such as Travelodge ®, Super 8 ®, Holiday Inn ®, Hilton ®, Ramada ® and Country Inns and Suites ®. Three of the Company's hotels are independently branded. In addition to its real estate holdings, the Company owns and operates the Travelodge Canada franchise business which is currently comprised of over 90 hotels across nine Provinces and Territories.The Company's common shares and convertible debentures are traded on the Toronto Stock Exchange under the trading symbols "RYL", "RYL.DB.B", "RYL.DB.C" and "RYL.DB.D" respectively.This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.FOR FURTHER INFORMATION PLEASE CONTACT: Michael McFetersRoyal Host Inc.Chief Financial Officer902-470-4500