Royal Host Inc.
TSX : RYL
TSX : RYL.DB.D
TSX : RYL.DB.C
TSX : RYL.DB.B

Royal Host Inc.

September 24, 2013 10:15 ET

Royal Host Inc. Announces Proposal to Amend the Terms of Its Series D Debentures Due June 30, 2014 and Its Series B Debentures Due October 31, 2015

HALIFAX, NOVA SCOTIA--(Marketwired - Sept. 24, 2013) - Royal Host Inc. (the "Company") (TSX:RYL)(TSX:RYL.DB.D)(TSX:RYL.DB.C)(TSX:RYL.DB.B) announced today that it will seek the approval of holders of its 5.90% convertible unsecured subordinated debentures due June 30, 2014 (the "Series D Debentures") and holders of its 6.00% convertible unsecured subordinated debentures due October 31, 2015 (the "Series B Debentures") to amend certain terms of such debentures at separate serial meetings of the debenture holders (the "debentureholders") to be held on October 31, 2013 (the "Meetings").

The proposed amendments to the Series D Debentures consist of:

  1. EXTENDING the maturity date for the Series D Debentures from June 30, 2014 to June 30, 2019;

  2. INCREASING the annual interest rate of the Series D Debentures by 0.35 percentage points from 5.90% to 6.25%;

  3. REDUCING the conversion price of the Series D Debentures from $6.19 to $3.50 for each common share of the Company ("Common Shares"), resulting in a conversion rate of 285.7 Common Shares per $1,000 principal amount of the amended Series D Debentures rather than 161.6 Common Shares per $1,000 principal amount of the Series D Debentures; and

  4. REMOVING the provisions related to a change of control of the Company, whereby the debentureholders, upon a change of control, have the right to require the Company to purchase such holder's Series D Debentures at a price equal to 101% of the principal amount.

The proposed amendments to the Series B Debentures consist of:

  1. EXTENDING the maturity date for the Series B Debentures from October 31, 2015 to October 31, 2020;

  2. INCREASING the annual interest rate of the Series B Debentures by 0.25 percentage points from 6.0% to 6.25%;

  3. REDUCING the conversion price of the Series B Debentures from $4.76 to $3.50 for each Common Share, resulting in a conversion rate of 285.7 Common Shares per $1,000 principal amount of the amended Series B Debentures rather than 210.1 Common Shares per $1,000 principal amount of the Series B Debentures; and

  4. REMOVING the provisions related to a change of control of the Company, whereby the debentureholders, upon a change of control, have the right to require the Company to purchase such holder's Series B Debentures at a price equal to 101% of the principal amount.

The Board of Directors and management of the Company believe the proposed debenture amendments are in the best interests of the Company as they enhance the Company's strategy of preserving asset value while maintaining flexibility in pursuing long-term value creation for the benefit of all its security holders.

The Company believes the proposed debenture amendments are advantageous to debentureholders and recommends that debentureholders vote in favour of the proposed debenture amendments for the following reasons:

  • Eliminates the present possibility that the Company exercises its right to repay the debentures by issuing Common Shares to debentureholders in lieu of paying cash on or before the current maturity dates.

  • Increases the interest rate of each series of debentures to 6.25% which represents an attractive yield, especially given the historic low interest rate environment. This higher interest rate will come into effect prior to the current maturity dates of each series of debentures, thereby allowing debentureholders to earn a higher interest rate than they otherwise would be able to.

  • Increases the value of the conversion option embedded in the debentures by virtue of a reduction in the conversion price to $3.50. This has the effect of increasing the number of Common Shares underlying each $1,000 principal amount of debentures.

The amendments to the Series D Debentures and Series B Debentures will only be effective if the resolution is passed by an extraordinary resolution of the holders of at least 66 2/3% of the principal amount of the applicable series of debentures present in person or by proxy at the meeting and entitled to vote in respect of the amendments.

Consistent with TSX policy, the proposed increase in the interest rate on the Series D Debentures will be effective December 31, 2013 and the proposed increase in the interest rate on the Series B Debentures will be effective April 30, 2014. All other proposed amendments will be effective on signing of supplemental indentures by the Company and Computershare Trust Company of Canada.

The meeting of the Series D Debentureholders is scheduled to be held at 10:00 a.m. (Atlantic Daylight Time) on October 31, 2013 and the meeting of the Series B Debentureholders is scheduled to be held at 10:30 a.m. (Atlantic Daylight Time) on October 31, 2013. Each meeting will be held at the offices of the Company, at 1809 Barrington Street, Suite 1108, Halifax, Nova Scotia, B3J 3K8.

Debentureholders may vote by internet, by telephone or by contacting their brokers or investment advisors on or before 10:00 am (Atlantic Daylight Time) on October 29, 2013 for the Series D Debentures and on or before 10:30 am (Atlantic Daylight Time) on October 29, 2013 for the Series B Debentures. Detailed voting instructions are set out in the respective circular. Debentureholders of record at the close of business on September 25, 2013 will be entitled to vote at the applicable meeting of debentureholders.

The Toronto Stock Exchange (the "TSX") has conditionally approved the listing of the amended debentures. The amended Series D Debentures will be referred to as the 6.25% Series D Convertible Unsecured Subordinated Debentures due June 30, 2019 and, subject to regulatory approval, will trade on the TSX under the symbol "RYL.DB.D". The amended Series B Debentures will be referred to as the 6.25% Series B Convertible Unsecured Subordinated Debentures due October 31, 2020 and, subject to regulatory approval, will trade on the TSX under the symbol "RYL.DB.B".

For further particulars of such benefits see "Benefits of the Debenture Amendments and Recommendation of the Board" in the respective management information circulars of the Company dated September 25, 2013, which will be available under the Company's profile on SEDAR at www.sedar.com and which will be mailed to debentureholders in the coming days.

As of the close of business on September 23, 2013 there are $29,220,000 Series D Debentures outstanding and $24,017,000 Series B 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 set out in this news release, including, in particular, the terms, timing and success of any debenture amendments and the refinancing or conversion risk associated with the maturity of the debentures. The Company has no intention and undertakes no 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. Royal Host currently owns 19 hotels with 2,611 rooms across Canada. Royal Host also owns and operates the Travelodge Canada franchise business which is currently comprised of over 90 hotels across Canada. Royal Host'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.

Contact Information

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