Oceanwood to Strengthen its Position in NH Following €280M Capital Increase

8 May 2018 – Expansión

The British investment fund Oceanwood is going to strengthen its position in the hotel chain NH Hotel Group, of which it is currently the second largest shareholder with a 12% stake, following the capital increase that the company is expected to carry out in the near future.

The hotel chain is going to increase its share capital to finance a convertible bond issue undertaken in 2013, which is due to expire at the end of this year, but which may be exchanged for shares before the end of that period, in accordance with the conditions of the issue.

NH will handover 50.8 million shares to the bondholders, equivalent to 14.5% of the existing share capital. The company already has 7.5 million own shares, and so the capital increase will involve the issue of 43 million new shares, which at current market prices represents a total sum of around €280 million. With this operation, NH will manage to reduce its debt with the issue of new shares and will thereby advance with its objective to improve its level of leverage.

Of NH’s major shareholders, Oceanwood was the only one to participate in the issue, subscribing almost 30% of the debt, which means that its stake will amount to 15.5%, whilst HNA, with 29.5% of the share capital and Grupo Hespería, in the hands of the businessman José Antonio Castro, with 9%, will see their stakes in NH diluted. The price of the conversion was set at €4.92 per share back in the day, whereas NH’s share price closed yesterday at €6.43, which implies a 30% appreciation over the conversion price.

Although the bond is not due to expire until November, the Board of Directors has the authority to force its conversion ahead of time given that one of the conditions included to that effect in the brochure has been fulfilled. Specifically, the conditions of the issue indicated that in the event that NH’s share price rises above €6.39 for more than 20 days during a 30 day period, then the company could force the conversion. That situation was achieved last week. The board met on Wednesday to present the company’s results.

Last October, NH announced that it had fully repaid and cancelled all of the senior debt obligations issued amounting to €250 million, with maturity in 2019 and whose principal pending payment amounted to €100 million.

The group’s gross debt amounted to €736 million at the end of last year and the bulk of that debt is due to mature in 2023.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

NH Early Redeems A Bond Issue To Reduce Its Debt By €100M

31 October 2017 – Expansión

The NH hotel chain has reduced its debt by €100 million after early redeeming the entirety of a debt obligation issue made in 2013. The issue, amounting to €250 million in total, was due to mature in 2019.

NH has explained that the redemption will be performed on 30 November and will be charged against available cash and, temporarily, through short-term credit lines. Following the operation, the company’s long-term gross financial debt will stand at around €740 million.

The hotel group has explained that this operation will allow it to achieve a net interest saving of around €9.6 million between 30 November (2017) and 1 November 2019, the obligations’ maturity date.

“The redemption and cancellation of the obligations represents a significant milestone in the company’s strategic plan, and seeks to reduce the gross amount and average cost of its indebtedness over the long-term, as well as to prolong its average life”, says NH.

Specifically, with this redemption and without considering the temporary use of short-term credit lines, the average cost of NH’s debt will reduce from 4.2% to 3.8%, whilst its average life will lengthen from 4.4 years to 4.7 years.

Moreover, as a consequence of this redemption, the syndicated credit line signed in 2016 for a limit of €250 million will continue to be available in its entirety, and its maturity is extended automatically until 2021.

In this way, NH is finalising the process to refinance its long-term debt and will hold onto a €250 million convertible bond, which is due to mature in November 2018, as medium-term debt.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Meliá Generates Profits Of €45M In H1 2016

2 August 2016 – Expansión

The hotel chain earned €45 million during the six months to June and reduced its net debt by €213 million.

The hotel chain Meliá, which will join the Ibex next week, replacing FCC, doubled its profits during the first half of the year, to €45 million. The company has highlighted that the 123% improvement in net profit has been generated even without the sale of any assets.

The company owned by the Escarrer family increased its average revenue per room (RevPAR) by 9.4% – or by 14.2% if we include the assets under management in its portfolio – and whereby recorded six years of consecutive quarterly increases.

The company closed the first half of the year with operating income of €856 million, 0.4% lower than in the same period in 2015. If we strip out the effect of gains from the sale of assets last year, operating income increased by 5.7%.

By geographic region, RevPAR in America was lower in H1 2016 than in H1 2015, which the company explains was due to the impact of the depreciation in the Canadian dollar, the economic deceleration in Brazil and Argentina, changes in reservations due to the Zika virus and the good temperature in the USA and Canada, the main issuing markets. By contrast, the company highlighted the strong performance of hotels in the Mediterranean and Caribbean, with a RevPAR increae of 30.9%.

In terms of the financial situation, Meliá decreased its net debt by €213 million during the first six months of the year, bringing it down to €556 million at the end of June, thanks primarily to the early conversion of a convertible bond issued in 2013.

The Vice-President and CEO of Meliá, Gabriel Escarrer Jaume, stated that the repositioning of its hotels, investment in assets and strategic markets, as well as financial strengthening have allowed the group to return to the Ibex thirteen years later.

The company is “optimistic” about the performance of its hotel complexes during the third quarter and its urban hotels during the second half of the year. In the same way, it forecasts a favourable “albeit unequal” performance across its “European hotels”, influenced by the world environment, especially France, in the face of the heightened terrorist threat. In terms of America, the firm expects a boost with the opening of several new hotels: Innside New York Nomad, ME Miami and Meliá Braco Village (Jamaica).

At a conference with analysts, the company made reference to Brexit explaining that it does not expect any impact in the short term, given that Britons have already booked their holidays for 2016, and some have even booked for next year.

Original story: Expansión

Translation: Carmel Drake