Tag: majority shareholders

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’s Minority Shareholders Fear HNA Will Take Control

19 May 2015 – Expansión

Intesa’s exit from the share capital increases HNA and Hesperia’s control over NH – six of the hotel chain’s eleven directors are representives of the two largest stakeholders.

The funds and minority shareholders of the NH Hotel Group have expressed their concern following a decision by the Board of Directors not to appoint any more independent directors and therefore increase, albeit indirectly, the control exerted by the Chinese giant HNA and the Hesperia Investor Group – the two largest shareholders.

At the end of January, Intesa Sanpaolo put an end to its eight year investment in NH by selling its 7.6% stake. At the time, the Italian entity had just one director (Livio Giovanni Maria Torio) since its other representative (Rosalba Casiraghi) resigned in December 2014; her exit left NH without any female directors and granted HNA its fourth executive.

Following Intesa’s divestment, NH’s Board of Directors decreased from 13 to 11 members. And so it will remain for the time being. Last week, the management body approved the accounts for the first quarter. It also referred the appointment of Francisco Román and Ling Zhang (appointed by co-optation) and the re-election of José Antonio Castro and José María López-Elola (following the expiry of their mandates) for approval by the General Shareholders’ Meeting, which will be held in June. There was no mention of (the appointment of any) more independent directors, which has aroused concern amongst NH’s fund managers and minority shareholders, since the hotel chain’s corporate bylaws provide for a maximum of 20 directors and a minimum of five.

Over the last few years, funds such as THS, BlackRock, Fidelity and Invesco have all acquired shares in NH, although in most cases, their stakes, which fluctuate constantly, are currently trading at below 3%. Currently, four of the eleven directors represent HNA and Hesperia has two directors, even though it has reduced its stake by 8.56% to 9.09%.

Corporate governance

The counterweight are three independent directors, together with the CEO, Federico González and the Chairman, Rodrigo Echenique, who represents Santander and whose exit from NH is expected in the medium term. The concern of the minority shareholders is that, as well as violating corporate governance standards, HNA, which owns a 29.5% stake, will strengthen its hold over NH without launching a public takeover bid (OPA) for the company. If the CNMV establishes that NHA and Hesperia control NH between them, it may compel them to launch a takeover bid for 100% of the share capital.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake