* KKR eyes buying bonds that convert into shares
* NH Hoteles' shares jump 5 percent
By Tracy Rucinski
MADRID, Oct 26 Spain's NH Hoteles has
received a preliminary offer from U.S. private equity firm KKR
to buy bonds that can be converted into shares of the
debt-laden hotel chain.
NH Hoteles, Europe's third largest business hotel operator
based on rooms, has long been tipped as a private equity target
given its large debt and that of its savings bank shareholders,
which together own nearly a third of the firm.
Spanish savings banks, or cajas, have been viewed as
unstable shareholders given mounting pressure to sell their
equity stakes to meet new capital requirements ahead of a
European rescue fund for the banking sector.
Meanwhile, NH Hoteles - with nearly 1 billion euros of debt
and 193 million euros of operating cash flow in 2011 - has been
trying to sell its assets to cut debt by a quarter in the next
Spanish media said KKR could invest in NH Hoteles by first
acquiring a 15.7 percent stake held by the parent of
nationalised lender Bankia, worth about 100 million
euros ($130 million), or through a capital increase, or both.
NH Hoteles said in a statement to Spain's stock market
regulator on Friday that no definitive agreement with KKR had
been reached, leaving it unclear what shape any stake buy or
recapitalisation plan might take.
An NH Hoteles spokesman said later that no further details
"The board has received a proposal and now they'll be
analysing it more closely."
News of the preliminary offer from KKR sent NH Hoteles stock
up 5 percent on Friday.
"KKR would remove the cajas from the shareholder structure
and governing bodies, provide financial support for NH, and
manage the company from a value-creation perspective," Spanish
brokerage N+1 Equities said.
KKR co-founder Henry Kravis on Thursday tipped investment
opportunities in Spain due to the country's debt crisis, saying
the firm was interested in companies in the financial, hotel,
leisure and real estate sectors.
NH Hoteles' business has been hit by recession in two of its
main markets, Spain and Italy, but a deal could give KKR access
to its more profitable hotels in Germany, Benelux, central
Europe and Latin America.
Last year, China's HNA Group called off a deal to take a
stake in NH Hoteles through a capital increase that would have
given it 20 percent of the firm.