IHG Reports Sale Of InterContinental Hong Kong For $938 Mln - Quick Facts

(RTTNews) - InterContinental Hotels Group Plc. (IHG, IHG.L) Friday said it has agreed to sell IHG's ownership interest in InterContinental Hong Kong to Supreme Key Limited, a consortium of investors advised and managed by Gaw Capital Partners, for a gross purchase price of $938 million.

The buyer has paid a cash deposit to IHG of $94 million, with the remaining proceeds payable in cash on completion. The transaction is scheduled to complete in the second half of 2015.

The buyer has also made a commitment to invest in a significant refurbishment of the InterContinental Hong Kong. This is expected to commence in 2017 and will take place over a period of 18 months.

IHG will retain a 37-year management contract on the InterContinental Hong Kong, with three 10-year extension rights, giving an expected contract length of 67 years. Management fees payable to IHG are initially expected to be approximately $8 million per annum, increasing following the refurbishment.

InterContinental Hong Kong is internationally-acclaimed as one of the world's most famous hotels, with a five-star rating from the Forbes Travel Guide, three Michelin-starred restaurants, and a wide range of state-of-the-art meeting and banqueting facilities.

It is situated on the Kowloon waterfront, with panoramic views of Victoria Harbour and Hong Kong's skyline. InterContinental Hong Kong opened in 1980 and has 503 guest rooms, including 87 suites, and has been wholly owned by IHG and operated under the InterContinental brand since 2001.

In 2014, the Hotel generated EBIT of $42 million, and, as at December 31, 2014, had a net book value of $298 million. The transaction will give rise to an estimated exceptional pre-tax profit on disposal of $700 million, with an estimated exceptional non-cash tax charge of $40 million.