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Kingdom Hotel Inv (KHI)

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Monday 15 March, 2010

Kingdom Hotel Inv

Recommended cash offer by sub

RNS Number : 5595I
Kingdom Hotel Investments
15 March 2010
 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO AUSTRALIA, CANADA, JAPAN OR ANY OTHER RESTRICTED JURISDICTION

15 MARCH 2010

RECOMMENDED CASH OFFER
by
KINGDOM 5-KR-211, LTD.
a wholly-owned subsidiary of
KINGDOM HOLDING COMPANY
for
KINGDOM HOTEL INVESTMENTS

Summary

·          The board of Bidco and the Independent Committee of the board of KHI announce that they have agreed the terms of a recommended cash offer to be made by Bidco (a wholly-owned subsidiary of KHC) for the entire issued and to be issued share capital of KHI other than the 94,516,240 KHI Shares already owned by the Bidco Group (representing approximately 56.1 per cent. of the issued ordinary share capital of KHI).

·          The Offer will be US$5.00 in cash for each KHI Share and also values each KHI GDS at US$5.00.

·           The Offer values KHI's entire existing issued share capital at US$842.9 million.

·           The Offer represents:

·           a premium of 39.7 per cent. to the average closing middle-market price, as derived from NASDAQ Dubai, of US$3.58 per KHI Share for the three months ended 14 March 2010; and

·           a premium of 37.2 per cent. to the average closing middle-market price, as derived from the Daily Official List, of US$3.64 per KHI GDS for the three months ended 12 March 2010.

·          Following the initial approach from representatives of KHC, the board of KHI formed an Independent Committee to evaluate the Offer on behalf of KHI. The formation of the Independent Committee is in accordance with the Takeover Rules and corporate governance best practice.

·          The Independent Committee of the board of KHI, which has been advised by Perella Weinberg Partners, considers the terms of the Offer to be fair and reasonable and recommends shareholders accept the Offer.  In providing its advice, Perella Weinberg Partners has taken into account the commercial assessments of the Independent Committee.

·          Bidco has received an irrevocable undertaking to accept the Offer from Janus Capital Management LLC, in respect of 22,016,253 KHI GDSs (representing 22,016,253 KHI Shares), representing approximately 13.1 per cent. of KHI's existing issued ordinary share capital.

·          Bidco has also received irrevocable undertakings to accept the Offer from the directors of KHI who hold KHI Shares (including KHI Shares represented by KHI GDSs) in respect of their own beneficial holdings of 1,080,500 KHI Shares and 299,761 KHI GDSs representing, in aggregate, approximately 0.8 per cent. of KHI's existing issued ordinary share capital, as at the date of this announcement.

·          The Offer will be conditional upon Bidco obtaining acceptances of the Offer in respect of KHI Shares which, when aggregated with the existing holdings of the Bidco Group, comprise at least 75 per cent. of the voting rights attaching to the share capital of KHI. Should the Offer become unconditional, Bidco intends to procure the delisting and cancellation of trading of the KHI Shares and KHI GDSs.

·          Commenting on the recommended Offer, His Royal Highness Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, Chairman of KHC said:

"KHI has a sound business and strong management team. The offer which KHC has today announced represents a significant premium to KHI's historic trading price and is structured to provide minority shareholders with short term liquidity at an exit price for cash on terms we believe are highly attractive. We are delighted to have already secured the support of the Independent Committee of the board of KHI and of KHI's largest minority shareholder for our offer. We look forward to the successful completion of the transaction in due course."

·           Commenting on the recommended Offer, the Independent Committee said:

"KHI has a proven business model, strong balance sheet and resilient revenue streams from its diverse portfolio of leading hotels. The business is performing well despite challenging market conditions. However, limited liquidity and low trading volumes have affected and are likely to continue to affect the share price. The offer from KHC allows our minority shareholders the opportunity to crystallise cash value at a premium to the level at which KHI's shares have been trading historically."

Enquiries to:

Bidco

 

Shadi S. Sanbar

Tel: + 966 1 211 1111

 

 

Citi (Financial adviser to Bidco)

Julian Mylchreest

Tel: +44 20 7986 7420

Craig Reisser

Tel: +44 20 7986 7508

 

 

Deutsche Bank (Financial adviser to Bidco)

Tim Lloyd-Hughes

Tel: +44 20 7545 8000

Apoorva Shah

Tel: +971 4 361 1700

 

 

Brunswick Group (PR Adviser to KHI)

 

Kate Holgate/Laura Cummings

Tel: + 44 20 7404 5959

Rupert Young/Edward Moore

Tel: + 971 4 365 8260

 

 

Perella Weinberg  Partners (Financial adviser to KHI)

Philip Yates

Tel: +44 20 7268 2800

Graham Davidson

Tel: +44 20 7268 2800

This summary should be read in conjunction with the accompanying full text of the following announcement (including the appendices) which sets out further details of the Offer and which forms an integral part of this announcement.

