Holiday Inn 2014 Annual Report Download - page 171

Disposal of interest in InterContinental Paris –
Le Grand
On 7 December 2014, a share sale and purchase agreement was
entered into between BHR Holdings BV (part of IHG) and
Constellation Hotels France Grand SA. Under the agreement, BHR
Holdings BV agreed to sell its 100 per cent interest in Société Des
Hotels InterContinental France, the owner of InterContinental
Paris – Le Grand, to Constellation Hotels France Grand SA. The
gross sale proceeds agreed are €330 million in cash.
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 agreement, BHR Holdings BV gave certain customary
warranties and indemnities to Constellation Hotels France
Grand SA.
Acquisition of the Kimpton Hotels & Restaurants
business
On 15 December 2014, a share sale and purchase agreement
was entered into between Kimpton Group Holding LLC and
Dunwoody Operations, Inc., an affiliate of IHG. Under the
agreement, Dunwoody Operations, Inc. agreed to buy a 100 per
cent interest in Kimpton Hotel & Restaurant Group, LLC, the
principal trading company of the Kimpton group, from Kimpton
Group Holding LLC. The purchase completed on 16 January 2015.
Under the agreement, Dunwoody Operations, Inc. gave certain
customary warranties and indemnities to the seller.
The purchase price payable by Dunwoody Operations, Inc. in
respect of the acquisition was $430 million paid in cash.
£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.
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
Working Time Regulations 1998
Under EU law, many employees of Group companies are now
covered by the Working Time Regulations which came into force
in the UK on 1 October 1998. These regulations implemented the
European Working Time Directive and parts of the Young Workers
Directive, and lay down rights and protections for employees in
areas such as maximum working hours, minimum rest time,
minimum days off and paid leave.
In the UK, there is in place a national minimum wage under the
National Minimum Wage Act. At 31 December 2014, the minimum
wage for individuals between 18 and under the age of 21 was
£5.13 per hour and £6.50 per hour for individuals age 21 and
above (in each case, excluding apprentices aged under 19 years
or, otherwise, in the first year of their apprenticeships). This
particularly impacts businesses in the hospitality and retailing
sectors. Compliance with the National Minimum Wage Act is being
monitored by the Low Pay Commission, an independent statutory
body established by the UK government.
Less than five per cent of the Group’s UK employees are covered
by collective bargaining agreements with trade unions.
Continual attention is paid to the external market in order to ensure
that terms of employment are appropriate. The Group believes the
Group companies will be able to conduct their relationships with
trade unions and employees in a satisfactory manner.
Material contracts
The following contracts have been entered into otherwise than
in the course of ordinary business by members of the Group:
(i) in the two years immediately preceding the date of this
document in the case of contracts which are or may be material;
or (ii) that contain provisions under which any Group member has
any obligation or entitlement that is material to the Group
as at the date of this document. To the extent that these
agreements include representations, warranties and indemnities,
such provisions are considered standard in an agreement of that
nature, save to the extent identified below.
Disposal of 80 per cent interest in InterContinental
New York Barclay
On 19 December 2013, Constellation Barclay Holding US, LLC,
which is an affiliate of Constellation Hotels Holding Limited,
agreed to acquire, pursuant to a contribution agreement, an
80 per cent interest in a joint venture with IHG’s affiliates to own
and refurbish the InterContinental New York Barclay hotel. The
80 per cent interest was acquired for gross cash proceeds of
$274million. IHG’s affiliates hold the remaining 20 per cent
interest. The disposal was completed on 31 March 2014.
IHG’s management affiliate has also secured a 30-year
management contract on the hotel, which commenced 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’s affiliates
have agreed to invest through the joint venture in a significant
refurbishment, repositioning and extension of the hotel.
This commenced in 2014 and will take place over a period
of approximately 18 months.
Under the contribution agreement, IHG’s affiliates gave certain
customary warranties and indemnities to Constellation Barclay
Holding US, LLC.
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STRATEGIC REPORT GOVERNANCE
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
ADDITIONAL INFORMATION