THE HONGKONG AND SHANGHAI HOTELS, LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
THE HONGKONG AND SHANGHAI HOTELS, LIMITED
(Incorporated in Hong Kong with limited liability)
(Stock Code: 00045)
The Board wishes to announce that on 17 December 2015, PTL and MEC entered into certain agreements to restructure the lease arrangements with respect to the Building and the Land.
MEC currently owns the Building and the Land. On 25 October 2002, MEC and PTL, an indirect wholly-owned subsidiary of HSH, entered into a 50-year lease agreement with respect to the Building. The Building has been operating as the Hotel under the management of HSH since 2007. The current annual rental under the Building Lease Agreement is based on a minimum annual rental and a contingent rental taking into account the profitability of the Hotel. In order to secure a longer lease term and fix the rental payments going forward, on 17 December 2015, PTL and MEC entered into the Purchase and Sale Agreement pursuant to which PTL shall purchase the Building from MEC for a total Consideration of JPY10.3 billion (excluding tax) (approximately HK$656 million) in accordance with the terms and conditions therein. In addition, PTL and MEC entered into the Land Lease Agreement pursuant to which PTL shall lease the Land from MEC for a fixed term of 70 years.
As one of the applicable percentage ratios under Chapter 14 of the Listing Rules for the Purchase Transaction is 5% or more but less than 25%, the Purchase Transaction constitutes a discloseable transaction of HSH and is subject to the notification and announcement requirements under Chapter 14 of the Listing Rules. The Land Lease Agreement is a long- term operating lease entered into by PTL within its ordinary course of business.
To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, MEC and their respective ultimate beneficial owners are third parties independent of HSH and of connected persons (as defined in the Listing Rules) of HSH.
MEC currently owns the Building and the Land. On 25 October 2002, MEC and PTL, an indirect wholly-owned subsidiary of HSH, entered into a 50-year lease agreement with respect to the Building with a layered rental structure. The Building has been operating as the Hotel under the management of HSH since 2007. The current annual rental under the Building Lease Agreement is based on a minimum annual rental and a contingent rental taking into account the profitability of the Hotel.
In order to secure a longer lease term and fix the rental payments going forward, on 17 December 2015, PTL and MEC entered into the Purchase and Sale Agreement pursuant to which PTL shall purchase the Building from MEC in accordance with the terms and conditions therein, and on the same date entered into the Land Lease Agreement pursuant to which PTL shall lease the Land from MEC for a fixed term of 70 years and assume responsibility for all capital expenditure relating to the Building going forward. Upon completion of the Purchase and Sale Agreement, the lease term under the Land Lease Agreement shall commence and the existing Building Lease Agreement shall be cancelled. MEC shall continue to own the Land as freeholder while PTL shall have an interest in the Land as lessee.
Key terms of the Purchase Transaction, as contained in the Purchase and Sale Agreement, are set out below as follows:
Parties MEC (as seller)
PTL (as purchaser)
Signing Date 17 December 2015
Completion Date 18 December 2015
Assets to be purchased the Building
Consideration JPY10.3 billion (excluding tax) (approximately HK$656 million)
Capital expenditure obligations PTL shall assume all capital expenditure obligations on the Building going forward
Key terms of the Land Lease Agreement are set out below as follows:
Parties MEC (as lessor)
PTL (as lessee) HSH (as guarantor)
Signing Date 17 December 2015
Commencement Date 18 December 2015
Expiry Date 17 December 2085
Lots to be leased the Land
Annual lease payment JPY780 million (excluding tax) (approximately HK$50
million)
HSH has agreed to be a guarantor to the obligations of PTL as lessee under the Land Lease Agreement.
The total Consideration plus applicable consumption taxes shall be settled in cash on the Completion Date in accordance with the terms of the Settlement Memorandum. The Consideration will be satisfied by internal resources of HSH.
The Consideration was determined after good faith negotiations between MEC and PTL, by reference to the value and lease terms of the existing Building Lease Agreement, the future capital expenditure on the Building and the value of all future rental payments under the Land Lease Agreement.
As one of the applicable percentage ratios under Chapter 14 of the Listing Rules for the Purchase Transaction is 5% or more but less than 25%, the Purchase Transaction constitutes a discloseable transaction of HSH and is subject to the notification and announcement requirements under Chapter 14 of the Listing Rules. The Land Lease Agreement is a long-term operating lease entered into by PTL within its ordinary course of business.
The Purchase Transaction and the Land Lease Agreement allow PTL to effectively extend the lease arrangements for the Building and Land by 28 years to 17 December 2085 and to, fix the level of rental payments under the Land Lease Agreement. The Land Lease Agreement also makes reference to the partnership spirit and shared objectives of MEC and PTL to ensure the continued partnership and long-term cooperation between the parties. The Directors believe that the Purchase Transaction, together with the Land Lease Agreement are fair and reasonable and in the interest of the Shareholders as a whole.
HSH, through its subsidiaries, joint venture, joint operation and associates, is principally engaged in the ownership, development, and management of prestigious hotels and commercial and residential properties in key locations in Asia, the United States and Europe, as well as the provision of tourism and leisure, club management and other services.
MEC is a comprehensive real estate developer. It boasts the leading position in the Japanese market, operating a spectrum of businesses in diverse fields related to real estate, including an office building business centered on the Marunouchi district in central Tokyo, a retail property business, a residential business and a hotel business. The company's area of operations is not confined to Japan; it includes the United States and the United Kingdom and extends to such Asian countries as China and Singapore.
To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, MEC and their respective ultimate beneficial owners are third parties independent of HSH and of connected persons (as defined in the Listing Rules) of HSH.
DefinitionsIn this announcement, unless the context otherwise requires, the following terms shall have the meanings set out below:
"Board" the board of Directors
"Building" the shell and core of the Building erected on the Land, including the steel and steel concrete structure with flat roof, four basement levels, and 25 above ground levels with a total floor area of 57,770.89 square meters, together with all
facilities, structures, machinery, equipment, tools, appliances and fixtures, but excluding fit-out, furnishing and equipment that PTL already owns in or on the Building
"Building Lease Agreement" the Fixed-Term Building Lease Agreement entered into
between MEC and PTL dated 25 October 2002, pursuant to
which PTL shall lease the Building from MEC for a term of 50 years from 1 September 2007, being the date on which the Hotel commenced operations
"Completion Date" 18 December 2015
"Consideration" JPY10.3 billion (excluding tax) (approximately HK$656
million)
"Directors" the directors of HSH
"Group" HSH and its subsidiaries
"HK$" Hong Kong Dollar(s), the lawful currency of Hong Kong
"Hotel"The Peninsula Tokyo, the hotel located within the Building which is owned by PTL and operated by the Group
"HSH"The Hongkong and Shanghai Hotels, Limited, a company incorporated in Hong Kong with limited liability under the Companies Ordinance and the shares of which are listed on the main board of The Stock Exchange of Hong Kong Limited
"JPY" Japanese Yen, the lawful currency of Japan
"Land" Lot nos. 1-1, 1-2, 1-3, 1-4 Yurakucho, 1-chome, Chiyoda-ku, Tokyo, Japan
The Hongkong and Shanghai Hotels Ltd. issued this content on 2015-12-17 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2015-12-17 10:21:48 UTC
Original Document: http://www.hshgroup.com/en/~/media/Files/HSHGroup/Investor_Relations/Corporate_Announcements/2015/20151217DiscloseableTransactionPTKEN.ashx
