RNS Number:4138J
BIL International Limited
31 March 2003
MASNET No. 106 OF 31.03.2003
Announcement No. 106
BIL INTERNATIONAL LIMITED
POSTING OF OFFER DOCUMENT TO THISTLE SHAREHOLDERS
BIL International Limited wishes to release a copy of the announcement titled
"Posting of Offer Document To Thistle Shareholders" made to the London Stock
Exchange today.
A copy of the Offer Document dated 31 March 2003 is available on the website of
the Singapore Exchange Limited at www.sgx.com
IMPORTANT NOTE:
Unless BIL (UK) Limited otherwise determines, the Offer is not being made,
directly or indirectly, in or into or by use of the mails or by any means or
instrumentality (including, without limitation, facsimile transmission, telex,
telephone, e-mail and the internet) of interstate or foreign commerce of, or by
any other facilities of a national, state or other securities exchange of the
United States, nor is it being made, directly or indirectly, in or into Canada,
Australia or Japan. Accordingly, copies of the Offer Document and any related
documents are not being, and must not be, mailed or otherwise distributed or
sent in or into or from the United States, Canada, Australia or Japan, and
persons doing so may render invalid any related purported acceptance of the
Offer. The availability of the Offer to persons who are not citizens, nationals
or residents of the United Kingdom may be affected by the laws of their relevant
jurisdictions. Shareholders of Thistle Hotels PLC who are not resident in the
United Kingdom should inform themselves about and observe any applicable
requirements of their jurisdiction. Further information for overseas
shareholders is set out in the Offer Document. Any person (including, without
limitation, any nominee, trustee or custodian) who would, or otherwise intends
to, or who may have a contractual or legal obligation to, forward the Offer
Document and/or any related documents to any jurisdiction outside the United
Kingdom, should read those paragraphs before taking any action.
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE
UNITED STATES, CANADA, AUSTRALIA OR JAPAN
31 March 2003
CASH OFFER BY HSBC
ON BEHALF OF BIL (UK) LIMITED
FOR THISTLE HOTELS PLC
POSTING OF OFFER DOCUMENT TO THISTLE SHAREHOLDERS
Introduction
BIL (UK) announces that the Offer Document containing the Cash Offer for
Thistle, being made on its behalf by HSBC, is being posted to Thistle
Shareholders today.
Acceptances to the Offer should be received as soon as possible following
receipt of the Offer Document and in any event, by no later than 3.00pm (London
time) on 22 April 2003.
The Offer
The Offer Price of 115 pence per Thistle Share represents:
* A premium of approximately 29 per cent. to the Closing Middle Market
Price of 89 pence per Thistle Share on 29 January 2003, being the last business
day prior to Investec re-rating Thistle based on "potential for corporate action
";
* A premium of approximately 15 per cent. to the Closing Middle Market
Price of 100 pence per Thistle Share on 20 February 2003, being the last
business day prior to the announcement by BIL that it was contemplating making
an offer for Thistle;
* A multiple of approximately 8.5 times Thistle's 2002 pro-forma EBITDA*;
and
* A multiple of approximately 27.2 times Thistle's 2002 pro-forma
earnings*.
BIL believes that the Offer represents full and fair value to Thistle
Shareholders:
Compared to the valuation of Thistle implied by a peer group of comparable
companies**, considered by BIL to be the most comparable to Thistle, the Offer
Price represents:
* A premium of approximately 35 per cent. on the basis of Thistle's 2002
pro-forma EBITDA*; and
* A premium of approximately 138 per cent. on the basis of Thistle's 2002
pro-forma earnings*.
Compared to the valuation of Thistle implied by recent acquisitions** of UK
hotel companies, considered by BIL to be the most comparable to Thistle, the
Offer Price represents:
* A premium of approximately 32 per cent. on the basis of Thistle's 2002
pro-forma turnover*; and
* A premium of approximately 147 per cent. on the basis of Thistle's 2002
pro-forma earnings*.
In arriving at the Offer Price, BIL was mindful of the fact that, in the 12
months prior to BIL's announcement that it was contemplating making an offer for
Thistle, Thistle's share price has been inflated by bid speculation, trading at
an average premium of 21 per cent. to the FTSE All Share Leisure and Hotels
Index, despite Thistle releasing several negative trading statements.
As detailed above, on an earnings-based valuation approach BIL's Offer is at a
premium to the values implied by both comparable companies** and recent
acquisitions**. BIL considers that an NAV based valuation approach is
inappropriate for a hotel company and ignores, in the case of Thistle:
* The contractual early redemption cost of Thistle's debenture debt of
approximately #406 million, a premium of 56 per cent. to its book value;
* A potential tax liability on asset sales of up to #90 million;
* The cost of exiting the hotels business on any asset sale; and
* The #90 million letter of credit relating to the 10 year performance
guarantee to Orb, covering the hotel businesses sold to Orb in April 2002.
