Inspiration Hlt Regulatory News (IHC)

19 Jun 2007 07:30

India Hospitality Corp.19 June 2007 For Immediate Release 19 June 2007 India Hospitality Announces US $110 Million Deal to Form a Growing Diversified India-Based Hospitality Company Sellers Retain Option to Reinvest up to US $75 million in India Hospitality New York, NY. - June 19, 2007 - India Hospitality Corp. (LSE: IHC, IHC or IndiaHospitality), today announced its intention to acquire India-based MarsRestaurants Private Limited (MRPL or Mars), an emerging hotel and restaurantcompany, and SkyGourmet Catering Private Limited (SCPL or SkyGourmet), anairline catering company operating out of four locations in India, forapproximately US $110 million to create a diversified hospitality companyservicing the rapidly growing Indian travel and leisure marketplace fromaffiliates of Navis Capital Partners, a private equity firm with offices inKuala Lumpur, Hong Kong, and Bangkok, and certain private shareholders. Under the terms of the acquisition agreement, the sellers of MRPL and SCPL willreceive approximately US $110.0 million of which approximately US $91.6 millionwill be payable in cash with the remainder in IHC ordinary shares on completionof the transaction. Additional consideration may become payable if thebusinesses achieve certain performance targets. Upon completion of the transaction, current India Hospitality shareholders willown approximately 88.9% of IHC and insiders, including Hayground Cove AssetManagement and Navis Capital Partners, will hold approximately 51.1%. Affiliatesof Navis Capital Partners and Mr. Sanjay Narang, the founder of both SkyGourmetand Mars, will continue to play an active role in the management of the combinedbusinesses going forward. Navis is retaining an option to reinvest a substantial portion of the saleproceeds into IHC. Navis and its affiliates will be granted an option tosubscribe in aggregate for up to US $75.0 million in cash for new IHC ordinaryshares, which, if exercised in full, would result in its ownership interest inIHC increasing to approximately 20.7% on a fully diluted basis. Under the proposed transaction IHC has also agreed, subject to certainconditions, to purchase from Navis and its affiliates, Nirula's, a rapidlygrowing quick service restaurant chain with strong brand recognition throughoutIndia and an additional hotel, which could provide a future re-brandingopportunity for the Gordon House brand. Sanjay Narang, President of Mars, commented: "With a broad and experiencedmanagement team already in place, we view this merger with India Hospitality asa unique platform to leverage our core competencies and operating experience.IHC's vision and the support of its board will allow us to grow the business andbecome a leader in the Indian lodging, leisure and travel industry. With theeconomic growth India is currently experiencing combined with a growing middleclass, we believe we are on the cusp of a strong growth cycle and are excited tobe partnering with IHC." Jason Ader, Chairman and CEO of India Hospitality added: "We have long felt thatIndia holds great potential for growth in the lodging, leisure, travel andsupport industries in which Mars and SkyGourmet operate. The rising purchasingpower of the Indian consumer combined with the rapid emergence of low-costairline carriers is expected to drive strong airline passenger growth. Thisgrowth is driving major infrastructure investments in airports which will createsubstantial expansion opportunities for hotels, restaurants and airline cateringservices. Further infrastructure investment in shopping malls and office parkscreates additional opportunities to leverage these restaurant brands in foodcourts. I'm confident that combining the long-established and successfuloperating history of these businesses with the stronger capital structureprovided by this transaction will position IHC to better capitalize on thesegrowth propects." Mars operates two Gordon House Hotels, a modern four-star hotel chain cateringto both the Indian business and high-end leisure traveler markets. For the lastseveral years domestic tourism has continued to rise at double digit rates. Withdemand for hotel rooms expected to outpace industry supply growth, the GordonHouse chain is poised to participate in this expected demand for hotel roomsover the long-term. Mars also has a diversified portfolio of restaurants, witheight primary brands covering a wide range of segments, including family, casualand over-the-counter dining. Several of the popular brands include "Not JustJazz By The Bay", "Tendulkar's", "All