Royal Host completes issuer bid for 6%, 5.9% and 6.25% convertibles

By Jennifer Chiou

New York, July 16 - Royal Host Inc. said that it wrapped its substantial issuer bids for up to C$7 million principal amount, or 21%, of its C$33,374,000 of outstanding series B 6% convertible unsecured subordinated debentures due Oct. 31, 2015; up to C$4 million principal amount, or 10.9%, of its C$36,778,000 outstanding series D 5.9% convertible unsecured subordinated debentures due June 30, 2014; and up to C$2 million principal amount, or 4.2%, of its C$47,204,000 of outstanding series C 6.25% convertible unsecured subordinated debentures due Sept. 30, 2013.

The bids expired at 11:59 p.m. ET on July 13.

As of 8:30 a.m. ET on July 16, the company said that a total of C$10,321,000 of the series C debentures, C$7,237,000 of the series D debentures and C$7,567,000 of the series B debentures had been deposited in the offers.

Royal Host said in a news release that it will be taking up C$2 million of the series C debentures for a proration factor of 19.38%, C$5,631,000 of the series D debentures with a proration factor of 77.81% and all of the C$7,567,000 of series B debentures.

For each C$1,000 principal amount, the purchase price is C$880 for the 6% convertibles, C$920 for the 5.9% convertibles and C$950 for the 6.25% convertibles, resulting in a total payment for the acquired debentures of C$13,739,480 with accrued interest.

As already reported, Stonecap Securities Inc. was asked to prepare a valuation report for the notes, and as of June 5, the fair market value was assessed at C$750 to C$820 for the 6% convertibles, C$840 to C$885 for the 5.9% convertibles and C$900 to C$940 for the 6.25% convertibles.

Royal Host already said it entered into a lock-up agreement for Geosam Capital Inc. to tender about C$713,000 principal amount of 5.9% convertibles.

The company said it will fund purchases of the notes with cash on hand, available credit facilities and a C$2 million standby commitment provided by Clarke Inc.

Halifax, N.S.-based Royal Host owns and operates hotels. It began the bid on June 7.

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