Shares in Thailand's Minor jump on debt financing plan for NH Hotel deal

Bangkok

SHARES in Minor International Pcl surged on Wednesday after it said it would look to debt financing for its takeover bid for NH Hotels - a deal valuing the Spanish chain at up to 2.5 billion euros (S$3.9 billion).

The proposed purchase would be Thailand's largest overseas hospitality deal and would give the acquisitive firm hotels with scale and presence in "hard-to-enter" cities across Spain, Benelux, Central Europe and Italy.

NH would be a "launching pad" for an aggressive expansion, Minor International chief operating officer Dillip Rajakarier said, adding that the company was still looking for targets of up to US$300 million in locations such as London, Prague and Rome.

Minor's shares were up over 7 per cent in afternoon trade, valuing the firm at around US$5.3 billion, helped by relief that Minor would not be looking to issue equity to finance the deal.

Minor said it had agreed to pay HNA, NH's biggest shareholder, 622 million euros for a 26.5 per cent stake.

The conversion of some bonds to shares will take Minor's stake over the 30 per cent ownership threshold, beyond which Spanish law requires that a full takeover be launched.

Minor said in its presentation material on Wednesday that it is targeting 51 to 55 per cent ownership of NH, but added that it is prepared to look at funding options other than bond issuance if it gains more than 68 per cent of the company.

It said it will use bridging facilities from financial institutions for a period of 18 months for the takeover.

"We are targeting 51 to 55 per cent ownership because we want NH to remain publicly listed and liquid," said Mr Rajakarier, adding that Minor had "absoluately no plans" to issue new capital because it had financial investors ready to come in if necessary. REUTERS