The DFSA has not approved this announcement, not taken steps to verify the information set out in it, and has no responsibility for it.

This announcement does not, and is not intended to, constitute or form part of any offer to sell or an invitation to purchase or subscribe for any securities, nor shall there be any sale, issue or transfer of the securities referred to in this announcement in any jurisdiction in contravention of any applicable law. The Offer will be made solely by means of the Offer Document and, for KHI Certificated Shareholders, the Form of Acceptance accompanying the Offer Document.

The availability of the Offer to persons who are citizens or residents of jurisdictions outside the DIFC, the United Kingdom and the United States may be affected by the laws of those relevant jurisdictions. Such persons should inform themselves about and observe any applicable requirements. If you remain in any doubt, you should consult your professional adviser in the relevant jurisdiction without delay.

Any acceptance or other response to the Offer should be made only on the basis of information to be contained in the Offer Document which Bidco intends to despatch as soon as is reasonably practicable.

The Offer will be subject to the applicable rules and regulations of the DFSA and the Takeover Rules.

The Offer will not be made, directly or indirectly, in or into or by the use of the mails of, or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of Australia, Canada, Japan or any other Restricted Jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or otherwise from within Australia, Canada, Japan or any other Restricted Jurisdiction. Accordingly, copies of this announcement are not being, and must not be, mailed or otherwise distributed or sent in, into or from Australia, Canada, Japan or any other Restricted Jurisdiction. Persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not distribute, mail or send it in, into or from Australia, Canada, Japan or any other Restricted Jurisdiction, and so doing may render any purported acceptance of the Offer invalid.

Citi, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as financial advisor to Bidco and no one else in connection with the contents of this announcement and the Offer and will not be responsible to anyone other than Bidco for providing the protections afforded to clients of Citi or for giving advice in relation to the Offer or any other matters referred to herein.

Deutsche Securities Saudi Arabia (DSSA), which is authorised and regulated in the Kingdom of Saudi Arabia by the Capital Market Authority (CMA), is acting as financial advisor to Bidco and no one else in connection with the contents of this announcement and the Offer and will not be responsible to anyone other than Bidco for providing the protections afforded to clients of DSSA or for giving advice in relation to the Offer or any other matters referred to herein. DSSA has CMA license # 07073-37 and is a member of the group of companies headed by Deutsche Bank AG.

Perella Weinberg Partners, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively as financial advisor to KHI and no one else in connection with the contents of this announcement and the Offer and will not be responsible to anyone other than KHI for providing the protections afforded to clients of Perella Weinberg Partners or for giving advice in relation to the Offer or any other matters referred to herein.

Important information

It may be difficult to enforce any rights and any claim arising under the US federal securities laws, since Bidco and KHI are located in non-US jurisdictions, and some or all of their officers and directors may be residents of non-US jurisdictions. It may not be possible to sue a non-US company or its officers or directors in a non-US court for violations of US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment.

Forward-looking statements

This announcement, including information included or incorporated by reference in this announcement, may contain "forward-looking statements" concerning the Offer, Bidco, Bidco Group and KHI. Generally, the words "will", "may", "should", "could", "would", "can", "continue", "opportunity", "believes", "expects", "intends", "anticipates", "estimates" or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Bidco or KHI's operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation on Bidco or KHI's business. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements. Bidco, Bidco Group and KHI assume no obligation in respect of, and do not intend to update, these forward-looking statements, except as required pursuant to applicable law.



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO AUSTRALIA, CANADA, JAPAN OR ANY OTHER RESTRICTED JURISDICTION

FOR IMMEDIATE RELEASE

15 MARCH 2010

RECOMMENDED CASH OFFER
by
KINGDOM 5-KR-211, LTD.
a wholly-owned subsidiary of
KINGDOM HOLDING COMPANY
for
KINGDOM HOTEL INVESTMENTS

1.         Introduction

The board of Bidco and the Independent Committee of the board of KHI announce that they have agreed the terms of a recommended cash offer to be made by Bidco (a wholly-owned subsidiary of KHC) for the entire issued and to be issued share capital of KHI other than the 94,516,240 KHI Shares already owned by the Bidco Group (representing approximately 56.1 per cent. of the issued ordinary share capital of KHI).

