St.James BeachHotels - Rec. Offer by Elegant Hotels
13 August 1997 - 10:18AM
UK Regulatory
RNS No 6589w
ST. JAMES BEACH HOTELS PLC
13th August 1997
RECOMMENDED CASH OFFER
BY CLOSE BROTHERS CORPORATE FINANCE LIMITED
ON BEHALF OF
ELEGANT HOTELS LIMITED
FOR
ST. JAMES BEACH HOTELS PLC
* Cash offer at 200p per ordinary share in St. James
Beach Hotels PLC ("St. James Beach") by Close
Brothers Corporate Finance Limited on behalf of
Elegant Hotels Limited. The offer values the entire
existing issued ordinary share capital of St. James
Beach at #46.4 million.
* In addition, ordinary shareholders in St. James
Beach are entitled to a final dividend of 4.0p (net)
or the scrip dividend alternative to be proposed at
today's Annual General Meeting of St. James Beach.
* Offer represents a premium of 5.3 per cent. over the
closing price of a St. James Beach ordinary share on
12 August 1997.
* Offer irrevocably accepted by West Indies Builders
(C.I.) Limited in respect of 58.7 per cent. of the
existing issued ordinary share capital of St. James
Beach.
* The St. James Beach board believes that the
management resource which Elegant Hotels will bring
to St. James Beach will enable the opportunities
available to St. James Beach to be exploited.
* The St. James Beach board will recommend
shareholders to accept the Offer.
Andrew Parker, Chairman and Chief Executive of Elegant
Hotels commented:
"I believe this is an exciting opportunity for the
creation of a diversified hotel group with greater
prominence in the Caribbean, and I look forward to the
future with confidence".
Ray Horney, Chairman and Chief Executive of St. James
Beach commented:
"Since the current management took control of St. James
Beach in 1989 the company has developed and expanded its
hotels and human resource and I feel the company is now
well placed for further expansion under the new
management team."
CONTACTS
Elegant Hotels Limited 001 246 428 7131
Andrew Parker
Close Brothers Corporate Finance 0171 426 4000
Limited
David Pusinelli
St. James Beach Hotels PLC 0973 141596
Ray Horney
UBS Limited 0171 901 3333
Philip Stephens
Simon Rothschild 0171 256 5756
Millham Communications
Close Brothers Corporate Finance Limited which is
regulated by The Securities and Futures Authority
Limited, is acting for Elegant Hotels Limited and no one
else in connection with the Offer and will not be
responsible to anyone other than Elegant Hotels Limited
for providing protections afforded to its customers nor
for providing advice in relation to the Offer.
UBS Limited, which is regulated by The Securities and
Futures Authority Limited, is acting for St. James Beach
Hotels PLC and no one else in connection with the Offer
and will not be responsible to anyone other than St.
James Beach Hotels PLC for providing the protections
afforded to its customers nor for providing advice in
relation to the Offer.
This document is not for release, publication or
distribution in or into the United States of America,
Canada or Ireland.
RECOMMENDED CASH OFFER BY ELEGANT HOTELS LIMITED
FOR ST. JAMES BEACH HOTELS PLC
INTRODUCTION
The boards of Elegant Hotels Limited ("Elegant") and St.
James Beach Hotels PLC ("St. James Beach") announce that
agreement has been reached on the terms of a recommended
cash offer ("the Offer") to be made by Close Brothers
Corporate Finance Limited ("Close Brothers") on behalf of
Elegant to acquire all of the issued and to be issued
ordinary shares of 25p each of St. James Beach ("St.
James Beach Shares"). The Offer values each St. James
Beach Share at 200p and the entire existing issued
ordinary share capital of St. James Beach at
approximately #46.4 million.
RECOMMENDATION
The board of St. James Beach (excluding Mr T Quinn for
the reason given below), which has been so advised by UBS
Limited ("UBS"), considers the Offer to be fair and
reasonable and will recommend the ordinary shareholders
of St. James Beach ("St. James Beach Shareholders") to
accept the Offer. In providing advice to the board of
St. James Beach, UBS has taken into account the board of
St. James Beach's commercial assessment.
