Refinancing of three London h

RNS Number : 9149W

Park Plaza Hotels Limited

26 November 2010

 



26 November 2010

PARK PLAZA HOTELS LIMITED

Refinancing of three London hotels

Park Plaza Hotels Limited (Park Plaza), owner, operator and franchisor of hotels in Europe, the Middle East and Africa, announces the refinancing of three London hotels (the Hotels) which it operates and part owns - the Park Plaza Riverbank, the Park Plaza Victoria and the Park Plaza Sherlock Holmes. The refinancing involves 5-year term facilities (theFacilities) totalling £165.0 million with Aareal Bank AG (Aareal). The Hotels were previously financed by a £195.0 million facility (outstanding £181.9 million) from Goldman Sachs International (Goldman Sachs), which was due to mature in March 2013.

The Hotels are owned by three jointly-controlled companies, Riverbank Hotel Holding B.V. (Riverbank), Victoria London Hotel Holding B.V. (Victoria) and Grandis Netherlands Holding B.V. (Grandis) (collectively the Borrowers). Park Plaza's interest in Riverbank and Grandis is 55% and in Victoria 50%.

A separate arrangement with Aareal has been made to meet the costs of terminating an existing interest rate swap (the Close-Out Costs) amounting to £14.4 million which, as part of the overall financing, were settled by Aareal. The Borrowers have undertaken to pay to Aareal the value of the Close-Out Costs plus interest over the next three years by way of additional margin (the Close-Out Margin) on the fixed rate of interest under the new interest rate swap with Aareal referred to below. Park Plaza and its partner, Elbit Imaging Limited (Elbit), have severally guaranteed the Borrowers' obligations in respect of the Close-Out Costs plus interest. Park Plaza's exposure under this guarantee is currently limited to 53.11% of the amount guaranteed, which reflects its proportionate interests in the Borrowers and the values allocated to the hotels for the purposes of the Facilities.

In addition to the new Facilities, Park Plaza together with Elbit provided an equity injection of £16.6 million (£8.9 million of which was provided by Park Plaza) in order to enable the Borrowers to repay the balance of the amount that was outstanding to Goldman Sachs.

The facility agreement with Aareal provide for two facilities: one for £153.6 million to Riverbank and Victoria (Facility A) and the other for £11.4 million to Grandis (Facility B). The interest on 85% of Facility A (£130.6 million) has been fixed (by means of an interest rate swap with Aareal) at 5.295% per annum (including the Close-Out Margin) for the first 3 years and 3.275% for the remaining 2 years. On top of these fixed rates a margin of 2.75% per annum will be applied. The balance of Facility A will bear interest at 2.75% per annum over 3-month Sterling LIBOR (LIBOR) and the whole of Facility B will initially bear interest at 5.0% per annum over LIBOR reducing to 2.95% per annum on the grant of security over the Park Plaza Sherlock Holmes.

The Facilities are secured by, inter alia, pledges over the shares in the Borrowers and first legal charges over the Park Plaza Riverbank and the Park Plaza Victoria and, subject to obtaining the necessary consent, will be secured by a first legal charge over the Park Plaza Sherlock Holmes. Park Plaza and Elbit have also severally guaranteed principal, interest and costs under Facility B (but not Facility A). Park Plaza's exposure under this guarantee is currently limited to 55% of the amount guaranteed, representing its proportionate interest in Grandis. Save as aforesaid, the facilities are without recourse to Park Plaza or any other member of its group apart from the Borrowers and their subsidiaries.

Commenting on the refinancing, Boris Ivesha, Chief Executive Officer of Park Plaza, said:

"We are delighted to have secured new facilities for three of our London Hotels.  This agreement builds on the Group's existing relationship with Aareal in The Netherlands and we are delighted with its continuing confidence, commitment and support. 

The new facilities enable us to invest further in these well established and well performing Hotels and our experienced management will continue to focus on optimising their performance, growing their market share and delivering great customer service.

The Board continues to believe that the Group's long-term growth prospects remain attractive and that it is well placed to take advantage of future opportunities."

Enquiries:

Park Plaza Hotels

Boris Ivesha, Chief Executive Officer                                                     Tel: [phone]

Chen Moravsky, Chief Financial Officer                                       Tel: [phone]

Hudson Sandler

Wendy Baker / Kate Hough                                                                 Tel: [phone]

Investec

James Grace / Grant Bergman                                                            Tel: [phone]

 

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