The Offer will be US$5.00 in cash for each KHI Share. The Offer values each KHI GDS (evidenced by a Global Depositary Share, each representing one KHI Share) at US$5.00 and values KHI's entire existing issued share capital at US$842.9 million.  This assumes that there are 168,570,212 KHI Shares in issue as at the date of this announcement and that no further KHI Shares or rights over KHI Shares will be allotted, issued and/or granted during the period from the date of this announcement until the date that the Offer closes.

The Independent Committee of the board of KHI, which has been advised by Perella Weinberg Partners, considers the terms of the Offer to be fair and reasonable and recommends shareholders accept the Offer.  In providing its advice, Perella Weinberg Partners has taken into account the commercial assessments of the Independent Committee.

2.         The Offer

The Offer for the KHI Shares, which will be on the terms and subject to the conditions set out below and in Appendix 1, and to be set out in the Offer Document and the Form of Acceptance, will be made on the following basis:

for each KHI Share

US$5.00 in cash

which is equivalent to:

 

for each KHI GDS

US$5.00 in cash

The Offer represents:

·     a premium of 39.7 per cent. to the average closing middle-market price, as derived from NASDAQ Dubai, of US$3.58 per KHI Share for the three months ended 14 March 2010; and

·     a premium of 37.2 per cent. to the average closing middle-market price, as derived from the Daily Official List, of US$3.64 per KHI GDS for the three months ended 12 March 2010.

3.         KHI Global Depositary Shares

Eligible holders of KHI GDSs and of beneficial interests in KHI GDSs will be able to instruct Citibank, N.A., as Tender Agent of the Offer, to accept the Offer with respect to the KHI Shares underlying their KHI GDSs. Further details in relation to how eligible holders of KHI GDSs or of beneficial interests in KHI GDSs can participate in the Offer will be set out in the Offer Document. It is expected that the KHI GDS programme will be terminated after the Offer becomes or is declared unconditional in all respects.

Following the Offer becoming or being declared unconditional in all respects, the Tender Agent will arrange for each KHI Share in respect of which it has been instructed to accept the Offer to be withdrawn from the KHI GDS programme. A cancellation fee of up to US$0.0375 per KHI GDS will be payable to the Depositary in respect of the KHI GDSs representing KHI Shares for which valid acceptances to the Offer are received and will be deducted from the consideration paid pursuant to the Offer to the holders of such KHI GDSs or of beneficial interests in such KHI GDSs.

4.         Financing of the Offer

It is estimated that full acceptance of the Offer and the cashing out of all of the unvested awards under the KHI Long Term Incentive Plan would require the payment by Bidco of a maximum amount of approximately US$375 million in cash which will be funded by Bidco through certain credit facilities provided to KHC comprising a bridge facility of US$150 million arranged by Citibank N.A., London Branch and a term loan of US$250 million arranged by Deutsche Bank AG, London Branch.

Citi and Deutsche Securities Saudi Arabia are satisfied that sufficient resources are available to Bidco to satisfy in full the cash consideration payable to KHI Shareholders as a result of full acceptance under the terms of the Offer and to cash out all of the unvested awards under the KHI Long Term Incentive Plan.

5.         Interests in KHI Shares

As at the close of business on 14 March 2010, the Bidco Group is interested in 94,516,240 KHI Shares representing approximately 56.1 per cent. of the issued ordinary share capital of KHI. The holdings of the Bidco Group consist of 75,416,240 KHI Shares (representing approximately 44.7 per cent. of the issued ordinary share capital of KHI) held by Kingdom 5-KR-124, Ltd a wholly-owned subsidiary of KHC and 19,100,000 KHI Shares (representing approximately 11.3 per cent. of the issued ordinary share capital of KHI) held by Kingdom 5-KR-51, Ltd. a wholly-owned subsidiary of KHC.

As at the close of business on 12 March 2010, Deutsche Bank, a concert party of Bidco, is interested in 106,199 KHI GDSs representing approximately 0.063 per cent. of the issued ordinary share capital of KHI.  Save as set out above, neither Bidco, nor any director of Bidco, nor, so far as Bidco is aware, any person acting in concert with Bidco, owns or has control over any relevant securities or, holds any option to purchase relevant securities.

