Royal Host begins issuer bid for 6%, 5.9% and 6.25% convertible notes

By Susanna Moon

Chicago, June 7 - Royal Host Inc. said it began three substantial issuer bids that will run for at least 35 days until July 13.

The company is offering to purchase up to C$7 million principal amount, or 21%, of its C$33,374,000 of outstanding series B 6% convertible unsecured subordinated debentures due Oct. 31, 2015; up to C$4 million principal amount, or 10.9%, of its C$36,778,000 outstanding series D 5.9% convertible unsecured subordinated debentures due June 30, 2014; and up to C$2 million principal amount, or 4.2%, of its C$47,204,000 of outstanding series C 6.25% convertible unsecured subordinated debentures due Sept. 30, 2013, according to a company press release.

For each C$1,000 principal amount, the purchase price will be C$880 for the 6% convertibles, C$920 for the 5.9% convertibles and C$950 for the 6.25% convertibles.

The company said it will purchase the notes on a prorated basis if the amount of tendered notes exceeds the caps.

Holders also will receive accrued interest.

Stonecap Securities Inc. was asked to prepare a valuation report for the notes, and as of June 5 the fair market value was assessed at C$750 to C$820 for the 6% convertibles, C$840 to C$885 for the 5.9% convertibles and C$900 to C$940 for the 6.25% convertibles.

Royal Host said it entered into a lock-up agreement for Geosam Capital Inc. to tender about C$713,000 principal amount of 5.9% convertibles.

The company said it will fund any purchases of the notes with cash on hand, available credit facilities and, if needed, a CC$5 million standby commitment provided by Clarke Inc.

The company's directors believe that the purchase of the notes under the offers represents an effective use of the company's financial resources and is in the best interests of the company, the release said.

The offers are not expected to preclude the company from pursuing its foreseeable business opportunities, the release noted.

Under Canadian securities laws, Royal Host will suspend purchases under its three normal course issuers bids until after the offers expire.

The company said on Dec. 16 that holders tendered C$12.04 million, or about 26.4%, of its series B 6% convertibles and C$12,704,000, or 25.6%, of its series D 5.9% convertibles 2014 in the substantial issuer bid that expired at 5 p.m. ET on Dec. 16.

Royal Host owns and operates hotels. It is based in Halifax, N.S.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.