TRIS Rating places the “A+” company rating and issue ratings of Minor International PLC (MINT) on CreditAlert with a “negative” implication. The alert follows the announcement that MINT will purchase a sizeable stake in NH Hotel Group SA (NHH). NHH is the sixth-largest European hotel chain, operating 382 hotels with 59,350 rooms in 30 markets, mainly in Europe. NHH is listed on the Madrid Stock Exchange.
MINT announced on 6 June 2018 that it will purchase 65,850,000 shares of NHH, equivalent to 16.8% of the equity (on a fully diluted basis). The transaction is valued at EUR421 million or approximately Bt15.9 billion. The share purchase will be funded by a bridge loan from banks. Prior to this transaction, MINT had acquired a 9.4% equity stake (on a fully diluted basis) in NHH worth Bt8.1 billion in May 2018. MINT also plans to buy an additional 8.4% stake (on a fully diluted basis) in September 2018, and launch a takeover bid in late 2018 to purchase all of the remaining shares of NHH. The planned September purchase and the takeover bid are subject to shareholder approval and the ability of the company to secure sufficient funding.
Given the size of NHH’s operation, the acquisition will mean a giant step in MINT’s geographical expansion of its hospitality business into the European market, which will have a profound effect on its growth prospects. However, the planned debt financing to fund the acquisition will push up MINT’s financial leverage and weaken its financial risk profile. The “negative” alert reflects TRIS Rating’s view on the prospective weakened financial risk profile of MINT as a result of the acquisition. TRIS Rating will resolve the CreditAlert once further information and details of the transactions are available for thorough assessment.
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