Royal Host to buy back 6%, 5.9% and 7.5% convertibles under issuer bid

By Susanna Moon

Chicago, Jan. 4 - Royal Host Inc. said it plans to begin a normal course issuer bid for its 5.9% convertible unsecured subordinated debentures due June 30, 2014, 6% convertible unsecured subordinated debentures due Oct. 31, 2015 and 7.5% convertible unsecured subordinated debentures due Sept. 30, 2018.

The Toronto Stock Exchange accepted Royal Host's notice of intention to make the normal course issuer bid to repurchase the three series of convertibles from time to time, according to a company press release.

Under exchange rules, the company plans to buy back 10% of the public float outstanding, or $3,104,400 principal amount of the 5.9% convertibles, $2,571,900 principal amount of the 6% convertibles and $4,503,200 principal amount of the 7.5% convertibles.

As of Dec. 31, there was $31,119,000 of the 5.9% notes, $25,744,000 of the 6% notes and $45,166,000 of the 7.5% notes outstanding.

The purchase price for the notes will be the prevailing market price on the Toronto Stock Exchange at the time of purchase, the release noted.

The issuer bid will run from Jan. 9 through Jan. 8, 2014.

From time to time, the market price of the debentures may not fully reflect their underlying value, and purchasing the notes during those times would be in the company's best interests, Royal Host said in the release.

"The purchases will increase the proportionate interest of, and may be advantageous to, all remaining debenture holders. In addition, the purchases by Royal Host may increase liquidity to Royal Host's debenture holders wishing to sell their debentures," the release noted.

Royal Host has purchased $3,805,000 of the 5.9% debentures, $457,000 of the 6% debentures and $2,986,000 of the 7.5% debentures at weighted average prices of $72.85, $76.26 and $85.10, respectively, under previous normal course issuer bids that expired Sept. 11. The average daily trading volume of the notes for six months prior to the date was $38,924, $22,346 and $79,691, respectively.

Halifax, N.S.-based Royal Host owns and operates hotels.

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