Taking into account the full contractual cost of redemption of Thistle's
debenture debt, the current net cash position of approximately #108 million
would become a net debt position of approximately #39 million.
Background to the Offer
BIL originally acquired Mount Charlotte Investments PLC, the forerunner to
Thistle, in 1991 and following significant investment, growth of the portfolio
and a rebranding of the company to Thistle, floated it on the London Stock
Exchange in 1996. The purpose of the flotation was to raise Thistle's profile
and status, increase international recognition of the Thistle brand and further
the development of the business.
BIL considers that since that time Thistle has not performed to its potential
and that its share price has suffered as a consequence.
The UK hotel sector is currently facing difficulties that BIL believes are
unlikely to be short term. An uncertain outlook and negative sentiment
associated with the current conflict in the Gulf combines with generally poor
global economic and political conditions:
* In BIL's view there will be no quick recovery from the current
downturn. Following the Gulf War in 1991 and the last major downturn, it took
Thistle six years to exceed pre-Gulf War operating profit levels; and
* BIL believes that the geopolitical risks and global economic
uncertainty are greater now than in the early 1990s.
Upon completion of the Offer, BIL intends to undertake a thorough strategic,
financial and operational review of Thistle.
Interest in Thistle Shares
The BIL Group currently owns or controls 221,094,640 Thistle Shares,
representing approximately 45.8 per cent. of Thistle's existing issued share
capital.
BIL wishes to make it clear that, even if a competing offer were made, the BIL
Group would not dispose of its shareholding in Thistle. This statement is
intended be binding for a period of at least 12 months.
Extraordinary general meeting
In line with BIL's existing shareholding in Thistle and also as a consequence of
BIL's view that Thistle has not performed to its potential, it is BIL's
intention to write to Thistle to requisition an extraordinary general meeting of
Thistle Shareholders.
At that extraordinary general meeting resolutions will be proposed which would
effect substantial changes to the size and composition of the Thistle board. Any
such changes will be consistent with BIL's obligations to Thistle under the
Relationship Agreement entered into by BIL and Thistle at the time of Thistle's
flotation in 1996, in that the majority of Thistle directors would not be
directors or employees of the BIL Group. Save with the consent of the Panel,
any such extraordinary general meeting would not be requisitioned until after
the end of the Offer Period.
The passing of any resolutions to effect changes to the Thistle board requires a
simple majority of the votes cast by those shareholders present (in person or by
proxy) and voting at the meeting. The BIL Group intends to vote in favour of
the resolutions in respect of its 221,094,640 Thistle Shares, representing
approximately 45.8 per cent. of Thistle's existing issued share capital.
* The calculation of pro-forma 2002 results for Thistle is set out in Appendix 1
to this announcement.
** Further details of the comparable companies and the recent acquisitions of UK
hotel companies are set out in Appendix 1 to this announcement.
Enquiries:
BIL
Arun Amarsi +65 6228 1427
HSBC
Neil Goldie-Scot +44 (0)20 7991 8888
Jan Sanders
Marcus Ayre
Brunswick
Jonathan Glass +44 (0)20 7404 5959
Simon Sporborg
Definitions used in the Offer Announcement dated 4 March 2003 and in the Offer
Document dated 31 March 2003 have the same meaning when used in this
announcement, unless the context requires otherwise.
This announcement has been issued by HSBC, which is regulated in the UK by The
Financial Services Authority, and which is acting as financial adviser to BIL
and BIL (UK) and no one else in connection with the Offer and the matters
described in this announcement and will not be responsible to anyone other than
to BIL and BIL (UK) for providing the protections afforded to customers of HSBC,
nor for providing advice in relation to the Offer or any other matters described
in this announcement.
Unless BIL (UK) otherwise determines, the Offer is not being made, directly or
indirectly, in or into the United States, Canada, Australia or Japan or by use
of the mails of, or by any means or instrumentality of interstate or foreign
commerce of, or any facility of a national securities exchange of any of those
jurisdictions and the Offer should not be accepted by any such use, means,
instrumentality or facility or from within the United States, Canada, Australia
or Japan. This includes, but is not limited to, the post, facsimile
transmissions, telex, telephone, e-mail and the internet. Accordingly, copies
of this announcement and any related documents are not being sent and must not
be mailed or otherwise distributed or sent in, into or from the United States,
Canada, Australia or Japan. Persons receiving such documents (including,
without limitation, custodians, nominees and trustees) should not distribute or
send them in, into or from the United States, Canada, Australia or Japan or use
the United States, Canadian, Australian or Japanese mails or any such means,
instrumentality or facility for any purpose, directly or indirectly, in
connection with the Offer. Doing so may invalidate any related purported
acceptance of the Offer.
