Holiday Inn 2015 Annual Report Download - page 165

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.
Disposal of InterContinental Paris – Le Grand
On 7 December 2014, a share sale and purchase agreement was
entered into between BHR Holdings B.V. (part of IHG) and Constellation
Hotels France Grand SA. Under the agreement, BHR Holdings B.V.
agreed to sell Société Des Hotels InterContinental France, the owner
of InterContinental Paris – Le Grand, to Constellation Hotels France
Grand SA. The gross sale proceeds agreed were €330 million in cash.
The disposal was completed on 20 May 2015.
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 B.V. 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 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.
The purchase price payable by Dunwoody Operations, Inc. in respect
of the acquisition was $430 million paid in cash.
Under the agreement, Dunwoody Operations, Inc. gave certain
customary warranties and indemnities to the seller.
Disposal of InterContinental Hong Kong
On 10 July 2015, a share sale and purchase agreement was entered
into between Hotel InterContinental London (Holdings) Limited
(part of IHG) and Supreme Key Limited. Under the agreement, Hotel
InterContinental London (Holdings) Limited agreed to sell Trifaith
Investments Limited, the owner of InterContinental Hong Kong
Limited, which in turn is the owner of InterContinental Hong Kong,
to Supreme Key Limited. The gross sale proceeds agreed were
$938 million in cash. The disposal completed on 30 September 2015.
In connection with the sale, IHG secured a 37-year management
contract on the hotel, with three 10-year extension rights at IHG’s
discretion, giving an expected contract length of 67 years.
Under the agreement, Hotel InterContinental London (Holdings)
Limited gave certain customary warranties and indemnities to
Supreme Key Limited.
£1.5 billion Euro Medium Term Note programme
In 2015, the Group updated its Euro Medium Term Note programme
(Programme) and issued a tranche of £300 million 3.750% notes due
14 August 2025 (2015 Issuance).
On 16 June 2015, 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
27 November 2009, as supplemented by two supplemental trust deeds
dated 7 July 2011 and 9 November 2012 between the same parties
relating to the Programme, were 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 £1.5 billion (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 16 June 2015 (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 previous base
prospectus dated 9 November 2009) on 26 November 2012 in respect
of the issue of a Tranche of £400 million 3.875% Notes due 28 November
2022 (2012 Issuance). Final Terms were issued pursuant to the Base
Prospectus on 12 August 2015 in respect of the 2015 Issuance.
The Final Terms issued under each of the 2009 Issuance, 2012
Issuance and 2015 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.
STRATEGIC REPORT GOVERNANCE GROUP FINANCIAL STATEMENTS ADDITIONAL INFORMATIONPARENT COMPANY FINANCIAL STATEMENTS
163IHG Annual Report and Form 20-F 2015