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Royal Host Offers Improved Debenture Amendment Terms and Reschedules Its Meeting of Series C Debentureholders

Date : 11/14/2012 @ 5:59AM
Source : Marketwired
Stock : Royal Host (RYL)
Quote : 1.16  0.0 (0.00%) @ 1:46AM
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Royal Host Offers Improved Debenture Amendment Terms and Reschedules Its Meeting of Series C Debentureholders

Royal Host (TSX:RYL)
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Royal Host Inc. (the "Company") (TSX:RYL) (TSX:RYL.DB.C) (TSX:RYL.DB.B.) (TSX:RYL.DB.D) announced today that it has rescheduled a meeting (the "Meeting") to seek the approval of holders (the "Debentureholders") of its Series C, 6.25% convertible unsecured subordinated debentures due September 30, 2013 (the "Debentures"), with regard to certain amendments to the Debentures (the "Debenture Amendments"). The Meeting will now be held on November 29th, 2012 at 10:00 a.m. (Atlantic Standard Time) and more favorable terms are being offered to Debenture Holders (the "Revised Debenture Amendments").

The Debenture Amendments identified in the Management Information Circular published on October 11, 2012 (the "Circular") have been modified to present more favourable terms to Debentureholders (the "Revised Debenture Amendments"). Specifically, the Revised Debenture Amendments provide:


a.  AN INCREASE in the annual interest rate of the Debentures by 20.0% from
    6.25% to 7.50%. When initially announced, the Company had proposed an
    increase in the interest rate to 7.00%; and 
    
b.  A REDUCTION in the conversion price of the Debentures from $4.87 to
    $3.50 for each Common Share underlying the Debentures ("Common Shares"),
    resulting in a conversion rate of 285.714 Common Shares per $1,000
    principal amount of the amended Debentures rather than 205.339 Common
    Shares per $1,000 principal amount of the Debentures. When initially
    announced, the Company had proposed a decrease in the conversion price
    to $4.00.

Other than the increase in the offered interest rate and the decrease in the offered conversion price described above, the proposed amendments to the Debentures described in the Circular are unamended.

Although the required quorum has been achieved for the Meeting and of the proxies voted, over 60% have been voted in favour of the Debenture Amendments, the Meeting has been rescheduled to allow Debentureholders sufficient time to vote on the proposed amendments and to allow Debentureholders additional time to consider the improved terms of the Revised Debenture Amendments.

Recommendation of the Board of Directors

For the reasons described in the Circular, the Board of Directors of the Company (the "Board") UNANIMOUSLY RECOMMENDS that Debentureholders vote FOR the Revised Debenture Amendments.

Benefits to Shareholders and Debentureholders

The Board believes that the Revised Debenture Amendments provide a number of benefits to the Company and its security holders, including the Debentureholders. The principal benefit to the Company is the five year extension of its only significant near-term debt. The benefits of the proposed amendments to Debentureholders include:


--  A 1.25 percentage point (or 20.0%) increase in the interest rate to
    7.50% which represents an attractive yield especially in the current low
    interest rate environment. 
--  An increase in the value of the conversion option imbedded in the
    Debentures by virtue of a reduction in the conversion price from $4.87
    to $3.50. This has the effect of increasing the number of shares
    underlying each $1,000 principal amount of Debentures by approximately
    39.1% from 205.399 to 285.714; and 
--  A consent fee of 0.50% (or $5 per $1,000 principal amount of Debentures)
    to Debentureholders that vote in favour of the proposed amendments
    payable on passage of the resolution. This has the effect of increasing
    the yield to consenting Debentureholders. Debentureholders who do not
    vote in favour of the Revised Debenture Amendments will not be eligible
    to receive a consent fee.

These Debenture Amendments and incentives will only be effective if the resolution is passed in accordance with the requirements described below.

For further particulars of such benefits see "Benefits of the Debenture Amendments and Recommendation of the Board" section in the Circular, which is available under the Company's profile on SEDAR (www.sedar.com) and which was previously mailed to Debentureholders.

Voting Instructions

Debentureholders may vote by internet, by telephone or by contacting their brokers or investment advisors on or before 10:00 am (Atlantic Standard Time) on November 27, 2012. Debentureholders who have already voted in favour of the Debenture Amendments and wish to continue to vote in favour of the Revised Debenture Amendments need to take no action. Debentureholders who have already voted against the Debenture Amendments and wish to continue to vote against the Revised Debenture Amendments need to take no action. Debentureholders who have already voted and who wish to change the way they have voted in light of the increased interest rate and decreased conversion rate should contact their broker with revised voting instructions and submit a new proxy form containing these revised instructions. Debentureholders who have not already voted can vote in accordance with the instructions in the Circular.

The Meeting is rescheduled to be held at 10:00 a.m. (Atlantic Standard Time) on November 29, 2012 at the offices of the Company, at 1809 Barrington Street, Suite 1108, Halifax, Nova Scotia, B3J 3K8. The Revised Debenture Amendments, if passed by an extraordinary resolution of the holders of at least 66 2/3% of the principal amount of the Debentures present by person or by proxy at the Meeting in accordance with the provisions of the Indenture, will be binding upon all Debentureholders. The quorum for the Meeting is the presence in person or by proxy of Debentureholders representing 25% of the principal amount of Debentures outstanding at the record date, which was set by the Board of Directors of the Company as the close of business on October 15, 2012. As of the close of business on November 13, 2012 there are $45,166,000 Debentures outstanding.

Forward Looking Statements

This press release may contain certain forward-looking statements relating, but not limited to, the Company's operations, anticipated financial performance, business prospects, and strategies. Forward- looking information typically contains statements with words such as "anticipate", "does not anticipate", "believe", "estimate", "forecast", "intend", "expect", "does not expect", "could", "may", "would", "will", "should", "budgeted", "plan" or other similar terms and expressions suggesting future outcomes. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from further results expressed, projected or implied by such forward-looking statements. Readers are therefore cautioned that the Company's expectations, estimates and assumptions, although considered reasonable, may prove to be incorrect and readers should not place undue reliance on forward-looking statements.

Forward-looking statements contained herein are not guarantees of future performance and involve certain risks, uncertainties and other factors that are difficult to predict, and could result in the outcome of such events being materially different from those indented, planned, anticipate, believed, estimated or expected in this news release. Such factors and assumptions include, but are not limited to, general economic conditions, levels of travel in the Company's key market areas, political conditions and events, competitive pressures, changes in government policy or regulations, and lodging industry conditions. The Company does not undertaken any obligation to update or release any revisions to these forward- looking statements to reflect events or circumstances, unanticipated events or circumstances, or should its estimates or assumptions change, after the date hereof, except as expressly required by law.

About Royal Host Inc.

Royal Host Inc. is a diversified hospitality company that delivers shareholder value through hotel ownership, investments and franchising. The Company's hotels, which contain approximately 2,957 rooms, are located in five Provinces and Territories across Canada. Twenty of the Company's hotels operate under internationally recognized brands such as Travelodge ®, Super 8 ®, Holiday Inn ®, Hilton ®, Ramada ® and Country Inns and Suites ®. Three of the Company's hotels are independently branded. In addition to its real estate holdings, the Company owns and operates the Travelodge Canada franchise business which is currently comprised of over 90 hotels across nine Provinces and Territories.

The Company's common shares and convertible debentures are traded on the Toronto Stock Exchange under the trading symbols "RYL", "RYL.DB.B", "RYL.DB.C" and "RYL.DB.D" respectively.

This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.

Contacts: Royal Host Inc. Michael McFeters Chief Financial Officer 902-470-4500



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