Holiday Inn 2013 Annual Report Download - page 173

Under the Trust Deed, each of the Issuer and the Guarantors has
given certain customary covenants in favour of the Trustee.
Final Terms were issued (pursuant to the previous base
prospectus dated 27 November 2009) on 9 December 2009 in
respect of the issue of a Tranche of £250 million 6% Notes due
9 December 2016 (2009Issuance).
Final Terms were issued pursuant to the Base Prospectus
on 26November 2012 in respect of the issue of a Tranche of
£400 million 3.875% Notes due 28 November 2022 (2012 Issuance).
The Final Terms issued under each of the 2009 Issuance and the
2012 Issuance provide that the holders of the Notes have the right
to repayment if the Notes (a) become non-investment grade within
the period commencing on the date of announcement of a change
of control and ending 90 days after the change of control (Change
of Control Period) and are not subsequently, within the Change of
Control Period, reinstated to investment grade; (b) are downgraded
from a non-investment grade and are not reinstated to its earlier
credit rating or better within the Change of Control Period; or (c) are
not credit rated and do not become investment-grade credit rated
by the end of the Change of Control Period.
Further details of the Programme and the Notes are set out in the
Base Prospectus, a copy of which is available (as is a copy of each
ofthe Final Terms dated 7 December 2009 relating to the 2009
Issuance and the Final Terms dated 26 November 2012 relating to
the 2012 Issuance) on the Company’s website at www.ihgplc.com.
The Notes issued pursuant to the 2009 Issuance and the Notes
issued pursuant to the 2012 Issuance are referred to as ‘£250million
6% bonds’ and the ‘£400 million 3.875% bonds’ respectively in the
Group Financial Statements.
On 27 November 2009, the Issuer and the Guarantors entered into
an agency agreement (Agency Agreement) with HSBC Bank plc
as principal paying agent and the Trustee, pursuant to which the
Issuer and the Guarantors appointed paying agents and calculation
agents in connection with the Programme and the Notes.
Under the Agency Agreement, each of the Issuer and the Guarantors
has given a customary indemnity in favour of the paying agents and
the calculation agents. There was no change to the Agency
Agreement in 2011 or 2012.
On 9 November 2012, the Issuer and the Guarantors entered into
a dealer agreement (Dealer Agreement) with HSBC Bank plc as
arranger and Citigroup Global Markets Limited, HSBC Bank plc,
Lloyds TSB Bank plc, Merrill Lynch International, Mitsubishi UFJ
Securities International plc and The Royal Bank of Scotland plc as
dealers (Dealers), pursuant to which the Dealers were appointed
in connection with the Programme and the Notes.
Under the Dealer Agreement, each of the Issuer and the
Guarantors has given customary warranties and indemnities
in favour of theDealers.
Syndicated Facility
On 7 November 2011, the Company signed a five-year $1.07 billion
bank facility agreement with The Royal Bank of Scotland plc,
NB International Finance B.V., Citigroup Global Markets Limited,
HSBC Bank plc, Lloyds TSB Bank plc and The Bank of Tokyo-Mitsubishi
UFJ, Ltd., all acting as mandated lead arrangers and Banc of America
Securities Limited as facility agent (Syndicated Facility).
The interest margin payable on borrowings under the Syndicated
Facility is linked to IHG’s consolidated net debt to consolidated
EBITDA ratio. The margin can vary between LIBOR + 0.90% and
LIBOR + 1.70% depending on the level of the ratio. The facility was
undrawn at 31 December 2013.
Disposal of 80 per cent interest in the InterContinental
New YorkBarclay
On 19 December 2013, Constellation Barclay Holding US, LLC,
which is an affiliate of Constellation Hotels Holding Limited,
agreed, pursuant to a contribution agreement, to acquire an
80 per cent interest in a joint venture with IHG to own and refurbish
the InterContinental New York Barclay hotel. The 80 per cent
interest will be acquired for gross cash proceeds of $240 million.
IHG will hold the remaining 20 per cent interest.
IHG has also secured a 30-year management contract on the hotel,
commencing in 2014, with two 10-year extension rights at IHG’s
discretion, giving an expected contract length of 50 years.
Constellation Barclay Holding US, LLC and IHG have agreed to invest
through the joint venture in a significant refurbishment, repositioning
and extension of the hotel. This is expected to commence in 2014
and will take place over a period of approximately 18 months.
The transaction is expected to complete in the first quarter of 2014,
subject to the satisfaction of certain standard conditions.
Under the contribution agreement, IHG gave certain customary
warranties and indemnities to Constellation Barclay Holding US, LLC.
Sale of interest in the InterContinental London Park Lane
On 27 March 2013, an asset sale and purchase agreement (APA)
was entered into between Hotel Inter-Continental London Limited,
Six Continents Limited and Constellation Hotel (Opco) UK S.A.,
which is an affiliate of Constellation Hotels Holding Limited.
Under the APA, Hotel Inter-Continental London Limited agreed to
sell its leasehold interest in InterContinental London Park Lane
to Constellation Hotel (Opco) UK S.A. The sale was completed on
1 May 2013. In connection with the sale, IHG secured a 30-year
management contract on the hotel, with three 10-year extension
rights at IHG’s discretion, giving an expected contract length of
60 years.
Under the APA, Hotel Inter-Continental London Limited gave
certain customary warranties and indemnities to the purchaser.
IHG’s share of the sale proceeds (before transaction costs) were
£301.5 million in cash, £61 million of which was used to provide
security over UK pension liabilities which were previously secured
against the hotel.
£750 Million Euro Medium Term Note Programme
In 2012, the Group updated its Euro Medium Term Note programme
(Programme) and issued a tranche of £400 million 3.875% notes
due 28 November 2022.
On 9 November 2012, an amended and restated trust deed
(Trust Deed) was executed by InterContinental Hotels Group PLC
as issuer (Issuer), Six Continents Limited and InterContinental
Hotels Limited as guarantors (Guarantors) and HSBC Corporate
Trustee Company (UK) Limited as trustee (Trustee), pursuant to
which the trust deed dated 29 November 2009, as supplemented
by the first supplemental trust deed dated 7 July 2011 between
the same parties relating to the Programme, was amended and
restated. Underthe Trust Deed, the Issuer may issue notes
(Notes) unconditionally and irrevocably guaranteed by the
Guarantors, uptoa maximum nominal amount from time to time
outstanding of£750 million (or its equivalent in other currencies).
Notes are to be issued in series (each a Series) in bearer form.
EachSeries may comprise one or more tranches (each a Tranche)
issued on different issue dates. Each Tranche of Notes will be issued
on the terms and conditions set out in the updated base prospectus
dated 9 November 2012 (Base Prospectus) as amended and/or
supplemented by a document setting out the final terms (FinalTerms)
of such Tranche or in a separate prospectus specific tosuch Tranche.
Additional Information 171
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GROUP FINANCIAL STATEMENTS
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