BBVA & Ortega Will Need To Reach An Agreement To Sell Occidental Hoteles

9 March 2015 – Expansión

BBVA is the primary shareholder in Occidental. Through a number of investment companies, the bank controls 57.53% of the chain.

Amancio Ortega, the owner of Inditex, holds a 23.62% stake through his investment company Partler 2006. The other shareholders together control less than 20%.

The shareholders of Occidental Hoteles return to the market in search of a buyer, after the transaction with Barceló failed in December. Disagreements over price will be key to the divestment. (…). The investor duo, which together own more than 81% of the company, are again looking for a replacement. (…).

Plan

In 2007, the partners acquired Occidental from Mercapital and La Caixa for €700 million, including a debt of €229.5 million. The owners planned to invest €340 million to grow the chain and convert it into a world leader in the leisure segment, but that was suspended due to the economic crisis.

Over time, Occidental became a non-strategic investment and after restructuring the business and refinancing its debt in 2013, BBVA and Ortega launched a process to sell their stakes at the beginning of last year. (…)

According to sector sources, BBVA and Ortega were trying to sell at a price in line with what they paid eight years ago, however the offers they received included discounts of between 40% and 50%, given the investment required in Occidental’s hotels. At the last minute, an agreement with Barceló and CPG fell through; according to terms of the alliance between the two parties, the fund was going to assume the financial outlay and Barceló was going to take over the management of the hotels.

Given the situation, the shareholders of Occidental decided to suspend the process, although they are now resuming their search for candidates. And that is where the discrepancies arise over how to execute the divestment.

Ortega, who put an end to his adventure with the NH Hotel Group a year ago, is keen to accelerate his exit from Occidental, whose value may well decrease over the medium term, since there is no plan in place to allow it to keep growing. Meanwhile, BBVA is more reluctant and has put a (price) limit below which it is not willing to divest. Both investors have signed an agreement, which means that they will study any offers they receive.

The problem is that sooner or later, they will have to reach a consensus, since an agreement exists between the shareholders that links the approval of agreements in meetings to a favourable vote of at least 51% of the voting rights of Occidental.

Moreover, on an exceptional basis, for matters such as the appointment of the chairman, a minimum quorum of 66% is required. (…)

The hotel chain has now started to modernise its portfolio, which includes 13 hotels, most of which it owns. In recent years, Occidental has significantly reduced its portfolio – when BBVA and Ortega acquired their stakes, the group had 80 hotels and 18,500 rooms.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

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