Mr Quinn, a non-executive director of St. James Beach,
acts as adviser to Elegant Hotels (International) Limited
("EHI"), a hotel management company which Elegant has
agreed to acquire, conditional upon the Offer becoming
wholly unconditional, whereupon he will acquire shares in
Elegant. Accordingly, Mr Quinn has an interest in the
Offer and has therefore taken no part in the
consideration of the Offer.
IRREVOCABLE UNDERTAKINGS
Elegant has received an irrevocable undertaking to accept
the Offer from West Indies Builders (C.I.) Limited
("WIB"), a company which is controlled by a trust in
which Mr and Mrs R Horney, directors of St. James Beach,
are beneficially interested, in respect of its holding of
13,632,041 St. James Beach Shares representing 58.7 per
cent. of the existing issued ordinary share capital of
St. James Beach. This undertaking is also given in
respect of 321,661 St. James Beach Shares to be taken up
under the scrip dividend scheme for the year ended 31
March 1997. The irrevocable undertaking is binding even
in the event that a higher competing offer is made. Mr
Horney and WIB have given to Elegant certain warranties
relating to St. James Beach and its subsidiaries.
Mr R Pomphrett, a director of St. James Beach, has given
an irrevocable undertaking, which is binding even in the
event of a higher competing offer, to accept the Offer in
respect of his holding of 47,052 St. James Beach Shares
and the 1,110 shares he will receive under the scrip
dividend scheme referred to above. No other directors of
St. James Beach hold any St. James Beach Shares.
THE OFFER
The Offer, which will be subject to the condition set out
in Appendix I hereto and to that condition and the
further terms set out in the Offer Document, will be made
on the following basis:
for each St. James Beach 200p in cash.
Share
In addition, St. James Beach Shareholders will be
entitled to receive the final dividend of 4.0p (net) per
St. James Beach Share (or shares in lieu pursuant to St.
James Beach's scrip dividend scheme) in respect of the
year ended 31 March 1997 to be proposed at today's Annual
General Meeting of St. James Beach. Save as aforesaid,
the St. James Beach Shares will be acquired free from all
liens, charges, encumbrances and other interests and
together with all rights now or after the date hereof
attaching thereto, including the right to receive and
retain all dividends and other distributions declared,
paid or made after the date hereof.
No offer is being made for the non-voting preference
share capital of St. James Beach (the "Preference
Shares"). Elegant does not currently own any St. James
Beach Shares or Preference Shares.
FINANCIAL EFFECTS OF ACCEPTANCE
The Offer represents a premium of 5.3 per cent. over the
closing mid-market price of St. James Beach Shares as
derived from the London Stock Exchange Daily Official
List on 12 August 1997, the last business day prior to
the date of this announcement.
Further details on the financial effects of acceptance of
the Offer are set out in Appendix II.
BACKGROUND TO AND REASONS FOR THE OFFER
EHI was formed by Mr A Parker for the purpose of
operating the Tradewinds Hotel in Antigua. Subsequently,
Mr Parker decided to explore the possibility of building
and operating another hotel in Barbados and, in 1996, a
site for this purpose was duly acquired by EHI. Part of
the funding for the development of the site was provided
in the form of a US$5 million mezzanine loan facility
from CS Structured Credit Fund Ltd ("CSSCF").
Since its flotation in March 1994, St. James Beach's
management team has developed St. James Beach's portfolio
of four hotels on Barbados. Following discussions between
the managements of St. James Beach and EHI on the ways in
which the two groups might co-operate in the region
agreement has been reached to bring the two groups into
common ownership under a new holding company, Elegant.
The board of Elegant believes that the acquisition of St.
James Beach and its merging with the business of EHI
provide an attractive investment opportunity, creating a
hotel group of greater prominence in the region and one
able to benefit from economies of scale in areas such as
administration and marketing. Further, the application
of the management skills of Elegant is expected to
enhance the appeal of the St. James Beach hotels and
provide scope for increasing their occupancy levels.
The board of St. James Beach believes that the management
resource which Elegant will bring to St. James Beach will
enable the opportunities available to St. James Beach to
be exploited.
INFORMATION ON ELEGANT
Elegant is a Cayman Islands registered company recently
formed for the purpose of making the Offer and is
currently owned by CSSCF.
