Royal Host Inc. (the "Company") (TSX:RYL) (TSX:RYL.DB.C)
(TSX:RYL.DB.B.) (TSX:RYL.DB.D) announced today that it has
rescheduled a meeting (the "Meeting") to seek the approval of
holders (the "Debentureholders") of its Series C, 6.25% convertible
unsecured subordinated debentures due September 30, 2013 (the
"Debentures"), with regard to certain amendments to the Debentures
(the "Debenture Amendments"). The Meeting will now be held on
November 29th, 2012 at 10:00 a.m. (Atlantic Standard Time) and more
favorable terms are being offered to Debenture Holders (the
"Revised Debenture Amendments").
The Debenture Amendments identified in the Management
Information Circular published on October 11, 2012 (the "Circular")
have been modified to present more favourable terms to
Debentureholders (the "Revised Debenture Amendments").
Specifically, the Revised Debenture Amendments provide:
a. AN INCREASE in the annual interest rate of the Debentures by 20.0% from
6.25% to 7.50%. When initially announced, the Company had proposed an
increase in the interest rate to 7.00%; and
b. A REDUCTION in the conversion price of the Debentures from $4.87 to
$3.50 for each Common Share underlying the Debentures ("Common Shares"),
resulting in a conversion rate of 285.714 Common Shares per $1,000
principal amount of the amended Debentures rather than 205.339 Common
Shares per $1,000 principal amount of the Debentures. When initially
announced, the Company had proposed a decrease in the conversion price
to $4.00.
Other than the increase in the offered interest rate and the
decrease in the offered conversion price described above, the
proposed amendments to the Debentures described in the Circular are
unamended.
Although the required quorum has been achieved for the Meeting
and of the proxies voted, over 60% have been voted in favour of the
Debenture Amendments, the Meeting has been rescheduled to allow
Debentureholders sufficient time to vote on the proposed amendments
and to allow Debentureholders additional time to consider the
improved terms of the Revised Debenture Amendments.
Recommendation of the Board of Directors
For the reasons described in the Circular, the Board of
Directors of the Company (the "Board") UNANIMOUSLY RECOMMENDS that
Debentureholders vote FOR the Revised Debenture Amendments.
Benefits to Shareholders and Debentureholders
The Board believes that the Revised Debenture Amendments provide
a number of benefits to the Company and its security holders,
including the Debentureholders. The principal benefit to the
Company is the five year extension of its only significant
near-term debt. The benefits of the proposed amendments to
Debentureholders include:
-- A 1.25 percentage point (or 20.0%) increase in the interest rate to
7.50% which represents an attractive yield especially in the current low
interest rate environment.
-- An increase in the value of the conversion option imbedded in the
Debentures by virtue of a reduction in the conversion price from $4.87
to $3.50. This has the effect of increasing the number of shares
underlying each $1,000 principal amount of Debentures by approximately
39.1% from 205.399 to 285.714; and
-- A consent fee of 0.50% (or $5 per $1,000 principal amount of Debentures)
to Debentureholders that vote in favour of the proposed amendments
payable on passage of the resolution. This has the effect of increasing
the yield to consenting Debentureholders. Debentureholders who do not
vote in favour of the Revised Debenture Amendments will not be eligible
to receive a consent fee.
These Debenture Amendments and incentives 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" section in
the Circular, which is available under the Company's profile on
SEDAR (www.sedar.com) and which was previously mailed to
Debentureholders.
Voting Instructions
Debentureholders may vote by internet, by telephone or by
contacting their brokers or investment advisors on or before 10:00
am (Atlantic Standard Time) on November 27, 2012. Debentureholders
who have already voted in favour of the Debenture Amendments and
wish to continue to vote in favour of the Revised Debenture
Amendments need to take no action. Debentureholders who have
already voted against the Debenture Amendments and wish to continue
to vote against the Revised Debenture Amendments need to take no
action. Debentureholders who have already voted and who wish to
change the way they have voted in light of the increased interest
rate and decreased conversion rate should contact their broker with
revised voting instructions and submit a new proxy form containing
these revised instructions. Debentureholders who have not already
voted can vote in accordance with the instructions in the
Circular.
The Meeting is rescheduled to be held at 10:00 a.m. (Atlantic
Standard Time) on November 29, 2012 at the offices of the Company,
at 1809 Barrington Street, Suite 1108, Halifax, Nova Scotia, B3J
3K8. The Revised Debenture Amendments, if passed by an
extraordinary resolution of the holders of at least 66 2/3% of the
principal amount of the Debentures present by person or by proxy at
the Meeting in accordance with the provisions of the Indenture,
will be binding upon all Debentureholders. The quorum for the
Meeting is the presence in person or by proxy of Debentureholders
representing 25% of the principal amount of Debentures outstanding
at the record date, which was set by the Board of Directors of the
Company as the close of business on October 15, 2012. As of the
close of business on November 13, 2012 there are $45,166,000
Debentures outstanding.
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
indented, planned, anticipate, believed, estimated or expected in
this news release. Such factors and assumptions include, but are
not limited to, general economic conditions, levels of travel in
the Company's key market areas, political conditions and events,
competitive pressures, changes in government policy or regulations,
and lodging industry conditions. The Company does not undertaken
any 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
2,957 rooms, are located in five Provinces and Territories across
Canada. Twenty of the Company's hotels operate under
internationally recognized brands such as Travelodge ®, Super 8 ®,
Holiday Inn ®, Hilton ®, Ramada ® and Country Inns and Suites ®.
Three of the Company's hotels are independently branded. 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.
Contacts: Royal Host Inc. Michael McFeters Chief Financial
Officer 902-470-4500