Hotel Online  Special Report

Raffles Holdings Divesture of its Hotel Business
Unlocks Significant Shareholders’ Value


SINGAPORE 21 JULY 2005 – The Board of Raffles Holdings Limited (“RHL”) today announced that RHL has entered into a definitive agreement to divest its Hotel Business (“Transaction”) to Colony HR Acquisitions LLC, an affiliate of Colony Capital LLC for an enterprise value of S$1.72 billion, approximately U.S. $1,034 billion, subject to adjustments upon completion.

The key terms of the Transaction are:

  • divestment at implied enterprise value of S$1.72 billion
  • aggregate consideration of S$1.45 billion in cash
  • gain on divestment of S$605 million
  • 64% premium to the Hotel Business’ NTA
  • gross proceeds of 69 cents per RHL share
  • unlock significant shareholders’ value
  • A special dividend of 40 cents per share to RHL’s shareholders from proceeds is proposed (aggregating to approximately S$816 million).
  • The Transaction is subject to shareholders’ approval at an Extraordinary General Meeting to be convened.  CapitaLand, the 59.7% shareholder of RHL, has given an irrevocable undertaking to vote in favour of the Transaction.
  • After completion of the Transaction, RHL continues to hold its 45% direct equity interest in Tincel Properties which owns the Raffles City Complex.  Tincel Properties generated a total operating profit of S$96.3 million in FY2004.

Stronger Platform for Further Growth

“The Hotel Business has made significant progress in delivering growth and strong operating performance since the successful implementation of the strategic re-positioning plan in April 2003. With the Transaction, the Hotel Business will complement Colony Capital’s larger global portfolio of hotels which will provide an even stronger platform for further growth and development.

After the Transaction, Raffles Holdings will continue to have strong earnings from its interest in Tincel Properties and a strong balance sheet to fund future growth and development.”

Jennie Chua, President & CEO, Raffles Holdings Limited

Another Success in Unlocking Significant Shareholders' Value

“This transaction will create and unlock a very significant amount of value for RHL’s shareholders as evidenced by the large estimated gain on divestment of S$605 million.  Furthermore, the substantial aggregate consideration of more than S$1.4 billion – equivalent to 69 cents per share – provides RHL with the ability to not only return a large amount of capital to all its shareholders by the special dividend, but also to retain a substantial amount of capital and gearing capacity for re-investment into higher yielding assets for future business growth.

The CapitaLand Group is committed to achieve the best returns for our shareholders. By focusing on continuous active balance sheet and capital management across all our businesses, the Group’s prime objective is to enhance capital productivity and maximize shareholder returns.

CapitaLand’s consolidated financial results will benefit substantially from this transaction by virtue of its approximately 59.7 percent interest in RHL.  The Group intends to re-invest the proceeds into higher growth businesses to increase ROE performance.

The CapitaLand Group, into its fifth year of operations, is committed to maintain its growth momentum going forward for the benefit of our shareholders.”

Liew Mun Leong, Deputy Chairman, Raffles Holdings Limited and President & CEO of CapitaLand Group (major shareholder of Raffles Holdings)

Timely Opportunity to Maximise Value for all Shareholders

“RHL has been actively pursuing options to further the objective of creating & unlocking value and has successfully executed several such initiatives. The Transaction which will unlock significant shareholders’ value is yet another success in this continuing effort.

While the Hotel Business has performed well, it is at strategic crossroads. To grow the Hotel Business to gain global scale will entail significant capital investments.  The strong performance of the Hotel Business combined with the current active M&A market presented a timely opportunity for RHL to realize value in the business it has built over the years for the benefit of shareholders and all stakeholders.”

Cheng Wai Keung, Chairman, Raffles Holdings Limited

Custodian of a Great Hotel Chain

"We are honored to become the custodian of one of the finest hotel chains in the world and a true national treasure of the people of Singapore. The properties' success is clearly attributable to the dedication and professionalism of its management and staff.  Colony recognizes the need to keep talented and experienced management and employees and we look forward to working with them.  We deeply respect the historical significance of the Raffles Hotel, Singapore and we consider it our responsibility to protect that legacy.  We are delighted Jennie Chua has agreed to remain as chairman of the Raffles Hotel Singapore to provide continuity and support our efforts."

Thomas J. Barrack, Chairman & Chief Executive Officer, Colony Capital, LLC

 Committed to Continued Long Term Growth

"Our strategy with the business fundamentally revolves around brand positioning and extension.  Our priorities here are first and foremost to act as custodians for the Raffles brand.  Next, we are committed to the continued growth of the Raffles and Swissôtel brands over the years ahead, and support their commitment to unparalleled world class standards of product and services."

Grant L. Kelley, Chief Executive Officer, Colony Capital Asia Limited


Jeanette Pang
Director, Investor Relations
2 Stamford Road #06-01
Raffles City Convention Centre
Singapore 178882
Tel: (65) 6430-1357

Also See: Colony Capital in Agreement to Purchase 15 Raffles Hotels and 26 Swissotels from Raffles Holdings for Approximately US$1 billion; Includes the Fabled Raffles Hotel Singapore / July 2005
Raffles Hotel Singapore Continues Pursuit of Excellence / June 2004

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