ROYAL HOST MAILS INCREASED OFFER FOR CHIP REIT AND ANNOUNCES DEBT REFINANCING
Press Release: Royal Host
July 15, 1999
CALGARY, ALBERTA--Royal Host Real Estate Investment Trust (Royal Host) has announced that on July 12, 1999 it mailed
to registered unitholders of Canadian Hotel Income Properties Real Estate Investment Trust (CHIP) a Notice of Variation
outlining an increase in its offer to acquire 100 percent of the outstanding trust units of CHIP.
The increased Royal Host offer is on the basis of, at the election of the CHIP Unitholders (i) 1.3 trust units
of Royal Host, or (ii) 1 disposition proceeds right (Disposition Proceeds Right). This offer is subject to an aggregate
maximum of approximately 6.5 million Disposition Proceeds Rights ($67.8 million) based on the number of currently
issued and outstanding CHIP units. Each Disposition Proceeds Right entitles the holder to receive $10.40 in cash
from the proceeds (the "Sale Proceeds") to be received from the sale of selected hotel properties owned
by CHIP. The Disposition Proceeds Rights are also convertible at the option of the holder into Royal Host units
on the basis of 1.3 trust units of Royal Host for each $10.40 of Disposition Proceeds Rights.
Based on the $8.00 closing price of Royal Host units (on the trading day prior to the Royal Host announcement of
its intention to make the original offer) the increased exchange ratio of 1.3 Royal Host units for each CHIP unit
equates to an offer price of $10.40 per CHIP unit. This represents a premium of 21 percent to CHIP unitholders
based on the 20-day weighted average trading price of the CHIP units prior to Royal Host's original announcement.
It also represents a 12 percent premium to the closing price of the CHIP units on the trading day immediately proceeding
such announcement.
The revised Royal Host offer for CHIP is open for acceptance until 8:00 p.m. (Calgary time) on Friday, July 23,
1999.
Benefits that will accrue to CHIP unitholders from the Royal Host offer include:
- A significant premium to the trading price of the CHIP units, including the opportunity to effectively receive
a portion of the consideration under the offer in cash through the Disposition Proceeds Rights.
- Increased distributable cash due to significant operational savings and synergies.
- Enhanced critical mass and market presence.
- Increased liquidity and access to capital.
- Greater diversification and stability. The proceeds to be received from the strategic sale of assets will significantly
strengthen the financial stability and resources of the combined entity.
- Experienced management team with a significant equity interest.
Royal Host also announced that it has entered into an agreement with the lender of approximately $63 million of
its current indebtedness to extend the maturity date of the debt to April 1, 2000 on substantially the existing
terms. Under the terms of the agreement, the lender has also agreed to provide an additional $8 million in credit
for Royal Host's capital expenditure program.
``We are pleased with this arrangement,'' R.B. Royer, President and CEO of Royal Host. ``It will allow Royal Host
to implement its long-term financing program in a prudent and non-time constrained manner.''
The Royal Host trust units and Disposition Proceeds Rights may be offered only pursuant to the takeover bid circular.
This press release does not constitute an offer to sell or solicit an offer to buy. Nor shall there be any sale
of these securities in the United States or any other jurisdiction in which such solicitation or sale would be
unlawful prior to the registration or qualification under the securities laws of the United States or other such
jurisdictions.
Royal Host is a closed-end real estate investment trust with a national portfolio of 36 hotels with over 4,400
guest rooms primarily in the upper mid-market and upscale market segments. Royal Host owns the Travelodge Master
Franchise in Canada provides hotel and resort management services, markets vacation intervals in hotels, resorts
and luxury houseboats and operates a facility for customers to trade and bank prepaid vacations.
Royal Host maximizes earnings while minimizing risk through efficient operations, strong marketing and a focus
on providing travelers with superior accommodations and travel experiences. Royal Host units are traded on The
Toronto Stock Exchange (RYL.UN).
Statements contained in this news release regarding expected financial results and other planned events are forward-looking
statements. As a result, they are subject to uncertainties and risks, including the ability of Royal Host to successfully
implement its strategies including: the acquisition of CHIP; the successful integration of this acquisition into
Royal Host; and, the subsequent realization of expected synergies. Each of these events and conditions affecting
real estate investment and the hotel industry generally may be impacted, among other things, by economic, competitive
or regulatory conditions.
Contact:
Royal Host Real Estate Investment Trust
R.B. Royer
President and CEO
(403) 258-5600
(403) 292-0922
investorinfo@royalhost.com
http://www.royalhost.com