Fairmont's 3.75% convertible holders drop opposition to treatment of securities, tender payment raised

By Angela McDaniels

Seattle, April 20 - Fairmont Hotels & Resorts Inc. said that holders of $145 million of its $270 million of 3.75% convertible senior notes due 2023 have dropped their plan to oppose the company's treatment of the securities related to the tender offer and subsequent redemption that are part of the company's acquisition agreement.

In addition the payment on offer in the tender has been increased.

The tender offer for the convertibles is part of Toronto-based Fairmont's acquisition agreement with 3128012 Nova Scotia Ltd., under which 3128012 Nova Scotia will acquire all Fairmont shares for $45.00 each.

The complaining noteholders, which include Greywolf Capital Management LP, Whitebox Advisors, LLC, Tenor Capital Management Co., LP, Lydian Asset Management and Ramius Capital Group, LLC, had alleged that the subsequent redemption is not fair to owners of the convertibles and said they planned to file an objection with the Ontario Superior Court of Justice.

3128012 Nova Scotia has since announced that it will increase the consideration for holders who tender to $1,213.93 per $1,000 principal amount of convertibles from $1,211.43 plus accrued interest to June 1. The complaining noteholders agreed to tender their convertibles under the revised offer.

Notes that are not tendered will be convertible into cash at $1,192.68 for each $1,000 principal amount of notes, based on 26.5041 Fairmont shares times $45.00 per share. The objecting group had said it was entitled to an additional amount due to the loss of the right to convert the notes into shares for the remainder of the period when notes are outstanding.

The original consideration was equal to the sum of $1,192.68 - the amount that would have been received had the convertible notes been converted into Fairmont shares and then converted into $45.00 in cash for each Fairmont share.

The tender offer expires at 5 p.m. ET on April 28.

Global Bondholder Services Corp. is the information agent (866 470-3700 or call collect 212 430-3774). The Bank of New York is the depositary (call collect 212 815-3738).

The acquisition was approved by Fairmont's shareholders on Tuesday and is subject to court approval in Canada as well as the satisfaction or waiver of certain other conditions.

The company noted that the purchase price will be altered if the offer is extended beyond 5 p.m. ET on May 15.

Kingdom Hotels International and Colony Capital, LLC own 3128012 Nova Scotia.

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