6.         Irrevocable commitments and letters of intent

Bidco has received an irrevocable undertaking to accept the Offer from Janus Capital Management LLC, in respect of 22,016,253 KHI GDSs (representing 22,016,253 KHI Shares), representing approximately 13.1 per cent. of KHI's existing issued ordinary share capital. The undertaking from Janus Capital Management LLC will cease to be binding only if the Conditions are not satisfied or the Offer lapses or is withdrawn and remains binding in the event that a higher competing offer for KHI is made.

Bidco has also received irrevocable undertakings to accept the Offer from the directors of KHI who hold KHI Shares (including KHI Shares represented by KHI GDSs) in respect of their own beneficial holdings of 1,080,500 KHI Shares and 299,761 KHI GDSs representing, in aggregate, approximately 0.8 per cent. of KHI's existing issued ordinary share capital, as at the date of this announcement. Further details of these irrevocable undertakings, and those directors of KHI who hold KHI Shares or KHI GDSs, are set out in Appendix 3 to this announcement.

7.         Information relating to Bidco Group

KHC, the ultimate parent company of the Bidco Group, is a Saudi joint stock company listed on the Saudi Stock Exchange (Tadawul). KHC is headed by His Royal Highness Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud who owns over 90 per cent. of its shares.  KHC has an extensive portfolio of local and international public and private investments built up within a few selected core industries.

In addition to its holdings in the hospitality real estate sector through KHI (please see paragraph 8 below for further information on KHI), KHC has holdings in some of the world's best known hotels, including Hotel George V in Paris, The Savoy in London, Four Seasons Hotel and Resorts, and Fairmont Raffles Hotels International.

As at and for the period ended 31 December 2009 KHC had consolidated total assets of SR49.990 billion (US$ 13.331 billion) and consolidated total revenues of SR4.521 billion (US$ 1.206 billion). KHC's market capitalisation as at 14 March 2010, being the latest practicable date before the date of this announcement, was approximately SR36 billion (US$10 billion) based on a price of SR9.7 per share.

KHC's interest in KHI is held through Kingdom 5-KR-124, Ltd. and Kingdom 5-KR-51, Ltd. each of which is a wholly-owned subsidiary of KHC. Bidco is a wholly-owned subsidiary of KHC specifically formed for the purpose of the Offer.

8.         Information relating to KHI

KHI is a hospitality real estate investment company focused on emerging markets operating in the first-class and luxury market segments.  KHI was founded in 2000 by His Royal Highness Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud. In March 2006, KHI undertook an initial public offering with a primary listing of KHI Shares on NASDAQ Dubai (formerly the Dubai International Financial Exchange) and a secondary listing of KHI GDSs on the London Stock Exchange.

KHI has accumulated a portfolio of ownership interests in hotels and resorts managed by leading international hotel operators in distinctive and strategic emerging market locations primarily within Asia, Africa and the Middle East. As at 31 December 2009, KHI held ownership interests in 27 properties in 18 countries, comprising 22 operating hotels and resorts and 5 hotels and resorts currently under construction or in the initial stages of development. 

As at and for the period ended 31 December 2009 KHI had consolidated total assets of US$2,084 million, consolidated total revenues of US$246 million, Adjusted EBITDA, excluding real estate sales, of US$62 million and net debt of US$177 million.

Following the initial approach from representatives of KHC, the board of KHI formed an Independent Committee of the board of KHI to evaluate the Offer on behalf of KHI. The Independent Committee comprises directors who are independent of KHC and the Chairman of KHI and who are not executive directors of KHI. The formation of the Independent Committee is in accordance with the Takeover Rules and corporate governance best practice.

9.             Background to and reasons for the Offer

KHI has a strong business model and has made significant progress in diversifying its revenue streams since flotation in 2006.  However, there is limited liquidity and low trading volumes in KHI's shares, and there is no indication of any catalyst for that to change in the near to medium term. KHC's offer is structured to provide minority shareholders with short term liquidity at an exit price for cash which represents a significant premium to KHI's historic trading share price.

10.        Further terms of the Offer

The KHI Shares will be acquired pursuant to the Offer fully paid and free from all liens, charges, equities, encumbrances, rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching to them on or after 15 March 2010, including, without limitation, voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after that date.

Appendix 1 sets out further information about the Conditions that apply to the Offer.

11.        Management and employees

Bidco attaches great importance to the skills and experience of the existing management and employees of KHI and intends to retain the skills and experience of KHI's current senior management team on their existing terms.  Bidco's plans for KHI do not involve any material change to the conditions of employment of KHI Group employees.

