Transaction / Assets Seller Buyer € MM
Three Minority Shareholders Acquire Petit Palace Hotel Chain
19 September 2016 – Cinco Días
The Choice Hotels chain has had the doors to the Spanish hotel market closed in its face. The US group signed a pre-agreement with N+1 in July whereby the investment bank committed to sell its 52% stake in High Tech. Several minority shareholders then also joined the agreement, which is due to expire on 30 September.
However, three of the chain’s minority investors have opted to exercise their right of first refusal and acquire shares from other investors. In this way, on Friday, N+1 announced the sale of 26% of the company that it held through N+1 Dinamia Portfolio II, an operation that, excluding expenses, amounted to €9 million, given that it had valued its stake at €0.
Besides that stake, the investment bank also held another 26% stake in High Tech through several private equity funds, which it has also divested, according to sources familiar with the operation.
The three minority shareholders that now control High Tech are: Inversiones el Piles, an Asturian company that also owns 24.5% of Duro Felguera. It used to own 10% of the hotel chain, but now controls 54%. Alongside it is the company Edificio Miño, a private investment fund linked to one of the shareholders of Seguros Santa Lucía, which previously held 6.5% and now holds 11%; and General Oilex Company, the real estate group originally from Sweden, which has increased its stake from 5% to 35%.
These three investors, which have paid around €40 million for the 78.5% of the company that they did not control, have taken on all of its debt. They had been given the option to exercise their right to accompany the other investors in Choice’s offer or to exercise their right of first refusal; they opted for the latter.
The operation represents N+1’s exit from the hotel chain’s share capital, after it first became a shareholder in 2003. It also sees the departure of the founding executives of the company, which together held a 26.2% stake. On several occasions, some of the founders, such as Antonio Fernández and Javier Candela, expressed their interest in regaining control of High Tech, due to differences in terms of management and they tried to look for financial support from other investment funds. As such, over the last year, they have sounded out buyers including Hotusa.
High Tech operates 31 hotels in Spain, through the Petit Palace brand; it rents the majority and manages the rest. The chain has a strong presence in Madrid, where it manages 20 properties, as well as in Barcelona, Valencia, Sevilla, Bilbao and Málaga. In total, it has 1,966 rooms.
High Tech was launched 15 years ago by the team from Tryp, following the sale of that brand to the Escarrer family (Meliá). The founding team, which the other shareholders subsequently joined, created an urban brand, which suffered during the years of the crisis due to the high price of rentals and high financing costs. Sources in the market suggest that the new owners may be interested in valuing the company for its subsequent sale.
Original story: Cinco Días (by Laura Salces)
Translation: Carmel Drake