The directors of BIL and BIL (UK) accept responsibility for the information
contained in this announcement, save that the only responsibility accepted by
them in respect of the information in this announcement relating to Thistle or
the Thistle Group (which has been compiled from published sources) is to ensure
that such information has been correctly and fairly reproduced and presented.
Subject as aforesaid to the best of the knowledge and belief of the directors of
BIL and BIL (UK) (who have taken all reasonable care to ensure that such is the
case), the information contained in this announcement for which they are
responsible is in accordance with the facts and does not omit anything likely to
affect the import of such information.
APPENDIX 1
BASES AND SOURCES OF INFORMATION
(i) Share prices are Closing Middle Market Prices as derived
from the Daily Official List for the relevant date;
(ii) Thistle's Closing Middle Market Price on 29 January 2003
was 89.00 pence;
(iii) Thistle's Closing Middle Market Price on 20 February 2003
was 100.00 pence;
(iv) The premia of 2002 pro-forma EV/EBITDA and 2002 pro-forma
earnings for Thistle compared to those ratios for companies considered by BIL to
be most comparable to Thistle are based on the enterprise value represented by
the Offer, as derived from the Offer Price multiplied by the number of Thistle
Shares in issue and the market value of Thistle's debt as at 28 March 2003 (see
section (xi) of this Appendix) net of cash at bank and in hand; and BIL's
calculation of Thistle's 2002 pro-forma results as detailed in section (xiv) to
this Appendix and the average of the same ratios for the comparable companies
set out in section (xii) to this Appendix;
(v) The premia of 2002 pro-forma EV/turnover and 2002 pro-forma
earnings for Thistle compared to those ratios for recent transactions considered
by BIL to be most comparable to Thistle are based on the enterprise value
represented by the Offer (as set out in section (iv)) and BIL's calculation of
Thistle's 2002 pro-forma results as detailed in section (xiv) to this Appendix
and the average of the same ratios for the recent transactions set out in
section (xiii) to this Appendix;
(vi) The statement "Following the Gulf War in 1991 and the last
major downturn, it took Thistle six years to exceed pre-Gulf War operating
profit levels" is based on Thistle's reported operating profit for each of the
years 1990 to 1996 inclusive, as set out in Thistle's annual report and accounts
for each of those years.
(vii) The statement "in the 12 months prior to BIL's announcement
that it was contemplating making an offer for Thistle, Thistle's share price has
been inflated by bid speculation, trading at an average premium of 21 per cent.
to the FTSE All Share Leisure and Hotels Index, despite Thistle releasing
several negative trading statements" is based on:
(a) a comparison of Thistle's share price performance to that of
the FTSE All Share Leisure and Hotels Index (rebased to Thistle's 21 February
2002 share price) over that period;
(b) the release during that period of the 30 December 2001
preliminary results (4 March 2002), the 14 July 2002 interim results (3
September 2002) and a trading update (16 January 2003) which disclosed falls in
revenue of 5.9 per cent., 13.6 per cent. and 6.8 per cent. respectively for the
periods to which those reports related; and
(c) press and analyst reports of potential corporate activity in
relation to Thistle, as sourced from a Credit Suisse First Boston research note
(26 November 2002), Bloomberg (4 August 2002) and Investors Chronicle (31
January 2003).
(viii) The potential tax liability on asset sales of up to #90
million has been sourced from Thistle's 2001 report and accounts.
(ix) The #90 million letter of credit has been sourced from the
circular to Thistle Shareholders dated 12 March 2002, regarding the disposal of
certain hotels to Orb.
(x) The contractual cost of redemption relates to the cost of
redeeming the debentures as at 28 March 2003, under the basis of calculation set
out in the debenture prospectuses of 4 July 1989 and 26 October 1989 (10.75 per
cent. First Mortgage Debenture Stock 2014) and 19 July 1997 (7.875 per cent.
First Mortgage Debenture Stock 2022).
(xi) References to market value relate to the aggregated closing
market prices for each debenture on 28 March 2003, as sourced from Datastream.
(xii) Comparable companies
(a) References to "comparable companies", "peer group" or
similar statements in this announcement refer to Six Continents plc, Whitbread
plc, De Vere Group plc, Macdonald Hotels plc and Jarvis Hotels plc, the UK
listed hotel companies BIL considers to be most comparable to Thistle.
(b) Comparisons between the Offer and the peer group have been
made as at 3 March 2003, the last business day prior to the announcement of the
Offer.
(c) Enterprise values for the peer group companies have been
derived as follows:
(i) equity values have been based on the closing middle market
price on 3 March 2003 and the number of shares in issue at that time, as sourced
from Topic;
(ii) each company's debt has been sourced from its most recent
published annual report and accounts or, where relevant, interim or preliminary
results announcements; and
(iii) where appropriate debt has been marked to market using
closing prices on 3 March 2003, as sourced from Bloomberg and Datastream.
