June 6, 2018 / 8:39 AM / 6 months ago

Shares in Thailand's Minor jump on debt financing plan for NH Hotel deal

BANGKOK, June 6 (Reuters) - Shares in Minor International Pcl surged on Wednesday after it said it would look to debt financing for its takeover bid for NH Hotels - a deal valuing the Spanish chain at up to 2.5 billion euros ($2.9 billion).

The proposed purchase would be Thailand’s largest overseas hospitality deal and would give the acquisitive firm hotels with scale and presence in “hard-to-enter” cities across Spain, Benelux, Central Europe and Italy.

NH would be a “launching pad” for an aggressive expansion, Minor International Chief Operating Officer Dillip Rajakarier told Reuters, adding the company was still looking for targets of up to $300 million in locations like London, Prague and Rome.

Minor’s shares were up over 7 percent in afternoon trade, valuing the firm at around $5.3 billion, helped by relief that Minor would not be looking to issue equity to finance the deal.

Minor said it had agreed to pay HNA, NH’s biggest shareholder, 622 million euros for a 26.5 percent stake. The conversion of some bonds to shares will take Minor’s stake over the 30 percent ownership threshold beyond which Spanish law requires a full takeover be launched.

Minor said in presentation material on Wednesday it is targeting 51 percent to 55 percent ownership of NH, but added it is prepared to look at funding options other than bond issuance if it gains more than 68 percent of the company.

It said it will use bridging facilities from financial institutions for a period of 18 months for the takeover.

We are targeting 51 to 55 percent ownership because we want NH to remain publicly listed and liquid, said Rajakarier, adding that Minor had “absoluately no plans” to issue new capital because it had financial investors ready to come in if necessary.

Minor, owned by U.S.-born billionaire William Heinecke, currently operates 158 hotels in 32 countries, across Asia, the Middle East, Australia and Africa.

The hotel and restaurant operator started an investment drive in 2016 when it acquired Portugal’s Tivoli for 294 million euros.

Heinecke, who became a Thai citizen in 1991, made his fortune bringing Western-style quick-service restaurants like Pizza Hut and Dairy Queen to the Thai market.

Minor is the lateast Thai hospitality firm to snap up hotels abroad. In February, U City bought Veinna House for 330 million euros and Singha Estate purchased Hawaii-based Outrigger for $250 million.

$1 = 31.8800 baht Reporting by Chayut Setboonsarng; Editing by Edwina Gibbs

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