Inspiration Hlt Regulatory News (IHC)

19 Jun 2007 08:50

India Hospitality Corp. (LSE:IHC), (IHC or India Hospitality),today announced its intention to acquire India-based Mars RestaurantsPrivate Limited (MRPL or Mars), an emerging hotel and restaurantcompany, and SkyGourmet Catering Private Limited (SCPL or SkyGourmet),an airline catering company operating out of four locations in India,for approximately US $110 million to create a diversified hospitalitycompany servicing the rapidly growing Indian travel and leisuremarketplace from affiliates of Navis Capital Partners, a privateequity firm with offices in Kuala Lumpur, Hong Kong, and Bangkok, andcertain private shareholders. £ Under the terms of the acquisition agreement, the sellers of MRPLand SCPL will receive approximately US $110.0 million of whichapproximately US $91.6 million will be payable in cash with theremainder in IHC ordinary shares on completion of the transaction.Additional consideration may become payable if the businesses achievecertain performance targets. £ Upon completion of the transaction, current India Hospitalityshareholders will own approximately 88.9% of IHC and insiders,including Hayground Cove Asset Management and Navis Capital Partners,will hold approximately 51.1%. Affiliates of Navis Capital Partnersand Mr. Sanjay Narang, the founder of both SkyGourmet and Mars, willcontinue to play an active role in the management of the combinedbusinesses going forward. £ Navis is retaining an option to reinvest a substantial portion ofthe sale proceeds into IHC. Navis and its affiliates will be grantedan option to subscribe in aggregate for up to US $75.0 million in cashfor new IHC ordinary shares, which, if exercised in full, would resultin its ownership interest in IHC increasing to approximately 20.7% ona fully diluted basis. £ Under the proposed transaction IHC has also agreed, subject tocertain conditions, to purchase from Navis and its affiliates,Nirula's, a rapidly growing quick service restaurant chain with strongbrand recognition throughout India and an additional hotel, whichcould provide a future re-branding opportunity for the Gordon Housebrand. £ Sanjay Narang, President of Mars, commented: "With a broad andexperienced management team already in place, we view this merger withIndia Hospitality as a unique platform to leverage our corecompetencies and operating experience. IHC's vision and the support ofits board will allow us to grow the business and become a leader inthe Indian lodging, leisure and travel industry. With the economicgrowth India is currently experiencing combined with a growing middleclass, we believe we are on the cusp of a strong growth cycle and areexcited to be partnering with IHC." £ Jason Ader, Chairman and CEO of India Hospitality added: "We havelong felt that India holds great potential for growth in the lodging,leisure, travel and support industries in which Mars and SkyGourmetoperate. The rising purchasing power of the Indian consumer combinedwith the rapid emergence of low-cost airline carriers is expected todrive strong airline passenger growth. This growth is driving majorinfrastructure investments in airports which will create substantialexpansion opportunities for hotels, restaurants and airline cateringservices. Further infrastructure investment in shopping malls andoffice parks creates additional opportunities to leverage theserestaurant brands in food courts. I'm confident that combining thelong-established and successful operating history of these businesseswith the stronger capital structure provided by this transaction willposition IHC to better capitalize on these growth propects." £ Mars operates two Gordon House Hotels, a modern four-star hotelchain catering to both the Indian business and high-end leisuretraveler markets. For the last several years domestic tourism hascontinued to rise at double digit rates. With demand for hotel roomsexpected to outpace industry supply growth, the Gordon House chain ispoised to participate in this expected demand for hotel rooms over thelong-term. Mars also has a diversified portfolio of restaurants, witheight primary brands covering a wide range of segments, includingfamily, casual and over-the-counter dining. Several of the popularbrands include "Not Just Jazz By The Bay", "Tendulkar's", "All StirFry" and "Just Around The Corner". £ SkyGourmet is an airline catering company in India currentlyoperating from four locations with plans to expand to up to 12 by2009. With the airline industry expected to expand from 47 millionpassengers in 2006 to