Holiday Inn 2015 Annual Report Download - page 166

Group information continued
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, the
Final Terms dated 26 November 2012 relating to the 2012 Issuance and
the Final Terms dated 12 August 2015 relating to the 2015 Issuance) on
the Company’s website at www.ihgplc.com. The Notes issued pursuant
to the 2009 Issuance, the Notes issued pursuant to the 2012 Issuance
and the Notes issued pursuant to the 2015 Issuance are referred to as
‘£250 million 6% bonds’, ‘£400 million 3.875% bonds’ and ‘£300 million
3.750% bonds’ respectively in the Group Financial Statements.
On 16 June 2015, the Issuer and the Guarantors entered into an
amended and restated 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.
On 16 June 2015, the Issuer and the Guarantors entered into a dealer
agreement (Dealer Agreement) with HSBC Bank plc as arranger and
Barclays Bank PLC, HSBC Bank plc, SunTrust Robinson Humphrey, Inc.,
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 30 March 2015, the Company signed a five-year $1.275 billion bank
facility agreement (Syndicated Facility) with Bank of America Merrill
Lynch International Limited, Barclays Bank plc, HSBC Bank PLC,
SunTrust Robinson Humphrey, The Bank of Tokyo-Mitsubishi UFJ, Ltd
and The Royal Bank of Scotland plc, all acting as joint bookrunners and
The Bank of Tokyo-Mitsubishi UFJ, Ltd as facility agent. The Company
may request to extend the term of the Syndicated Facility by up to two
further periods of 12 months.
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 + 0.40% and LIBOR + 1.00%
depending on the level of the ratio. The Syndicated Facility was
undrawn at 31 December 2015.
$400 million term loan facility
On 13 January 2015, the Company signed a six-month $400 million
term loan facility agreement with Bank of America Merrill Lynch
International Limited as arranger, facility agent and lender. The
Company may elect to extend the repayment date by up to two further
periods of six months.
The interest margin payable on borrowings is LIBOR + 0.6%,
increasing to LIBOR + 0.8% and LIBOR +1.0% for the first and second
six-month extension periods respectively. The facility was terminated
in August 2015.
Legal proceedings
Group companies have extensive operations in the UK, as well as
internationally, and are involved in a number of legal claims and
proceedings incidental to those operations. It is the Company’s view
that such proceedings, either individually or in the aggregate, have not
in the recent past and are not likely to have a significant effect on the
Group’s financial position or profitability. Notwithstanding the above,
the Company notes the matters set out below. Litigation is inherently
unpredictable and, as of 22 February 2016, the outcome of these
matters cannot be reasonably determined.
A claim was filed on 9 July 2013 by Pan-American Life Insurance
Company against Louisiana Acquisitions Corp. and InterContinental
Hotels Corporation. The claimant identified eight causes of action:
breach of contract; breach of partnership, fiduciary duties and good
faith obligations; fraud; civil conspiracy; conversion; unfair trade
practices; unjust enrichment; and alter ego. As of 22 February 2016,
the likelihood of a favourable or unfavourable result cannot be
reasonably determined and it is not possible to determine whether
any loss is probable or to estimate the amount of any loss.
On 31 July 2012, the UK’s Office of Fair Trading (OFT) issued a
Statement of Objections alleging that the Company (together with
Booking.com B.V. and Expedia, Inc.) had infringed competition law
in relation to the online supply of room-only hotel accommodation
by online travel agents. The Group co-operated fully with the
investigation. On 31 January 2014, the OFT announced its decision
to accept a series of commitments and to conclude its investigation
without any finding of infringement or wrongdoing, or the imposition
of any fine. On 26 September 2014, the Competition Appeal Tribunal
allowed an appeal brought by Skyscanner Limited and quashed the
decision to accept the commitments. On 16 September 2015 the
Competition and Markets Authority, as the successor organisation
to the OFT, closed its investigation without any finding of infringement
by the Company.
A class-action claim was filed on 3 July 2012 by two claimants alleging
that InterContinental Hotels of San Francisco, Inc. and InterContinental
Hotels Group Resources, Inc. violated California Penal Code 632.7,
based upon the alleged improper recording of cellular phone calls
originating from California to IHG customer care and reservations
centres. The claimants subsequently amended the claim to include
Six Continents Hotels, Inc. The parties entered into a settlement
agreement to resolve all class claims, and on 8 February 2016,
the Court issued an order granting approval of the settlement.
164 IHG Annual Report and Form 20-F 2015