Jin Jiang closes transfer of entire equity interest in HAC after segregation of retained assets
Shanghai Jin Jiang International announced the closing of the transfer of HAC entire equity interest after segregation of the retained assets was completed
The board of directors of Shanghai Jin Jiang International announced that, on 3 May 2016, closing of the transaction relating to the transfer of the entire equity interest in HAC after segregation of the retained assets was completed.
In 2010, CAPITAL GATHERING LLC (‘‘CG’’), a wholly-owned subsidiary of Jin Jiang, and THI V INCA LLC (‘‘THAYER’’) under THAYER HOTEL INVESTORS V-A LP jointly acquired INTERSTATE HOTELS & RESORTS, INC. (‘‘IHR’’), including its hotel management operations and certain proprietary hotel operations. The entity through which the two shareholders exercised control over IHR was HOTEL ACQUISITION COMPANY, LLC (‘‘HAC’’), which was owned as to 50% by each of CG and THAYER. CG has invested US$111.5 million in HAC.
Pursuant to the ‘‘Equity Acquisition Agreement’’ between CG and THAYER (as the vendors) and KIHR BUYER, LLC, an independent third party (as the buyer), the buyer shall acquire from the vendors all equity interests in HAC after segregation of the retained assets (the ‘‘Transaction’’). The retained assets shall include 5 retained proprietary hotels (namely, Hilton Arlington, Hilton Durham, Hilton Seelbach, Sheraton Columbia and Westin Atlanta Airport), retained proprietary hotel entities, retained joint ventures, etc..
Prior to the closing date, HAC established a special-purpose entity (namely, INCA HOTEL HOLDINGS COMPANY LLC) (‘‘IHHC’’) to hold all retained assets and undertake relevant responsibilities. Subsequently, HAC allocated its full interests in IHHC to CG and THAYER according to the ratio of their shareholdings in HAC (namely, 50: 50).
On 2 May 2016, CG and THAYER entered into the ‘‘Amended and Restated Limited Liability Company Agreement for IHHC’’, pursuant to which IHHC is a joint venture jointly owned by CG and THAYER for the holding of retained assets segregated from HAC.
As at 3 May 2016, the vendors received a total of approximately US$260 million through the HAC distribution and the Transaction, of which the purchase price for the Transaction has been determined as the cash purchase price of US$295 million less the amount of net debt (including the ICBC Loan amounting to US$128 million), adjusted by the net working capital and the joint venture adjustment, and after deduction of transaction expenses.
The Transaction does not constitute a discloseable transaction or connected transaction of the Company under the Listing Rules.
As at 3 May 2016, closing relating to the Transaction was completed. With the purchase amount received through the Transaction and the HAC distribution received, CG has recouped its investment costs and realized partial investment gains. Following the Transaction, CG continues to hold the retained assets, including 5 proprietary hotels, through IHHC.
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