Conditional only upon the Offer becoming unconditional in
all respects, CSSCF has entered into an investment
agreement with Mr Parker and others whereby CSSCF will
subscribe for new shares in Elegant and has agreed to
provide a loan to Elegant in order to enable Elegant to
settle the purchase consideration due to St. James Beach
Shareholders under the Offer and meet the expenses of the
transaction.
Conditional also only upon the Offer becoming
unconditional in all respects, Elegant has entered into
an agreement with Mr Parker and others for the purchase
of the entire issued share capital of EHI for which they
will be receiving new shares in Elegant.
The Board of Elegant
The board of Elegant comprises:
Andrew Frederick Parker Chairman and Chief Executive
John Dennis Hunter Non-executive director
Karla Jocelyn Bodden Non-executive director
Equity interests in Elegant following successful
completion of the Offer
Assuming full acceptance of the Offer and the acquisition
of EHI, CSSCF will hold 100 per cent. of the A Ordinary
Shares in Elegant representing approximately 91 per cent.
of Elegant's ordinary share capital.
Assuming full acceptance of the Offer and the acquisition
of EHI, the B Ordinary Shares in Elegant, representing
approximately 9 per cent. of Elegant's ordinary share
capital, will be held by Mr Parker, Mr Young, Mr Quinn
and Staunch Finance Limited, with Mr Parker's holding
amounting to approximately 6 per cent.
Mr Young is a senior member of the management team of
EHI. Information on Staunch Finance Limited is given
below.
Information on CSSCF
CSSCF is an unregulated collective investment scheme. It
was established in 1996 as a Cayman Islands limited
liability company with an initial institutional
subscription of $200 million and commenced trading on 5
November 1996. It has a fixed term ending on 31 October
2006 (subject to certain early termination provisions and
the right to extend such term) upon which date it will be
terminated. The objective of CSSCF is to invest in a
broad range of securities, derivatives and other assets
in an attempt to achieve substantial returns relative to
the risk it assumes. The audited net assets of CSSCF at
30 April 1997 were $207.5 million.
CSSCF's investment activities and administrative affairs
have been delegated to an investment management company
based in Guernsey, Channel Islands, which has in turn
engaged Cabot Square Capital Ltd (the "Investment
Adviser") on an exclusive basis to provide investment
advice to it with respect to day-to-day investment
activities during the life of the company. The Investment
Adviser was formed in March 1996.
Information on Staunch Finance Limited
Staunch Finance Limited is a finance company which is
owned by its directors and one of their family. It first
invested in EHI in 1993. As at 31 March 1996 it had
issued share capital of #100 and audited net assets of
#265,490.
INFORMATION ON ST. JAMES BEACH
St. James Beach owns and operates four hotels situated in
the parish of St. James on the west coast of Barbados, in
the Caribbean. The hotels are "Coconut Creek" and
"Crystal Cove" which were converted into all-inclusive
resorts on 1 August 1997, and "Tamarind Cove" and "Colony
Club".
For the year ended 31 March 1997, St. James Beach
reported an audited consolidated profit before taxation
of #3.9 million (1996: #1.4 million) on turnover of
#17.3 million (1996: #16.2 million) and earnings per
ordinary share of 14.8p (1996: 4.4p). At 31 March 1997
St. James Beach had audited consolidated net assets of
#39.4 million.
ST. JAMES BEACH SHARE SCHEMES AND WARRANTS
The Offer will be extended to any fully paid St. James
Beach Shares which are unconditionally allotted or issued
while the Offer remains open for acceptance (or such
shorter period as Elegant may, subject to the City Code
on Takeovers and Mergers (the "Code"), decide) including
St. James Beach Shares unconditionally allotted or issued
pursuant to the exercise of options granted under the St.
James Beach Executive Share Scheme or pursuant to the
exercise of warrants.
To the extent that such options or warrants are not so
exercised, and if the Offer becomes or is declared
unconditional in all respects, Elegant will make
appropriate proposals to option holders and warrant
holders in due course.
EMPLOYEES AND DIRECTORS
The board of Elegant has confirmed to the board of St.
James Beach that the existing employment rights,
including pension rights, of all employees of St. James
Beach and its subsidiaries will be fully safeguarded.
All the directors of St. James Beach except Mr W Douglas
and Mr J Brierley have agreed to resign from all
directorships of St. James Beach Group companies upon the
Offer becoming unconditional in all respects.
