The European Bank for Reconstruction and Development (EBRD) and two financial vehicles of the Spanish GED Capital Development have started procedures to sell their stakes in the Continental hotel chain, a deal whereby the company''s shares will be listed on the Bucharest Stock Exchange. The stake put up for sale accounts for approximately 20% in the hotel chain.
Accounting-wise, the assets of Continental are worth 60 million euros, with the accounting value of the stake therefore standing at some 12 million euros. The price at which the shares will be sold has yet to be set, with the decision up to investor interest.
The floatation of Continental will be the first transaction where institutional investors chose a secondary public offering as means to exit the business. The companies to have floated on the Bucharest Stock Exchange over the last few years have been those that sold newly-issued shares to investors increasing their share capital in the process (initial public offering - IPO).
EBRD owns 11.42%, the Post Privatisation Foundation controls 6.86% and GED Eastern Ltd controls another 1.82%. The three shareholders will sell their entire interests during the offering.
Continental is controlled by businessman Radu Enache and his son, Daniel Enache, who own 30.3% together. Another significant shareholder is Ioan Mirea, with a stake of 18.7%.
The syndicate retained by EBRD and the two funds will present the specifics of the offering to the domestic and foreign institutional investors over the next few weeks, with the price to be set based on their reaction. The offering will be brokered by a syndicate comprised of BRD Securities, Raiffeisen Capital & Investment and Alpha Finance. The representatives of these companies would not comment on the offering, saying National Securities Commission (CNVM) regulations do not allow them to make any statements.
Continental Hotels was created in 2005, following the merger by absorption by Continental of the Dacia Continental, Continental Vest and Continental Nord companies. The company owns 100% in ten three and four-star hotels with a total capacity of 1,435 rooms.
It operates seven three and four-star hotels under the Continental Hotels brand in Arad, Oradea, Sibiu, Targu Mures, Suceava, Drobeta Turnu Severin and Portile de Fier.
Three other hotels are operated based on a management contract signed with the Accor group under the Ibis brand. Two of the Ibis hotels are located in Bucharest and one in Constanta. In addition, the company owns the two-star Gaiser complex in Timisu de Sus, which has 57 rooms and a 4,225 square metre plot of land in Timisoara, where it is to build two new hotels. These assets were evaluated at 57.4 million euros (211 million RON) at the end of last year, according to the company''s annual report.
The company also operates two hotels rented for long-term, namely the four-star Continental Hotel in Bucharest, with 54 rooms and the Bulevard Hotel in Sibiu, with 135 rooms. The two hotels are now being refurbished and modernised and will become operational in 2007.
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