over 100 million in 2010, SkyGourmet iswell-positioned to participate in this travel boom with plans toincrease its aggregate capacity from 25,000 meals served a day to ananticipated 72,000 meals per day by 2009. £ "Among the core competencies of Mars is the ability to createsuccessful brands across several market segments," said RichardFoyston, founding partner and Managing Director of Navis. "SkyGourmetis a unique company able to deliver a high quality, high volumeproduct within a demanding and time-sensitive environment. We expectthe combination of these businesses will provide for significantsynergies and create a meaningful competitive advantage. With theexpected growth of the Gordon House Hotels, the combined company iswell-positioned to leverage these businesses and offer a completelodging and dining experience to the growing business and touristtraveler." £ The transaction is expected to be fully funded with available cashand the issuance of new ordinary shares of IHC. Upon completion of thetransaction, IHC will retain its name, and expects to haveapproximately 24.4 million ordinary shares in issue. On a fullydiluted basis, IHC expects to have approximately 58.7 million sharesin issue. Cash on hand of the enlarged group immediately following theclosing of the transaction is expected to be approximately US $10.2million with total debt on the books as of May 31, 2007, ofapproximately US $24.2 million. £ In a demonstration of its support of IHC and the acquisition,Hayground Cove Asset Management (through the funds and accounts itmanages) has agreed to purchase from IHC up to the number of ordinaryshares for which repurchase rights are exercised at the same price pershare for which they are required to be repurchased by IHC. As theacquisition will constitute a Qualifying Business Combination underthe terms of IHC's initial public offering in July 2006, IHC ordinaryshareholders voting against the acquisition will have certain rightsto require IHC to repurchase their ordinary shares. Further details asto repurchase rights and Hayground's commitment will be contained inthe Admission Document to be sent to IHC's shareholders. £ The acquisition of Mars and SkyGourmet is classed as a reverseacquisition under the AIM Rules for Companies and requires theapproval of IHC's shareholders. A proxy statement and admissiondocument for the purposes of the AIM Rules for Companies (AdmissionDocument) containing further information on the acquisition andrelated transactions and a notice convening an Extraordinary GeneralMeeting of the shareholders of IHC to approve the acquisition andcertain related matters is expected to be published and sent toshareholders shortly. Pending the publication of the AdmissionDocument, trading in IHC's ordinary shares and warrants on theAlternative Investment Market of London Stock Exchange plc (AIM) willbe suspended in accordance with the AIM Rules for Companies. £ The Extraordinary General Meeting of the shareholders of IHC toapprove the acquisition of MRPL, SCPL, and certain relatedtransactions is expected to be held in mid-July 2007 and IHC expectsthe acquisition to close and the shares of India Hospitality to bere-admitted to trading on AIM on the business day following theExtraordinary General Meeting. £ About Mars £ Mars was incorporated in 2000 by Mr. Sanjay Narang and hismanagement team with the objective of operating and managingrestaurants. Since its incorporation, Mars has diversified into bakeryoutlets and operating and managing food courts and hotels. For thenine months ending December 31, 2006, MRPL had audited revenues ofapproximately US $7.2 million. The MRPL group currently employs over550 people. £ About SkyGourmet £ SkyGourmet was incorporated in 2002 and is headquartered inMumbai. SkyGourmet currently provides inflight catering services to anumber of domestic and international airlines, including Jet Airways,Kingfisher Airlines, Air India Express, Indian Airlines, MalaysianAirlines and Air France. It has operations in Mumbai, Bangalore, NewDelhi and Pune. For the nine months ending December 31, 2006, SCPL hadaudited revenues of approximately US $11.7 million. SkyGourmetcurrently has over 1,150 employees. £ About India Hospitality Corp. £ IHC is a blank-check company created to initially acquire Indianbusinesses or assets in the hospitality, leisure, tourism, travel andrelated industries, including but not limited to hotels, resorts,timeshares, serviced apartments and restaurants. £ In August 2006, IHC raised US $103 million in an IPO and privateplacement and is listed