Dubai firm to buy 23 per cent IHI stake in €110m deal

Dubai-based Istithmar Hotels FZE, a global hotels investment firm, is to subscribe to 110,000,000 equity shares in International Hotel Investments at e1 each, IHI announced yesterday.

The equity injection will be used exclusively for the acquisition of hotel properties.

IHI, which forms part of the Corinthia Group, is also to acquire full ownership of the Corinthia Bab Africa Hotel and Commercial Centre in Tripoli and the Corinthia Towers Hotel in Prague from Corinthia Palace Hotels. It currently owns four hotels, in St Petersburg, Budapest, Lisbon and Malta.

The memorandum of understand incorporating the deal was announced in a statement issued through the Malta Stock Exchange, just under a week from an information meeting for IHI shareholders.

Earlier this year IHI had announced agreement to issue another 28 million shares at €1 each to National Real Estate Company and the National Projects Holding Company of Kuwait.

As a result of the combined deals, the capital structure of IHI will change so Corinthia Place Hotel Co Ltd (CPHCL) will hold 63.16 per cent, Istithmar, 23.45 per cent, and others, including the public, 13.39 per cent.

The allotment of shares to Istithmar and the acquisition of the hotels from CPHCL are subject to various statutory and regulatory approvals and the completion of a subscription agreement between the parties.

IHI said the intention is to finalise the execution of the subscription agreement with Istithmar and CPHCL by next month and to close the transaction with the issue of the shares to Istithmar and the receipt of funds and the properties in Tripoli and Prague by April 2007.

The directors of IHI will also endeavour to obtain a secondary listing of the company on an international stock exchange within a year from the closing.

The company also announced that also subject to shareholder and regulatory approval, it intends to capitalise past reserves in favour of its shareholders through the issue of five million ordinary bonus shares to shareholders registered on June 30, 2006.

CPHCL intends to waive its rights to such bonus shares so that they will be issued pro-rata among the holders of the 29,765,114 shares held by public shareholders.

IHI also intends to stand in the market with a buy-back programme and offer the holders of the bonus shares the option to sell the shares to the company at their par value of €1 each. The offer will be open for six week "and is being made inter alia for the purpose of stablising the price of its shares" the company said.

In August IHI also announced it was raising its shareholding in Corinthia Hotels International, the Corinthia's hotel management arm, by 50 per cent to 70 per cent, while the American hotel group Wyndham International acquired the remaining 30 per cent.

CHI became the exclusive hotel management company for the Corinthia, Wyndham and Ramada Plaza brands in Europe, Africa and the Middle East.