DOCUMENTATION
The Offer Document will be dispatched to as soon as
possible.
CONTACTS
Elegant Hotels Limited 001 246 428
7131
Andrew Parker
Close Brothers Corporate Finance 0171 426 4000
Limited
David Pusinelli
St. James Beach Hotels PLC 0973 141596
Ray Horney
UBS Limited 0171 901 3333
Philip Stephens
Simon Rothschild 0171 256 5756
Millham Communications
Close Brothers Corporate Finance Limited which is
regulated by The Securities and Futures Authority
Limited, is acting for Elegant Hotels Limited and no one
else in connection with the Offer and will not be
responsible to anyone other than Elegant Hotels Limited
for providing protections afforded to its customers nor
for providing advice in relation to the Offer.
UBS Limited, which is regulated by The Securities and
Futures Authority Limited, is acting for St. James Beach
Hotels PLC and no one else in connection with the Offer
and will not be responsible to anyone other than St.
James Beach Hotels PLC for providing the protections
afforded to its customers nor for providing advice in
relation to the Offer.
APPENDIX I
CONDITION OF THE OFFER
The Offer is subject to the following condition:
valid acceptances being received (and not, where
permitted,withdrawn) by 3.00 p.m. on the twenty-first day
after the day on which the Offer document is posted to
St. James Beach Shareholders, (or such later time(s)
and/or date(s) as Elegant may, subject to the Code,
decide) in respect of not less than 51 per cent. of the
St. James Beach Shares to which the Offer relates
provided that this condition will not be satisfied unless
Elegant shall have acquired or agreed to acquire, whether
pursuant to the Offer or otherwise, St. James Beach
Shares carrying more than 50 per cent. of the votes then
normally exercisable at general meetings of St. James
Beach (on such basis as may be required by the Panel on
Takeovers and Mergers (the "Panel")), including for this
purpose, to the extent (if any) required by the Panel,
any votes attaching to (or which would, if issued, attach
to) St. James Beach Shares which are unconditionally
allotted or issued before the Offer becomes or is
declared unconditional as to acceptances whether pursuant
to the exercise of conversion or subscription rights or
otherwise; and for this purpose, the expression "St.
James Beach Shares to which the Offer relates" shall be
construed in accordance with Sections 428 to 430F of the
Companies Act 1985.
APPENDIX II
FINANCIAL EFFECTS OF ACCEPTANCE
The following table sets out, for illustrative purposes
only, and on the bases and assumptions stated below, the
financial effect on capital value and gross income for a
holder of one St. James Beach Share accepting the Offer
if the Offer becomes or is declared unconditional in all
respects:
Notes
(a) Capital value p
Market value of one St. James Beach (i) 190
Share
Cash value of offer for one St. 200
James Beach Share ----
Increase in capital value 10
This represents an increase of 5.3%
(b) Gross income p
Gross income from each St. James (ii) 7.19
Beach Share
Gross income from cash consideration (iii) 14.24
----
Increase in gross income 7.05
(i) Based on the closing middle market quotation as
derived from the London Stock Exchange Daily
Official List on 12 August 1997, being the latest
practicable date prior to the release of this
announcement.
(ii) The gross income from each St. James Beach Share has
been based on the dividend of 5.75p (net) per St.
James Beach Share for the year ended 31 March 1997
and assumes a tax credit of 20 per cent.
Shareholders who are individuals should note that
the tax treatment of individuals receiving dividends
from United Kingdom companies will change with
effect from 6 April 1999 following enactment of
proposals in the recent Budget. Such changes will
not, however, affect the net amount of dividend
retained by individuals who pay tax at the lower,
basic or higher rates.
Shareholders who are exempt funds or companies
should note that they will not, following enactment
of proposals in the recent Budget, be entitled to
claim repayment of tax credits attaching to
dividends paid by United Kingdom companies.
(iii) The gross income from cash consideration is
based on the assumption that the cash consideration
is reinvested to yield 7.12 per cent. per annum,
being the approximate yield shown by the FT
Actuaries Average Gross Redemption Yield for medium
coupon British Government securities of maturities
of 5 to 15 years on 11 August 1997, the latest
practicable day prior to the release of this
announcement.
(iv) Save as described above, no account has been taken
of any liability to taxation.
END
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