12.        KHI Long Term Incentive Plan

The Offer will extend to any KHI Shares which have been acquired by the trustee of the KHI Long Term Incentive Plan in connection with awards made under the KHI Long Term Incentive Plan.

The awards granted to participants under the KHI Long Term Incentive Plan which remain unvested as at the date of the Offer equating to 816,177 KHI Shares will be cashed out at the Offer Price on the same terms and conditions as those applicable to accepting KHI Shareholders in the Offer Document.

13.        Squeeze-out, delisting and cancellation of trading of the KHI Shares and KHI GDSs

If Bidco receives acceptances under the Offer in respect of 90 per cent. or more of the KHI Shares (including KHI Shares represented by KHI GDSs) to which the Offer relates, Bidco intends to apply the provisions of section 88 Companies Law (2009 Revision) of the Cayman Islands to acquire compulsorily the outstanding KHI Shares (including KHI Shares represented by KHI GDSs) on the same terms as the Offer.

It is also intended that, when Bidco has, by virtue of its shareholdings and acceptances of the Offer, acquired KHI Shares carrying at least 75 per cent. of the voting rights attaching to the share capital of KHI, Bidco will procure the making of an application by KHI: (i) for the cancellation of the trading in KHI Shares on NASDAQ Dubai and the listing of the KHI Shares from the Official List of Securities of NASDAQ Dubai; and (ii) for the cancellation of the trading in KHI GDSs on the London Stock Exchange's market for listed securities and the listing of the KHI GDSs from the Official List of the UK Listing Authority. It is intended that appropriate notifications will be given once Bidco announces it has acquired 75 per cent. of the voting rights.

14.        General

The Offer will be on the terms and subject to the conditions set out herein and in Appendix 1, and to be set out in the Offer Document and the accompanying Form of Acceptance. The formal Offer Document will be sent to KHI Shareholders as soon as practicable and in any event within 21 days of the date hereof.

Certain terms used in this announcement are defined in Appendix 2.

Enquiries to:

Bidco

 

Shadi S. Sanbar

Tel: + 966 1 211 1111

 

 

Citi (Financial adviser to Bidco)

Julian Mylchreest

Tel: +44 20 7986 7420

Craig Reisser

Tel: +44 20 7986 7508

 

 

Deutsche Bank (Financial adviser to Bidco)

Tim Lloyd-Hughes

Tel: +44 20 7545 8000

Apoorva Shah

Tel: +971 4 361 1700

 

 

Brunswick Group (PR Adviser to KHI)

 

Kate Holgate/Laura Cummings

Tel: +44 20 7404 5959

Rupert Young/Edward Moore

Tel: + 971 4 365 8260

 

 

Perella Weinberg Partners (Financial adviser to KHI)

Philip Yates     

Tel: +44 20 7268 2800

Graham Davidson

Tel: +44 20 7268 2800

The DFSA has not approved this announcement, not taken steps to verify the information set out in it, and has no responsibility for it.

This announcement does not, and is not intended to, constitute or form part of any offer to sell or an invitation to purchase or subscribe for any securities, nor shall there be any sale, issue or transfer of the securities referred to in this announcement in any jurisdiction in contravention of any applicable law. The Offer will be made solely by means of the Offer Document and, for KHI Certificated Shareholders, the Form of Acceptance accompanying the Offer Document.

The availability of the Offer to persons who are citizens or residents of jurisdictions outside the DIFC, the United Kingdom and the United States may be affected by the laws of those relevant jurisdictions. Such persons should inform themselves about and observe any applicable requirements. If you remain in any doubt, you should consult your professional adviser in the relevant jurisdiction without delay.

Any acceptance or other response to the Offer should be made only on the basis of information to be contained in the Offer Document which Bidco intends to despatch as soon as is reasonably practicable.

The Offer will be subject to the applicable rules and regulations of the DFSA and the Takeover Rules.

The Offer will not be made, directly or indirectly, in or into or by the use of the mails of, or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of Australia, Canada, Japan or any other Restricted Jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or otherwise from within Australia, Canada, Japan or any other Restricted Jurisdiction. Accordingly, copies of this announcement are not being, and must not be, mailed or otherwise distributed or sent in, into or from Australia, Canada, Japan or any other Restricted Jurisdiction. Persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not distribute, mail or send it in, into or from Australia, Canada, Japan or any other Restricted Jurisdiction, and so doing may render any purported acceptance of the Offer invalid.