Stir Fry" and "Just Around The Corner". SkyGourmet is an airline catering company in India currently operating from fourlocations with plans to expand to up to 12 by 2009. With the airline industryexpected to expand from 47 million passengers in 2006 to over 100 million in2010, SkyGourmet is well-positioned to participate in this travel boom withplans to increase 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 create successful brandsacross several market segments," said Richard Foyston, founding partner andManaging Director of Navis. "SkyGourmet is a unique company able to deliver ahigh quality, high volume product within a demanding and time-sensitiveenvironment. We expect the combination of these businesses will provide forsignificant synergies 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 complete lodging anddining experience to the growing business and tourist traveler." The transaction is expected to be fully funded with available cash and theissuance of new ordinary shares of IHC. Upon completion of the transaction, IHCwill retain its name, and expects to have approximately 24.4 million ordinaryshares in issue. On a fully diluted basis, IHC expects to have approximately58.7 million shares in issue. Cash on hand of the enlarged group immediatelyfollowing the closing of the transaction is expected to be approximately US$10.2 million with total debt on the books as of May 31, 2007, of approximatelyUS $24.2 million. In a demonstration of its support of IHC and the acquisition, Hayground CoveAsset Management (through the funds and accounts it manages) has agreed topurchase from IHC up to the number of ordinary shares for which repurchaserights are exercised at the same price per share for which they are required tobe repurchased by IHC. As the acquisition will constitute a Qualifying BusinessCombination under the terms of IHC's initial public offering in July 2006, IHCordinary shareholders voting against the acquisition will have certain rights torequire IHC to repurchase their ordinary shares. Further details as torepurchase rights and Hayground's commitment will be contained in the AdmissionDocument to be sent to IHC's shareholders. The acquisition of Mars and SkyGourmet is classed as a reverse acquisition underthe AIM Rules for Companies and requires the approval of IHC's shareholders. Aproxy statement and admission document for the purposes of the AIM Rules forCompanies (Admission Document) containing further information on the acquisitionand related transactions and a notice convening an Extraordinary General Meetingof the shareholders of IHC to approve the acquisition and certain relatedmatters is expected to be published and sent to shareholders shortly. Pendingthe publication of the Admission Document, trading in IHC's ordinary shares andwarrants on the Alternative Investment Market of London Stock Exchange plc (AIM)will be suspended in accordance with the AIM Rules for Companies. The Extraordinary General Meeting of the shareholders of IHC to approve theacquisition of MRPL, SCPL, and certain related transactions is expected to beheld in mid-July 2007 and IHC expects the acquisition to close and the shares ofIndia Hospitality to be re-admitted to trading on AIM on the business dayfollowing the Extraordinary General Meeting. About Mars Mars was incorporated in 2000 by Mr. Sanjay Narang and his management team withthe objective of operating and managing restaurants. Since its incorporation,Mars has diversified into bakery outlets and operating and managing food courtsand hotels. For the nine months ending December 31, 2006, MRPL had auditedrevenues of approximately US $7.2 million. The MRPL group currently employs over550 people. About SkyGourmet SkyGourmet was incorporated in 2002 and is headquartered in Mumbai. SkyGourmetcurrently provides inflight catering services to a number of domestic andinternational airlines, including Jet Airways, Kingfisher Airlines, Air IndiaExpress, Indian Airlines, Malaysian Airlines and Air France. It has operationsin Mumbai, Bangalore, New Delhi and Pune. For the nine months ending December31, 2006, SCPL had audited revenues of approximately US $11.7 million.SkyGourmet currently has over 1,150 employees. About India Hospitality Corp. IHC is a blank-check company created to initially acquire Indian businesses orassets in the hospitality, leisure, tourism, travel and related industries,including but not limited to hotels, resorts, timeshares, serviced apartmentsand restaurants. In August 2006, IHC raised US $103 million in an IPO and private placement andis listed