9th Dec 2005 15:37
Hotel Corp (The) PLC09 December 2005 For Immediate Release 9 December 2005 The Hotel Corporation plc Acquisition by DSH of three signature hotels for £41 million The Hotel Corporation, the AIM quoted investment company established as avehicle for public company investors to invest in Dawnay Shore Hotels plc ("DSH"), is pleased to announce a further acquisition by DSH of three signaturehotels in line with its stated intention of making complementary acquisitions inthe sector. Highlights • DSH has acquired three signature freehold hotels, with anexisting total of 182 rooms, substantial conference and luxury spa facilitiesand significant scope for adding rooms, for a total of £41m • Acquired from Furlong Hotels the consideration is £36m incash and £5m in loan notes due in 3 years time • The hotels are highly complementary to DSH's existing fourand five star heritage style Paramount chain and will give the group over 2,500bedrooms. The 3 hotels are: - The Lygon Arms in the picturesque Cotswold village of Broadway, formerly part of the Savoy group. This 16th Century inn was recently voted Best Country House Hotel by Sunday Times Traveller Magazine. - Billesley Manor near Stratford-upon-Avon, which is also a 16th century property, set in 11 acres of parkland - Combe Grove Manor near Bath set in 69 acres of woodland • DSH intends to create a signature group within theParamount chain, consisting of these three hotels and 5 other Paramountsincluding the Imperial Hotel, Torquay • £1.5m in refurbishment will be invested across the 3hotels and there is also an immediate opportunity to extend the hotels by addingextra rooms • Opportunity to improve overall operating performance andbenefit from purchasing synergies and use of Paramount central reservationsystem Howard Shore of Dawnay Shore Hotels, said: "We are delighted to have acquired three further internationally regarded hotelswhich are highly complementary to our existing hotel portfolio. We see greatpotential to enhance these properties, including adding extra rooms. We alsobelieve that the acquisition can enhance the image and drawing power of some ofour other premium properties by creating a signature group within the chain." Barclay Douglas, chairman of The Hotel Corporation, said: "We are pleased with this transaction which looks to be an excellent acquisitionfor the group. It is also encouraging to see that DSH has been able to fundthis purchase through bank borrowing yet still maintain a bank loan to valueratio which is lower than when it made its first acquisition. Financing theacquisition through bank borrowings maximises the potential shareholder returns." Press Enquiries: Dawnay Shore HotelsHoward Shore 020 7468 7911 The Hotel Corporation plcBarclay Douglas 01256 889895 Citigate Dewe RogersonMargaret George 020 7638 9571 Notes to Editors The Hotel Corporation plc 1. The Hotel Corporation is an AIM listed company which was established asa means for investors in publicly quoted companies to gain an interest in DawnayShore Hotels plc. It is currently a 49.9% shareholder in DSH. The HotelCorporation is an Isle of Man company, with its principal place of business andregistered office in Douglas, Isle of Man. 2. Paramount Group of Hotels was established in 1994 and was acquired byDawnay Shore Hotels Plc in July 2004. Following further acquisitions it nowowns and operates 20 four and five-star hotels across Scotland, NorthernEngland, Central England, Southern England and Wales, including the prestigiousCarlton Hotel in Edinburgh, The Marine in Troon, The Majestic in Harrogate, TheImperial in Torquay, The Imperial in Blackpool and the Oxford Hotel in Oxford.These all trade under the Paramount brand of distinction. 3. The hotels offer extensive banqueting, conference and leisurefacilities and many of them have architectural and historical significance. TheGroup has over 2500 bedrooms and over 150 conference and meeting rooms andoffers extensive facilities to both corporate and leisure guests. Acquisition of three signature hotels for £41 million The Directors of DSH are pleased to announce that it has acquired Furlong HotelsLimited, holding company of three famous country house hotels, for an aggregateconsideration of £41 million. The consideration is £36 million in cash,together with loan notes to the value of £5m due in three years' time. The three properties are The Lygon Arms at Broadway in the Cotswolds, BillesleyManor near Stratford-upon-Avon and Combe Grove Manor near Bath - for £41million. The purchase will add another 182 bedrooms to Paramount's portfolioand additional conference and meeting facilities. The three classic country house hotels fit perfectly into the Paramount Group offour and five star properties around the UK and will enhance the company'sgeographical coverage. There will be an immediate investment of £1.5 million inrefurbishment across the three properties. The property division of DawnayShore has identified opportunities to extend these hotels by adding additionalrooms and other facilities. Each property is set in extensive grounds. While these hotels will be operated as a fully integrated part of the ParamountGroup, each will retain its individual identity and the brand values associatedwith these prestigious properties. They will effectively form a separatecollection of top quality properties within the Paramount portfolio. The Lygon Arms is a legendary 16th Century inn, recently voted Best CountryHouse Hotel by Sunday Times Traveller Magazine. It has 69 bedrooms andconference capacity of 80. Billesley Manor is also a 16th century property, set in 11 acres of parklandwith 71 bedrooms and conferencing for 100, while Combe Grove Manor near Bath isset in 69 acres of woodland and has 42 bedrooms and conference facilities for80. All three have luxury spa facilities in-keeping with Paramount's otherhotels. The acquisition is being financed by an additional banking facility from AngloIrish Bank which will cover the costs of acquisition and provide funding for the£1.5m refurbishment programme mentioned above. The increased value of theportfolio indicated by the revaluation as at 30 June 2005 has meant that it ispossible to finance this acquisition entirely from bank borrowings whilstmaintaining prudent ratios. Taking account of the external valuation of thethree new properties prepared for this transaction, the ratio of bank borrowingsto the value of property assets remains about 75 per cent, which compares to the80 per cent ratio used to fund the original purchase of Paramount. The profiles of the three hotels are as follows: Hotel The Combe Grove Total Billesley Manor Lygon Manor Arms Site area (acres) 5.4 11.5 76 92.9 No of rooms 71 69 42 182 No of suites 2 11 3 16 Meeting rooms 9 5 5 19 Restaurants 1 3 2 6 Lounges 1 6 1 8 Health club Yes Yes Yes Swimming pool Yes Yes Yes Car parking spaces 60 120 80 Tennis Courts Yes Yes Yes Gardens Themed Formal Formal Other Spa Bistro Croquet Lawn Children's Nursery, Golf (5 Hole) & Driving Range Tenure Freehold Freehold Freehold The Board of DSH believes that, as part of the enlarged DSH hotel portfolio, itshould be possible to improve the operating performance of these hotelssignificantly: • at present their operating performance is significantlybelow other hotels in the Paramount Group, despite their facilities and locationbeing advantageous; • benefits are expected by the Directors from being able tomarket these hotels in a larger complementary chain and believe that certainlarge companies prefer to establish long term conference arrangements withgroups which can offer a wide variety of locations • the image and reputation of these properties can be usedto enhance the branding of other signature properties within Paramount. DSHintends to create a signature group including these three hotels, ImperialHotel, Torquay, Redworth Hall, Shrigley Hall, the Marine Hotel Troon and theCheltenham Park Hotel. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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