Citi, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as financial advisor to Bidco and no one else in connection with the contents of this announcement and the Offer and will not be responsible to anyone other than Bidco for providing the protections afforded to clients of Citi or for giving advice in relation to the Offer or any other matters referred to herein.

Deutsche Securities Saudi Arabia (DSSA), which is authorised and regulated in the Kingdom of Saudi Arabia by the Capital Market Authority (CMA), is acting as financial advisor to Bidco and no one else in connection with the contents of this announcement and the Offer and will not be responsible to anyone other than Bidco for providing the protections afforded to clients of DSSA or for giving advice in relation to the Offer or any other matters referred to herein. DSSA has CMA license # 07073-37 and is a member of the group of companies headed by Deutsche Bank AG.

Perella Weinberg Partners, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively as financial advisor to KHI and no one else in connection with the contents of this announcement and the Offer and will not be responsible to anyone other than KHI for providing the protections afforded to clients of Perella Weinberg Partners or for giving advice in relation to the Offer or any other matters referred to herein.

Important information

It may be difficult to enforce any rights and any claim arising under the US federal securities laws, since Bidco and KHI are located in non-US jurisdictions, and some or all of their officers and directors may be residents of non-US jurisdictions. It may not be possible to sue a non-US company or its officers or directors in a non-US court for violations of US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment.

Forward-looking statements

This announcement, including information included or incorporated by reference in this announcement, may contain "forward-looking statements" concerning the Offer, Bidco, Bidco Group and KHI. Generally, the words "will", "may", "should", "could", "would", "can", "continue", "opportunity", "believes", "expects", "intends", "anticipates", "estimates" or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Bidco or KHI's operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation on Bidco or KHI's business. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements. Bidco, Bidco Group and KHI assume no obligation in respect of, and do not intend to update, these forward-looking statements, except as required pursuant to applicable law.

 



 

Appendix 1
CONDITIONS AND FURTHER TERMS OF THE OFFER

The Offer, which will be made by Bidco, will comply with the applicable rules and regulations of the DFSA, the Takeover Rules and the law of the Cayman Islands, will be governed by laws of the DIFC and will be subject to the jurisdiction of the courts of the DIFC. In addition it will be subject to the terms and conditions set out in the Offer Document and related Form of Acceptance.

1.         Conditions of the Offer

The Offer will be subject to the following conditions:

(a)        valid acceptances being received (and not, where permitted, withdrawn) by not later than 5.00 p.m. (Dubai time) on the Closing Date (as defined in the Offer Document) (or such later time(s) and/or date(s) as Bidco may, subject to the Takeover Rules or with the consent of the DFSA, decide) which, when aggregated with KHI Shares already held by the Bidco Group, shall be in respect of not less than 75 per cent. (or such lower percentage as Bidco may decide) of the issued share capital and voting rights of KHI (including KHI Shares represented by KHI GDSs); 

(b)        no government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, court, trade agency, association, institution or any other body or person whatsoever in any jurisdiction (each a "Third Party") having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or having required any action to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, decision, order or change to published practice and there not continuing to be outstanding any statute, regulation, decision or order which would or might:

(i)         make the Offer, its implementation or the acquisition or proposed acquisition of any shares or other securities in KHI by any member of the Bidco Group void, illegal and/or unenforceable under the laws of any jurisdiction, or otherwise directly or indirectly prohibit, or materially restrain, restrict, delay or otherwise interfere with the implementation of, or impose material additional conditions or obligations with respect to, or otherwise materially challenge or require amendment of the Offer or the acquisition of any such shares or securities by any member of the Bidco Group;

(ii)        result in any member of the KHI Group ceasing to be able to carry on business under any name under which it presently carries on business to an extent which is material in the context of the Bidco Group taken as a whole; or

(iii)       otherwise affect the business, assets, profits or prospects of any member of the KHI Group or any member of the Bidco Group in a manner which is adverse to and material in the context of the KHI Group taken as a whole or of the obligations of any members of the Bidco Group taken as a whole in connection with the financing of the Offer;

and all applicable waiting and other time periods during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Offer or the acquisition or proposed acquisition of any KHI Shares or otherwise intervene having expired, lapsed, or been terminated;

