Home Inns to Acquire Remaining Minority Stake in Home Inns Beijing
And All of the Equity Interest in Beijing City Sunshine Hotels Management
JUNE 27, 2007. Home Inns & Hotels Management Inc. announced that it has entered into a definitive agreement to acquire the remaining 4.412% stake in its majority owned subsidiary, Home Inns & Hotels Management (Beijing) Ltd., and another definitive agreement to acquire Beijing City Sunshine Hotel Management Inc, a hotel management company with three leased-and-operated hotels in Beijing.
Acquisition of the Remaining 4.412% Stake in Home Inns Beijing
Home Inns currently owns 95.588% of Home Inns Beijing, the subsidiary that operates all Home Inns' leased-and-operated hotels, while the remaining 4.412% is owned by a joint venture partner which is a subsidiary of Beijing Tourism Group. Upon acquisition of the remaining 4.412% stake, Home Inns Beijing will become a wholly-owned subsidiary of Home Inns. Home Inns has agreed to pay a total consideration consisting of RMB 60 million and 441,661 ordinary shares of Home Inns. This transaction is expected to close in the third quarter of 2007. Home Inns Beijing generated revenue of RMB 567.9 million and RMB174.6 million in 2006 and the first quarter of 2007, respectively, which contributed to approximately 96.5% and 95.4% of Home Inns' total revenues in 2006 and the first quarter of 2007, respectively.
"After the acquisition, we will own all of the economic interest in Home Inns Beijing, and eliminate the portion of the minority interest in our income statement currently attributed to this 4.412% stake in Home Inns Beijing," said Ms. May Wu, Home Inns' Chief Financial Officer, "In addition, it is a strategically important move for Home Inns as the new and simplified corporate structure may allow us to substantially shorten the capital injection and currency conversion cycle at Home Inns Beijing, which in turn will better serve our rapid expansion activities."
Acquisition of Beijing City Sunshine Hotel Management Inc.
Beijing City Sunshine has two leased-and-operated economy hotels in operation and one additional hotel under development in Beijing. Home Inns will acquire Beijing City Sunshine in its entirety, for an undisclosed amount of cash. This acquisition is expected to close in early third quarter and is expected to add approximately RMB 6 million in revenues for the remainder of 2007.
"We are very pleased to bring into our portfolio these three additional hotels with excellent locations in Beijing," said David Sun, Home Inns' Chief Executive Officer. "We are even more excited about converting these properties into Home Inns hotels and achieving Home Inns' performance at these hotels in the foreseeable future."
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