International Hotel Investments will be issuing a four per cent bonus share issue, chairman Alfred Pisani announced yesterday during the company's 10th annual general meeting.
The new shares will be allotted to public investors as the three institutional shareholders (namely Corinthia Palace Hotel Company Ltd, LFICO and Istithmar) have waived their rights to the issue.
The shareholders will have the facility to sell back their bonus shares to IHI at the nominal value of €1 per share representing a 14.9 per cent premium to yesterday's closing price.
During the AGM, Mr Pisani explained that the company intended to obtain a secondary listing for IHI on the London Stock Exchange.
Shareholders at the meeting consequently approved a resolution authorising the directors to issue up to 200 million new shares at a price not lower than the nominal value of €1 per share. They also approved a resolution to abrogate the company's current Memorandum and Articles of Association and have it replaced by the new Memorandum and Articles of Association.
The change in the Memorandum and Articles of Association was necessary due to the company's intention to seek a listing on the London Stock Exchange, where a number of conditions must be met before such a listing is approved. One such requirement is an emphasis on corporate governance and the inclusion of independent directors who are not shareholders or executives. During yesterday's AGM, shareholders approved the nomination of Michael Beckett, the independent chairman of the Thomas Cook Group, to sit on the board of IHI.
Mr Pisani said the appointment of Mr Beckett to IHI's board would boost the company's profile in the UK as it sought a listing in London. He also explained that works on the London Corinthia Hotel were at an advanced stage and the hotel was expected to open early next year. Mr Pisani said that the value of the London hotel had already increased from €300 million when it was purchased two years ago to €450 million.
Mr Pisani told the shareholders present that the London Corinthia Hotel will substantially help the Corinthia brand to grow and that the company was also looking at Paris and Rome in order to expand further.
He said that based on the company's performance in the first six months of the year the prospects for this year were good and he was confident that the company would see an improved performance compared to last year.
In reply to questions from a number of shareholders Mr Pisani defended the company's record of not yet having issued dividends, saying it was first necessary to invest the company's profits in order to expand.
"We could have gone for one hotel and then given out dividends, but we choose to expand. We are convinced we have chosen the right strategy," Mr Pisani said, adding that expanding the Corinthia to places such as London will definitely add value to the brand.
IHI managing director Joseph Fenech also addressed the shareholders and said that despite 2009 being a challenging year IHI managed to weather the storm and is well positioned to face the future with courage, determination and optimism.
Mr Fenech said that IHI revenues for 2009 amounted to €103.32 million compared to €127.96 million in 2008. This decrease in revenue, he said, was mainly due to lower occupancies and lower average room rates achieved in IHI's hotels in Central Europe. Earnings before interest, tax and depreciation (EBITA) for 2009 amounted to €31.63 million compared to €43.36 million the previous year. IHI made a loss after tax of €1.62 million in 2009 compared to a profit of €14 million in 2008.
IHI has assets worth over €1 billion. It is the co-owner of the Corinthia Hotel London and it owns six hotels, namely the Corinthia Hotel & Residences in Budapest, the Corinthia Hotel Lisbon, the Corinthia Hotel St George's Bay, the Corinthia Hotel Prague, the Corinthia Hotel and Commercial Centre in St Petersburg and the Corinthia Hotel and Commercial Centre in Tripoli.
The shareholders in IHI include principally the Corinthia Group, as well as the Maltese public. IHI also owns 70 per cent in CHI, the multi-brand hotel operator, which manages 14 hotels including the IHI hotels, as well as another 10 owned by third parties which are under development.