on the AIM, a market operated by London Stock Exchange plc, under theticker IHC. The Company was sponsored and advised by Hayground Cove AssetManagement LLC, a New York-based investment management firm with approximatelyUS $2.8 billion in gross assets under management. Jason Ader, IHC's ChiefExecutive Officer and Chairman of the Board, is the Chief Executive Officer ofHayground Cove Asset Management. Mr. Ader has a strong background in the leisureand hospitality industries. Prior to founding Hayground Cove, he was a seniorManaging Director at Bear Stearns & Co., Inc., supervising coverage of thelodging and hospitality industry and was a top ranked analyst by InstitutionalInvestor Magazine's All-American Research Team for nine consecutive years. Banyan Tree Capital is IHC's exclusive financial advisor in connection with thetransaction. Proskauer Rose LLP, led by Jeffrey Horwitz, is overall transactioncounsel for IHC. For Further Information Contact:Investor Relations Contact: ICR Inc.William Schmitt203-682-8200 Media Contact: Buchanan CommunicationsRichard Darby, Isabel Podda+44 207 466 5000 Nominated Adviser and Broker: Deutsche BankMumtaz Naseem+44 20 7545 8000 Cautionary Note Regarding Forward Looking Statements Some of the information contained in this announcement constitutesforward-looking statements. You can generally identify these forward-lookingstatements 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 othervariations or comparable terminology. Such statements include any statementsthat are not statements of current or historical facts. These forward-lookingstatements are based on the current expectations of IHC's management, but actualresults may differ materially due to various factors. By their nature, forward-looking statements involve risks and uncertaintiesbecause they relate to events and depend on circumstances that may or may notoccur in the future. IHC cautions you that forward-looking statements are notguarantees of future performance and that IHC's actual results of operations,financial condition 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. In addition, even ifIHC's results of operations, financial condition and liquidity, and developmentsin the industries in which IHC operates are consistent with the forward-lookingstatements contained in this announcement, those results or developments may notbe indicative of results or developments in subsequent periods. These forward-looking statements are subject to numerous risks, uncertaintiesand assumptions about IHC, Mars and SkyGourmet. You are cautioned not to placeundue reliance on these forward-looking statements, which speak only as of thedate of this announcement, and might not occur in light of these risks,uncertainties and assumptions. All forward-looking statements included hereinattributable to IHC or any person acting on IHC's behalf (including statementsabout Mars and SkyGourmet) are expressly qualified in their entirety by thecautionary statements contained or referred to in this section. Except asrequired by applicable law, IHC undertakes no obligation and disclaims anyobligation to publicly update or revise any forward-looking statements, whetheras a result of new information, future events or otherwise, unless otherwiserequired to do so by the AIM Rules for Companies. Deutsche Bank AG is authorised under German Banking Law (competent authority:BaFin - Federal Financial Supervising Authority) and with respect to UKcommodity derivatives business by the Financial Services Authority; regulated bythe Financial Services Authority for the conduct of UK business. Deutsche Bankis acting exclusively for IHC. and no-one else in connection with theacquisition and related transactions and other matters referred to in thisannouncement and will not be responsible to anyone other than IHC. for providingthe protections afforded to clients of Deutsche Bank AG nor for providing advicein relation to the acquisitions and related transactions or any matter referredto in this announcement. Deutsche Bank is IHC's nominated adviser and broker for the purposes of the AIMRules for Companies. Its responsibilities as IHC's nominated adviser and brokerunder the AIM Rules for Nominated Advisers are owed solely to London StockExchange plc and not to IHC, any director of IHC or any other person. No offer or invitation to purchase or subscribe for ordinary shares in orwarrants to purchase or subscribe for ordinary shares or warrants of IHC isbeing made by this announcement. This information is provided by RNS The company news service from the London Stock Exchange