on the AIM, a market operated by London StockExchange plc, under the ticker IHC. The Company was sponsored andadvised by Hayground Cove Asset Management LLC, a New York-basedinvestment management firm with approximately US $2.8 billion in grossassets under management. Jason Ader, IHC's Chief Executive Officer andChairman of the Board, is the Chief Executive Officer of HaygroundCove Asset Management. Mr. Ader has a strong background in the leisureand hospitality industries. Prior to founding Hayground Cove, he was asenior Managing Director at Bear Stearns & Co., Inc., supervisingcoverage of the lodging and hospitality industry and was a top rankedanalyst by Institutional Investor Magazine's All-American ResearchTeam for nine consecutive years. £ Banyan Tree Capital is IHC's exclusive financial advisor inconnection with the transaction. Proskauer Rose LLP, led by JeffreyHorwitz, is overall transaction counsel for IHC. Cautionary Note Regarding Forward Looking Statements £ Some of the information contained in this announcement constitutesforward-looking statements. You can generally identify theseforward-looking statements by their use of words such as "may,""expects," "anticipates," "contemplates," "believes," "estimates,""intends," "plans," "will," "potential," "should," and "continue" or,in each case, their negative or other variations or comparableterminology. Such statements include any statements that are notstatements of current or historical facts. These forward-lookingstatements are based on the current expectations of IHC's management,but actual results may differ materially due to various factors. £ By their nature, forward-looking statements involve risks anduncertainties because they relate to events and depend oncircumstances that may or may not occur in the future. IHC cautionsyou that forward-looking statements are not guarantees of futureperformance and that IHC's actual results of operations, financialcondition and liquidity, and developments in the industry in which IHCoperates may differ materially from those made in or suggested by theforward-looking statements contained in this announcement. Inaddition, even if IHC's results of operations, financial condition andliquidity, and developments in the industries in which IHC operatesare consistent with the forward-looking statements contained in thisannouncement, those results or developments may not be indicative ofresults or developments in subsequent periods. £ These forward-looking statements are subject to numerous risks,uncertainties and assumptions about IHC, Mars and SkyGourmet. You arecautioned not to place undue reliance on these forward-lookingstatements, which speak only as of the date of this announcement, andmight not occur in light of these risks, uncertainties andassumptions. All forward-looking statements included hereinattributable to IHC or any person acting on IHC's behalf (includingstatements about Mars and SkyGourmet) are expressly qualified in theirentirety by the cautionary statements contained or referred to in thissection. Except as required by applicable law, IHC undertakes noobligation and disclaims any obligation to publicly update or reviseany forward-looking statements, whether as a result of newinformation, future events or otherwise, unless otherwise required todo so by the AIM Rules for Companies. £ Deutsche Bank AG is authorised under German Banking Law (competentauthority: BaFin - Federal Financial Supervising Authority) and withrespect to UK commodity derivatives business by the Financial ServicesAuthority; regulated by the Financial Services Authority for theconduct of UK business. Deutsche Bank is acting exclusively for IHC.and no-one else in connection with the acquisition and relatedtransactions and other matters referred to in this announcement andwill not be responsible to anyone other than IHC. for providing theprotections afforded to clients of Deutsche Bank AG nor for providingadvice in relation to the acquisitions and related transactions or anymatter referred to in this announcement. £ Deutsche Bank is IHC's nominated adviser and broker for thepurposes of the AIM Rules for Companies. Its responsibilities as IHC'snominated adviser and broker under the AIM Rules for NominatedAdvisers are owed solely to London Stock Exchange plc and not to IHC,any director of IHC or any other person. £ No offer or invitation to purchase or subscribe for ordinaryshares in or warrants to purchase or subscribe for ordinary shares orwarrants of IHC is being made by this announcement. Copyright Business Wire 2007