3128012 Nova Scotia gets tenders for 99% of Fairmont Hotels & Resorts' 3.75% convertibles

By Jennifer Chiou

New York, May 11 - 3128012 Nova Scotia Ltd. announced it accepted tenders from holders of $267 million or about 99% of Fairmont Hotels & Resorts Inc.'s 3.75% convertible senior notes due 2023.

The offer expired at 5 p.m. ET on May 10 after being extended. The offer was previously set to expire at 5 p.m. ET on April 28. It began on March 31.

The company said it paid $324,119,310 to purchase the notes.

On April 24, the company announced new pricing for the offer - $1,213.93 per $1,000 principal amount, up from $1,211.43.

On April 20, Fairmont said the amount on offer would be increased as part of an agreement with holders of $140 million of the convertibles under which the investors dropped their plan to oppose the company's proposed treatment of the securities.

The tender offer for the convertibles is part of Toronto-based Fairmont's acquisition agreement with 3128012 Nova Scotia, 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.

As before, 3128012 Nova Scotia will also pay accrued interest to June 1.

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. Before the agreement was reached, 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.

As of 4 p.m. ET on April 24, holders had tendered $13.379 million of the convertibles and the dissenting group had committed to tender an additional $144.944 million.

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.

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

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