(c)        all necessary or appropriate notifications, filings or applications having been made in connection with the Offer and all necessary waiting periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with and all Authorisations necessary or appropriate in any jurisdiction for or in respect of the Offer and the acquisition or the proposed acquisition of any shares or other securities in KHI by any member of the Bidco Group having been obtained from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the KHI Group or the Bidco Group has entered into contractual arrangements and all such Authorisations necessary or appropriate to carry on the business of any member of the KHI Group in any jurisdiction having been obtained in each case where the direct consequence of a failure to make such notification or filing or to wait for the expiry, lapse or termination of any such waiting period or to comply with such obligation or obtain such Authorisation would have a material adverse effect on the KHI Group, any member of the Bidco Group or the ability of Bidco to implement the Offer and all such Authorisations remaining in full force and effect at the time at which the Offer becomes otherwise unconditional and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

(d)        since 31 December 2009:

(i)         there having been no adverse change in the business, assets, financial or trading position or profits or prospects or operational performance of any member of the KHI Group to an extent which is material to the KHI Group taken as a whole or of the obligations of any member of the Bidco Group in connection with the financing of the Offer;

(ii)        no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against any member of the KHI Group or to which any member of the KHI Group is or may become a party (whether as claimant or defendant or otherwise) and no enquiry or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the KHI Group having been threatened, announced or instituted by or against, or remaining outstanding in respect of, any member of the KHI Group which, in any such case, might reasonably be expected materially and adversely to affect the KHI Group taken as a whole;

(iii)       no contingent or other liability having arisen or become known to Bidco or KHC which might be likely adversely to affect the business, assets, financial or trading position or profits or prospects of any member of the KHI Group to an extent which is material to the KHI Group taken as a whole; and

(iv)       no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence or operating permit held by any member of the KHI Group, which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which is material and likely adversely to affect the KHI Group taken as a whole; and

(e)        since 31 December 2009 Bidco not having discovered:

(i)         that any financial, business or other information concerning the KHI Group publicly disclosed or disclosed to any member of the Bidco Group at any time by or on behalf of any member of the KHI Group which is material in the context of the acquisition of KHI by any member of Bidco Group is misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make that information not misleading;

(ii)        that any member of the KHI Group is subject to any liability, contingent or otherwise, which is not disclosed in the annual report and accounts of KHI for the year ended 31 December 2009, and which is material in the context of the KHI Group; or

(iii)       any information which affects the import of any information disclosed to Bidco at any time by or on behalf of any member of the KHI Group which is material in the context of the KHI Group.

Subject to the requirements of the DFSA, Bidco reserves the right to waive in whole or in part all or any of conditions (b) to (e). Conditions (c) to (e) must be satisfied as at, or waived (where possible) on or before, the 21st day after the later of the Closing Date (as defined in the Offer Document) and the date on which condition (a) is fulfilled (or, in each case, such later date as the DFSA may agree).  Bidco shall be under no obligation to waive or determine to be, or treat as, fulfilled condition (b) by a date earlier than the date specified above for the fulfilment thereof notwithstanding that the other conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such conditions may not be capable of fulfilment.

If Bidco is required by the DFSA to make an offer for KHI Shares under the provisions of Rule 4 of the Takeover Rules, Bidco may make such alterations to the terms and conditions of the Offer as are necessary to comply with the provisions of that Rule.



 

Appendix 2
DEFINITIONS

The following definitions apply throughout this announcement unless the context otherwise requires:

"Adjusted EBITDA"

KHI's EBITDA, adjusted for the full impact of the KHI's share in the EBITDA of unconsolidated equity investments and the share of KHI minority partners in the EBITDA of its subsidiaries

"Australia"

the Commonwealth of Australia, its territories and possessions

"Authorisations "

authorisations, orders, grants, recognitions, confirmations, consents, licences, clearances, certificates, permissions or approvals

"Bidco"

Kingdom 5-KR-211, Ltd. a wholly-owned subsidiary of KHC

"Bidco Group"

KHC and its subsidiaries and where the context permits, each of them

"Canada"

Canada, its provinces and territories and all areas

"CSD"

the Central Securities Depositary of NASDAQ Dubai

"certificated" or "certificated form"

in relation to a share or other security, a share or other security title to which is recorded in the relevant register of the share or other security as being held in certificated form (that is, not through CSD or DFM)

"Citi"

Citigroup Global Markets Limited

"Clearstream"

Clearstream Banking, S.A.

