Fairmont Hotels purchase to be partially funded with $2.675 billion debt commitment

By Sara Rosenberg

New York, Jan. 30 - Kingdom Hotels International and Colony Capital has received a commitment for $2.675 billion in debt to help back their buyout of Fairmont Hotels & Resorts Inc., according to a 6-K filed with the Securities and Exchange Commission Monday.

JPMorgan has provided the debt commitment letter.

Under the acquisition agreement, Kingdom and Colony will purchase Fairmont at a price of $45.00 per share in cash.

Kingdom and Colony then plan to combine the Fairmont and Raffles Hotels & Resorts portfolios following the completion of the transaction, transforming the companies into a luxury global hotel operator with 120 hotels in 24 countries. Fairmont will remain an independent hotel management and ownership company with headquarters in Toronto, and Raffles, based in Singapore, will also retain its independent brand identity.

The total value of the transaction, including debt and the combination with Raffles, is expected to be $5.5 billion - or $3.9 billion, without giving effect to the Raffles combination.

Kingdom and Colony have provided Fairmont with an equity financing commitment of $1.385 billion to help fund the transaction as well.

Closing of the acquisition is subject to customary conditions, including regulatory approvals and is expected to close in the second quarter, shortly after receipt of shareholder and court approvals. The closing of the transaction is not subject to any financing condition.

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