HALIFAX, NOVA SCOTIA -- (Marketwired) -- 05/13/13 -- Royal Host Inc. (the "Company") (TSX: RYL) (TSX: RYL.DB.D) (TSX: RYL.DB.C) (TSX: RYL.DB.B) announced today that it will seek the approval of holders of its Series D, 5.9% convertible unsecured subordinated debentures due June 30, 2014 (the "Series D Debentures") and holders of its Series B, 6.0% convertible unsecured subordinated debentures due October 31, 2015 (the "Series B Debentures"), with regard to certain amendments to the debentures at respective serial meetings of the debenture holders (the "debentureholders") to be held on June 17, 2013 (the "Meetings").
The proposed amendments to the Series D Debentures include:
a. EXTENDING the maturity date for the Debentures from June 30, 2014 to June 30, 2019;b. INCREASING the annual interest rate of the Debentures by 0.35% from 5.90% to 6.25%; andc. REDUCING the conversion price of the Debentures from $6.19 to $3.50 for each Common Share in the Company ("Common Shares"), resulting in a conversion rate of 285.7 Common Shares per $1,000 principal amount of the amended Debentures rather than 161.6 Common Shares per $1,000 principal amount of the Debentures.
The proposed amendments to the Series B Debentures include:
a. EXTENDING the maturity date for the Debentures from October 31, 2015 to October 31, 2020;b. INCREASING the annual interest rate of the Debentures by 0.25% from 6.0% to 6.25%; andc. REDUCING the conversion price of the Debentures from $4.76 to $3.50 for each Common Share in the Company ("Common Shares"), resulting in a conversion rate of 285.7 Common Shares per $1,000 principal amount of the amended Debentures rather than 210.1 Common Shares per $1,000 principal amount of the Debentures.
The principal purpose of the debenture amendments is for the Company to maintain flexibility in pursuing its business plan with the goal of creating value for all security holders.
The Company believes the debenture amendments are advantageous to debentureholders and recommends that debentureholders vote in favour of the debenture amendments for the following reasons:
-- Eliminates the refinancing risk associated with the debentures and the possibility that the Company exercises its right to repay the debentures by issuing shares to the debentureholders in lieu of paying cash at the maturity dates.-- An increase in the interest rate to 6.25% which represents an attractive yield especially given the historic low interest rate environment.-- An increase in the value of the conversion option embedded in the debentures by virtue of a reduction in the conversion price to $3.50. This has the effect of increasing the number of shares underlying each $1,000 principal amount of Debentures.
The amendments to the Series D Debentures and Series B Debentures will only be effective if the resolution is passed in accordance with the requirements described below.
For further particulars of such benefits see "Benefits of the Debenture Amendments and Recommendation of the Board" in the respective management information circulars of the Company dated May 10, 2013, which are available under the Company's profile on SEDAR at www.sedar.com and which will be mailed to debentureholders in the coming days.
The Toronto Stock Exchange (the "TSX") has not yet conditionally approved the listing of the amended debentures, subject to the Company fulfilling all of the listing requirements of the TSX. Subject to regulatory approval, the amended debentures will trade on the TSX under the respective symbols "RYL.DB.D" and "RYL.DB.B".
Debentureholders may vote by internet, by telephone or by contacting their brokers or investment advisors on or before 10:00 am (Atlantic Daylight Time) on June 13, 2013 for the Series D Debentures and on or before 10:30 am (Atlantic Daylight Time) on June 13, 2013 for the Series B Debentures. Detailed voting instructions are set out in the respective circular.
The meeting of the Series D Debentureholders is scheduled to be held at 10:00 a.m. (Atlantic Daylight Time) on June 17, 2013 at the offices of the Company, at 1809 Barrington Street, Suite 1108, Halifax, Nova Scotia, B3J 3K8. The meeting of the Series B Debentureholders is scheduled to be held at 10:30 a.m. (Atlantic Daylight Time) on June 17, 2013 at the offices of the Company, at 1809 Barrington Street, Suite 1108, Halifax, Nova Scotia, B3J 3K8. The debenture amendments in respect of a particular series of debentures, if passed by an extraordinary resolution of the holders of at least 66 2/3% of the principal amount of such series of debentures present in person or by proxy at the meeting, and entitled to vote in respect of the amendments, in accordance with the provisions of the Indenture, will be binding upon all debentureholders of each such series. The quorum for each meeting is the presence in person or by proxy of Debentureholders representing 25% of the principal amount of debentures in the respective series outstanding at the record date, which has been set by the Board of Directors of the Company as the close of business on May 13, 2013. As of the close of business on May 10, 2013 there are $30,905,000 Series D Debentures outstanding and $24,386,000 Series B Debentures outstanding.
The Company has not retained a solicitation agent.
Forward Looking Statements
This press release may contain certain forward-looking statements relating, but not limited to, the Company's operations, anticipated financial performance, business prospects, and strategies. Forward- looking information typically contains statements with words such as "anticipate", "does not anticipate", "believe", "estimate", "forecast", "intend", "expect", "does not expect", "could", "may", "would", "will", "should", "budgeted", "plan" or other similar terms and expressions suggesting future outcomes. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from further results expressed, projected or implied by such forward-looking statements. Readers are therefore cautioned that the Company's expectations, estimates and assumptions, although considered reasonable, may prove to be incorrect and readers should not place undue reliance on forward-looking statements.
Forward-looking statements contained herein are not guarantees of future performance and involve certain risks, uncertainties and other factors that are difficult to predict, and could result in the outcome of such events being materially different from those set out in this news release, including, in particular, the terms, timing and success of any debenture amendments and the refinancing or conversion risk associated with the maturity of the debentures. The Company has no intention and undertakes no obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances, unanticipated events or circumstances, or should its estimates or assumptions change, after the date hereof, except as expressly required by law.
About Royal Host Inc.
Royal Host Inc. is a diversified hospitality company that delivers shareholder value through hotel ownership, investments and franchising. The Company's hotels, which contain approximately 2,824 rooms, are located in five Provinces and Territories across Canada, many operate under internationally recognized brands such as Travelodge ®, Super 8 ®, Holiday Inn ®, Hilton ®, and Ramada ®. In addition to its real estate holdings, the Company owns and operates the Travelodge Canada franchise business which is currently comprised of over 90 hotels across nine Provinces and Territories.
The Company's common shares and convertible debentures are traded on the Toronto Stock Exchange under the trading symbols "RYL", "RYL.DB.B", "RYL.DB.C" and "RYL.DB.D" respectively.
This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.
Royal Host Inc.
Chief Financial Officer