Four Seasons to redeem Liquid Yield Option(TM) Notes due 2029
23 August 2004 - 11:30PM
PR Newswire (US)
Four Seasons to redeem Liquid Yield Option(TM) Notes due 2029
TORONTO, Aug. 23 /PRNewswire-FirstCall/ -- Four Seasons Hotels Inc.
(TSX Symbol "FSH"; NYSE Symbol "FS") today announced that it
intends to redeem all of its Liquid Yield Option(TM) Notes due 2029
(Zero Coupon - Subordinated: CUSIP 35100EA06) on September 23, 2004
for US$328.73 cash per US$1,000 principal amount at maturity (the
redemption price being the issue price plus interest that is
accrued but unpaid to but excluding September 23, 2004). The
redemption of all of the outstanding LYONs for cash would require
an aggregate payment of approximately US$215.5 million, assuming
that none of the holders of LYONs exercised the right to convert
the LYONs before their redemption. Four Seasons intends to fund the
redemption of the LYONs with a portion of its current cash on hand.
In accordance with Canadian generally accepted accounting
principles, Four Seasons will allocate the consideration paid on
the redemption to the liability and equity components of the LYONs
based on their relative fair values at the date of redemption.
Depending on interest rates at the date of redemption, Four Seasons
anticipates that it will recognize a pre-tax accounting loss that
could be in the range of $14 million to $44 million related to the
debt component of the LYONs (such amount representing the
difference between the carrying value of the debt component and the
allocated relative fair value of the debt component - estimated at
the present value of the LYONs, yielding an assumed 25-year
interest rate ranging from 7.5% to 8.5% per annum, compounding
semi-annually). This loss will be recorded in the statement of
operations of Four Seasons in its third quarter. In addition, at
these interest rates, Four Seasons expects to recognize a pre-tax
accounting gain on the extinguishment of the equity component of
the LYONs, which could be in the range of approximately $2 million
to $32 million. The gain would be recognized directly in retained
earnings in the third quarter. The amount of the gain and loss is
extremely sensitive to interest rate changes. Based on the
foregoing, the expected net impact on retained earnings from the
extinguishment of the debt and equity components of the LYONs would
be a reduction of approximately $12 million, although the US to
Canadian dollar exchange rates will also affect the net impact.
Holders may convert LYONs into Limited Voting Shares of Four
Seasons prior to the close of business on September 23, 2004, at a
conversion rate of 5.284 Limited Voting Shares per US$1,000
principal amount at maturity of LYONs. (Cash will be paid in lieu
of any fractional shares that otherwise would be issued on
conversion.) Four Seasons has the right to acquire LYONs presented
for conversion for cash in lieu of issuing Limited Voting Shares.
If Four Seasons exercises this right, the amount of cash per
US$1,000 principal amount at maturity of LYONs will be equal to the
product of the conversion rate and the closing sale price of a
Limited Voting Share on the New York Stock Exchange on the trading
day immediately prior to the conversion date. On August 20, 2004,
the last reported sale price of Limited Voting Shares on the New
York Stock Exchange was US$57.27. A notice of redemption is being
sent by The Bank of Nova Scotia Trust Company of New York, the U.S.
trustee for the LYONs, to the registered holders of LYONs. Copies
of the notice of redemption and additional information relating to
the procedure for redemption may be obtained from The Bank of Nova
Scotia Trust Company of New York by calling (212) 225-5427. The
Bank of Nova Scotia Trust Company of New York at One Liberty Plaza,
23rd Floor, New York, New York 10006 is acting as paying agent and
conversion agent for the LYONs. All dollar amounts referred to in
this news release are in Canadian dollars unless otherwise noted.
With a history spanning four decades and a portfolio that extends
worldwide, Four Seasons Hotels and Resorts is the world's leading
operator of luxury hotels, currently managing 64 properties in 29
countries. This news release contains "forward-looking statements"
within the meaning of federal securities laws. These statements
concern anticipated future events, results, circumstances,
performance or expectations that are not historical facts. These
statements are not guarantees of future performance and are subject
to numerous risks and uncertainties that can affect our actual
results and could cause our actual results to differ materially
from those expressed or implied in any forward-looking statement
made by us or on our behalf. These statements are made as of the
date of this news release and, except as required by applicable
law, we undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. DATASOURCE: Four Seasons Hotels and
Resorts CONTACT: Douglas L. Ludwig, Chief Financial Officer and
Executive Vice President, (416) 441-4320; Barbara Henderson, Vice
President Taxation and Investor Relations, (416) 441-4329
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