(d) EBITDA and earnings figures have been annualised for each
company to 31 December 2002, the approximate financial year end for Thistle, and
have been sourced from the most recent published annual report and accounts,
preliminary results announcements and analyst research notes for those
companies, as appropriate.
(e) EBITDA and earnings figures have been restated to exclude
exceptional items and goodwill amortisation (where the applicable information is
available).
(f) The EBITDA and earnings multiples for each member of the
peer group and the relevant averages for the peer group as a whole, as derived
from BIL's analysis, are set out below:
Company Enterprise value EV/EBITDA Earnings
(FRS 13)
Six Continents plc #6.7bn 7.5x 14.5x
Whitbread plc #2.7bn 6.7x 10.9x
De Vere Group plc #532m 7.0x 11.3x
Macdonald Hotels plc #197m 6.1x 10.2x
Jarvis Hotels plc #156m 4.1x 10.1x
Average 6.3x 11.4x
(xiii) Recent transactions
(a) References to "recent transactions", or similar statements
in this document, refer to the recent UK sector transactions set out below
involving companies which BIL considers to be most comparable to Thistle:
Enterprise EV /Sales EV /EBITDA
value
Target company Date Earnings
Heritage Hotels April 2001 #235.0m 2.4x 8.0x n/a
Posthouse Hotels April 2001 #810.0m n/a 6.2x n/a
Regal Hotel Group PLC July 2000 #269.4m 2.3x 9.0x 7.2x
Menzies Hotels PLC June 2000 #45.0m 1.9x 7.5x 3.3x
Swallow Group plc November 1999 #749.4m 3.6x 11.6x 19.7x
Scottish Highland Hotels August 1999 #52.3m 2.4x 8.4x 9.4x
plc
County Hotels Group plc January 1999 #107.8m 2.3x 8.0x 15.2x
Average 2.5x 8.4x 11.0x
(b) The equity consideration paid under the relevant transaction
has been derived from published offer documents and public announcements or,
where such documents or announcements have not been issued, from analyst
research notes, SDC Platinum or other public information.
(c) Historical financial information for each of the target
companies has been sourced from the most recent published annual report and
accounts or interim or preliminary results statements for each company prior to
the date of the transaction, analyst research notes, SDC Platinum or other
public information.
(d) Where applicable, debt has been marked to market using the
closing prices prevailing at the time of the transaction, sourced from Bloomberg
and Datastream.
(e) Turnover, EBITDA and earnings for each target company have
been restated to exclude exceptional items and goodwill amortisation (where the
applicable information is available).
(xiv) Pro-forma results
(a) References to "pro-forma 2002 EBITDA", "pro-forma 2002
earnings" or similar statements in this announcement relate to Thistle's
reported 2002 results as adjusted by BIL to remove discontinued operations and
to reflect the full year affect of the disposal of 37 hotel businesses to Orb in
April 2002.
(b) The adjustments set out below have been made by BIL in
arriving at the pro-forma results:
(i) the results from disposed operations have been removed;
(ii) the management fee from the operation of the disposed
hotels has been adjusted to reflect an estimated full year's fee of #7.3
million, derived from a Credit Suisse First Boston research note dated 26
November 2002;
(iii) interest income and expense have been adjusted to reflect a
full year's reduction in Thistle's debt balance and a full year's interest
income from its cash balance; and
(iv) a 30 per cent. tax rate has been assumed in calculations of
profit after tax.
2002 2002 2002 2002 2002
Actual Disposed Mgmt fee Interest adj Pro-forma
(prelims) (prelims) (pro-forma) (pro-forma) (pro-forma)
Turnover 190.0 (33.0) 1.4 158.4
EBITDA 71.9 (12.4)(a) 1.4 61.0
EBITA 49.2 (9.0) 1.4 41.6
PBT 30.9 (9.0) 1.4 5.8(b) 29.1
Assumed tax 30.0%
PAT 21.8 20.4
- EPS 4.5p 4.2p
- Adjusted EPS 5.2p
(a) Disposed depreciation charge calculated as 3/12ths of the 2001
depreciation charge relating to the disposed hotels of #13.4 million
(b) Interest adjustment calculated by removing the cost of 3 months'
interest at 5.4 per cent. on #174 million of debt retired following the sale of
37 hotels to Orb on 4 April 2002 and adding #3.5 million, equivalent to 3
months' interest income on the estimated cash balance of #364.1 million,
following the transaction with Orb (source: Thistle's 29 December 2002
preliminary results, 2001 annual report and 14 July 2002 interim statement)
Submitted by Jane Teah, Company Secretary on 31/03/2003 to the SGX
This information is provided by RNS
The company news service from the London Stock Exchange
END
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