"Conditions"

the conditions to the Offer set out in Appendix 1 hereto

"Daily Official List"

daily official list of the London Stock Exchange

"Depositary"

Citibank N.A. in its role as depositary in respect of the KHI GDSs

"Deutsche Bank"

the group of companies headed by Deutsche Bank AG

"DFM"

the Dubai Financial Market

"DFSA"

Dubai Financial Services Authority

"DIFC"

Dubai International Financial Centre

"EBITDA"

earnings before interest, tax, depreciation and amortisation

"Euroclear"

Euroclear Bank N.V./S.A., as operator of the Euroclear system

"Form of Acceptance"

in relation to the KHI Shares held in certificated form (including the KHI Shares represented by KHI GDSs), the form of acceptance relating to the Offer, which will accompany the Offer Document, for use by KHI Certificated Shareholders wishing to accept the Offer

"holder(s) of KHI GDSs"

the person(s) whose name(s) appear in the book-entry settlement systems of Euroclear and Clearstream as the holders of beneficial interests in KHI GDSs (and, at any time all of the KHI GDSs are not evidenced by a single Regulation S Master GDR, including the person(s) registered in the books of the Depositary maintained for such purpose)

"Independent Committee"

an independent committee of the board of KHI, comprising those members of the board of KHI who are considered to be independent of KHC and the Chairman of KHI and who are not executive directors of KHI. The Independent Committee comprises Tarek Abdel-Meguid and David William Pace

"Japan"

Japan, its cities, prefectures, territories and possessions

"KHC"

Kingdom Holding Company

"KHI"

Kingdom Hotel Investments

"KHI Certificated Shareholder(s)"

the registered holders of KHI Shares on the register of members of KHI

"KHI Dematerialised Shareholder(s)"

the beneficial holders of KHI Shares on the register of the CSD

"KHI GDSs"

global depositary shares, each representing one KHI Share

"KHI Group"

KHI and its subsidiaries and where the context permits, each of them  

"KHI Long Term Incentive Plan"

the long term incentive plan established under the Kingdom Hotel Investments Employee Benefit Trust Deed dated 6 September 2007

"KHI Registered Shareholder(s)"

the KHI Certificated Shareholders and/or KHI Dematerialised Shareholders

"KHI Shareholder(s)"

the KHI Registered Shareholders, and/or the holders of KHI GDSs, and/or the holders of any other beneficial interests in the KHI Shares and/or the KHI GDSs, as the case may be

"KHI Share(s)"

the existing unconditionally allotted or issued and fully paid ordinary shares in the capital of KHI and any further shares which are unconditionally allotted or issued before the date on which the Offer closes (or such earlier date or dates, not being earlier than the date on which the Offer becomes unconditional as to acceptances or, if later, the first closing date of the Offer, as Bidco may decide)

"London Stock Exchange"

London Stock Exchange plc or its successor

"NASDAQ Dubai"

NASDAQ Dubai Limited

"Offer"

the recommended offer made by Bidco to acquire all the KHI Shares on the terms and subject to the conditions set out in the Offer Document and the Form of Acceptance and, where the context so requires, any subsequent revision, variation, extension or renewal of such offer and includes any election available in connection with it

"Offer Document"

the document containing and setting out the terms and conditions of the Offer

"Offer Price"

for each KHI Share US$5.00 in cash, which is equivalent to US$5.00 in cash for each KHI GDS

"Perella Weinberg Partners"

Perella Weinberg Partners UK LLP

"relevant securities"

KHI Shares, KHI GDSs, other KHI share capital and any securities convertible into or exchangeable for, and rights to subscribe for, any of the foregoing

"Restricted Jurisdiction"

Australia, Canada, Japan and any other jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Offer is sent or made available to KHI Shareholders in that jurisdiction

"subsidiary"

shall be construed in accordance with the Companies Law (2009 Revision) of the Cayman Islands

"Takeover Rules"

the Takeover Rules Module issued by the DFSA

"Tender Agent"

Citibank N.A. in its role as tender agent for holders of KHI GDSs pursuant to the Offer

"UK" or "United Kingdom"

United Kingdom of Great Britain and Northern Ireland

"US" or United States"

the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia

"US$"

means the lawful currency of the United States of America

 

All times referred to are Dubai time unless otherwise stated.



 

Appendix 3
DETAILS OF IRREVOCABLE UNDERTAKINGS OF DIRECTORS OF KHI

The following directors of KHI have given irrevocable undertakings as described in paragraph 6 of this announcement in respect of the number of KHI Shares and KHI GDSs set out below:

Name

Number of shares

KHI Shares

KHI GDS


 

Sarmad Zok

1,000,000

299,761

Tarek Abdel-Meguid

80,500

-

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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