BHG SA BRAZIL HOSPITALITY GROUP In line with best corporate governance practices and pursuant to Article 157, paragraph 4 of Law 6404/76 and CVM Instruction 358, of January 3, 2002, as amended, BHG S.A. - Brazil Hospitality Group ("BHG" or "Company") hereby announces to its shareholders and the market in general that, in accordance with a decision of its Board of Directors, it will not file an appeal against the decision of the Third Panel of the Superior Court of Justice that granted relief to the special appeal and recognized the right of preference of Nova Riotel Empreendimentos Hoteleiros Ltda. ("Nova Riotel").
Although BHG's claim to deny Nova Riotel's alleged right of preference was unanimously granted by the Fourth Civil Chamber of the State Appellate Court of Rio de Janeiro and is supported by the opinions of renowned legal experts, the reversal of decisions by the Superior Court of Justice regarding special appeals has procedural obstacles that make it difficult for the Superior Court of Justice or the Federal Supreme Court to reconsider the matter. Additionally, it is not possible to reliably estimate the time that the Judiciary shall take to eventually reverse the decision.
We hereby stress that the acquisition of the Rio Palace hotel ("Hotel"), located at Av. Atlântica nº 4.240, in the city and state of Rio de Janeiro, belonging to Veplan Hotéis e Turismo S.A., a company under reorganization ("Veplan"), by BHG only took place after the Fourth Civil Chamber of the State Appellate Court of Rio de Janeiro had unanimously approved, on July 6, 2011, the Private Instrument of Promise of Sale, entered into by BHG and Veplan on August 26, 2010 and amended on September 2, 2010.
In order to comply with the Promise of Sale, on August 17, 2011, Veplan and Melongena Empreendimentos 1 Ltda, a company belonging to BHG's economic group, signed the Hotel's final deed of sale.
Nonetheless, a first-instance ruling by the Sixth Corporate Court of the Rio de Janeiro Judicial District recognized the right of preference of Nova Riotel Empreendimentos Hoteleiros Ltda., as lessee, to acquire the hotel.
On January 9, 2012, BHG filed an interlocutory appeal with the Fourth Civil Chamber of the State Appellate Court of Rio de Janeiro, which resolved, on May 23, 2012, to reverse the first instance ruling in order to reject the right of preference of Nova Riotel and confirm the validity and efficacy of the Hotel acquisition by the BHG Group. The Fourth Civil Chamber of the State Appellate Court of Rio de Janeiro unanimously agreed with the BHG Group in all the matters and confirmed the efficacy of the Hotel acquisition by BHG.
On May 6, 2012, Nova Riotel filed Special Appeal no. 1374643/RJ (2013/0076548-3), which was granted by the Superior Court of Justice.
The Company also declares that it will request the withdrawal of the escrow deposit relating to the price paid for the Hotel acquisition, in the historical amount of one hundred and seventy million reais (R$170,000,000.00), plus legal interest, and shall adopt the appropriate measures to be reimbursed from the Property Transfer Tax (ITBI) paid.
Rio de Janeiro, June 20, 2014
Luiz Felipe Negreiros de Sá
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