6.0% IHG HOLDINGS PLC 2024

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Island Hotels Group Holdings plc - Prospectus dated 6 May 2014

The Company

Island Hotels Group Holdings plc was set-up on 5 August 2008 with the sole purpose of acquiring the business of the Island Hotels Group (the Group). As such, the Issuer today serves as the holding company of the Island Hotels Group which was originally established in 1987. The Group is a leading player in the leisure, hospitality and catering industry in Malta managing a bed stock in excess of 1,450 beds across two hotel properties and employing around 1,000 personnel in its hotel and catering operations.

The business of the Group can be split into five core activities:

i)             Hotel Operations: The Group fully owns the 252-room 5-star Radisson® Blu Resort St. Julian’s and has a 50% indirect stake in the 329-room 5-star Radisson® Blu Resort & Spa Golden Sands situated in Ghajn Tuffieha. Both properties operate under a franchise agreement with the Carlson Rezidor® Hotel Group – one of the world’s foremost hotel companies incorporating seven global brands. 

ii)            Vacation Ownership: The Group owns 50% of the Azure Group which in turn has been entrusted to operate a number of units at the Golden Sands Resort on a timeshare basis. In 2013, Island Hotels Group also set-up a subsidiary, Bay Point Collection Limited, with the principal activity of operating 45 rooms at the Radisson® Blu Resort St. Julian’s under the vacation ownership model.

iii)           Event Catering Business: The main subsidiary responsible for this activity is Island Caterers Limited (ICL) which was set-up in 1992 to offer innovative food products and events at new and unique venues.

iv)           MKIC Limited: This joint-venture with Monte Kristo Estates Limited was set-up in 2012 in order to take the exclusive operation of Montekristo Estates in Hal Farrug, Luqa. The joint-venture caters for weddings, corporate events, themed functions as well as outside catering services. It also operates a pizza and pasta restaurant with 160 covers.

v)            Buttigieg Holdings Limited: In June 2011, the Issuer acquired a 50% shareholding in the events and retail catering group of Buttigieg Holdings Ltd. Buttigieg Holdings originally operated the Papillon catering and retail outlets at the Malta International Airport and Mater Dei Hospital. In 2012, Buttigieg Holdings signed a 10-year agreement with Costa Coffee International Limited for the development of the COSTA Coffee retail outlets in Malta. Today, 5 COSTA Coffee outlets have been opened in Malta with plans to open another 4 by the end of 2015. Additionally, earlier this year, the Group also signed a franchise agreement with COSTA Coffee International Limited for the development and operation of up to 75 COSTA Coffee outlets in the East Coast of Spain, the Balearic Islands and Canary Islands. The first outlet in Spain will open towards the third quarter of 2014 with another three outlets planned before the end of the year.

Use of Proceeds

The net proceeds from the Bond issue, estimated at €34.35 million after issuance costs, will be principally used by the Issuer in the following order of priority:

i)     to on-lend circa €16 million to Bay Point Hotel Limited, a fully-owned indirect subsidiary of the Issuer, to carry out refurbishment works as well as construction and finishing works of two additional floors and a conference centre;

ii)     to finance the development and operation of the COSTA® Coffee brand in the East Coast of Spain, the Balearic Islands and the Canary Islands (circa €4 million);

the remaining balance of the net proceeds from the Bond Issue will be used for general corporate funding purposes, including the early repayment of some bank loans and in particular the reduction in the Group’s overdraft balance.

Status & Security

The Bonds constitute the general, direct, unconditional, unsubordinated and unsecured obligations of the Issuer and shall at all times rank equally and rateably without any priority or preference among themselves and with other unsubordinated or unsecured debt.

The indebtedness of the Group includes bank loans, corporate bonds and other borrowings from related companies. Bank borrowings are secured by present and future assets including hotel properties and therefore the indebtedness being created by the new bond issue, together with that of the current bond in issue, ranks after the bank borrowings. In addition, the Bonds would also rank after any future debts which are privileged or otherwise secured.

Coupon

6.0%

Amount Issued

€35,000,000

ISIN Code

MT0000481227

Maturity

The bonds will mature at 100% (par) on 15 May 2024.

Interest Payment

Annually on 15 May

XD Dates

30 April

Listing

Official List

Directors

Winston V. Zahra (Chairman), Winston J. Zahra, Trevor Zahra, William Hancock, Gary Alexander Neville, John L. Bonello, Michael C. Bonello, and Kenneth Abela (Company Secretary).

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