TIDMIHG
RNS Number : 3029I
InterContinental Hotels Group PLC
11 December 2020
11 December 2020
InterContinental Hotels Group PLC
Financing and reporting update
InterContinental Hotels Group ("IHG") [LON:IHG, NYSE:IHG (ADRs)]
provides a financing update including a further waiver and
relaxation of existing banking covenants, alongside an update on
changes to System Fund income recognition.
Financing update
As IHG announced in April, we amended our existing $1.35bn
syndicated and bilateral revolving credit facilities (RCF) to
include a waiver of existing covenants at 30 June 2020, 31 December
2020 and 30 June 2021(1) . The interest cover and leverage ratio
covenants were replaced by a $400m minimum liquidity covenant(2) .
The maturity of the RCF was extended by 18 months to September
2023.
IHG has now reached agreement for further amendments to the RCF.
This includes an additional waiver of the covenants at 31 December
2021, together with a relaxation to the covenants at 30 June 2022
and 31 December 2022. The leverage ratio covenant has been amended
to require Net Debt to EBITDA of less than 7.5:1 at 30 June 2022
and less than 6.5:1 at 31 December 2022. The interest cover
covenant has been amended to require a ratio of above 1.5:1 at 30
June 2022 and above 2.0:1 at 31 December 2022. The covenant
relaxations have been based on a theoretical severe downside
scenario. The minimum liquidity covenant of $400m will continue
whilst the amendments are in place and will be tested at 31
December 2021, 30 June 2022 and 31 December 2022.
Changes to System Fund income recognition
Ahead of reporting its results for the 2020 financial year, IHG
is today providing an outline of changes in income recognised in
the System Fund and in its results from reportable segments(3) as
follows:
-- Recognising revenue arising from the licensing of
intellectual property under co-brand credit card agreements in
IHG's reportable segments within Central Revenue rather than in the
System Fund. As only the proportion of revenue associated with
IHG's intellectual property will move, the vast majority of revenue
associated with the cobrand portfolio will continue to be
recognised in the System Fund.
-- Recognising the revenue, costs and profit of running the
Ambassador programme (the InterContinental Hotel & Resorts
paid-for loyalty programme) in the System Fund, rather than IHG's
reportable segments.
These changes are effective from 1 January 2020 with amounts
recognised in prior years unchanged. The net effect of the changes,
if these had been effective in 2019, would have been an increase in
IHG's revenue and operating profit from reportable segments of $18m
and $22m respectively, with a corresponding reduction in System
Fund revenue and increase in the System Fund in-year deficit. A
broadly similar impact is anticipated for the 2020 financial
year.
-Ends-
For further information, please contact:
Investor Relations (Stuart Ford; Rakesh +44 (0)1895 512 +44 (0)7527 419
Patel; Kavita Tatla) 176 431
Media Relations (Yasmin Diamond; Mark +44 (0)1895 512 +44 (0)7527 424
Debenham) 097 046
----------------------------------------- ---------------- ----------------
Notes and definitions
(1) The RCF has customary covenants in respect of interest cover
and leverage ratio, tested at half year and full year on a trailing
twelve-month basis. The interest cover covenant requires a ratio of
EBITDA to net interest payable above 3.5:1 and the leverage ratio
requires Net Debt:EBITDA of below 3.5:1 on a 'frozen GAAP' basis
pre-IFRS 16.
(2) Defined as unrestricted cash and undrawn facilities with a
remaining term of 6 months, tested on 30 June and 31 December.
(3) IHG's results from reportable segments excludes System Fund
results, hotel cost reimbursements and exceptional items. Revenue
and operating profit from reportable segments therefore comprises
the Group's fee business and owned, leased and managed lease
hotels.
Notes to Editors
IHG (R) (InterContinental Hotels Group) [LON:IHG, NYSE:IHG
(ADRs)] is a global organisation with a broad portfolio of hotel
brands, including Six Senses Hotels Resorts Spas , Regent Hotels
& Resorts , InterContinental (R) Hotels & Resorts , Kimpton
(R) Hotels & Restaurants , Hotel Indigo (R) , EVEN (R) Hotels ,
HUALUXE (R) Hotels and Resorts , Crowne Plaza (R) Hotels &
Resorts , voco(TM) , Holiday Inn (R) Hotels & Resorts , Holiday
Inn Express (R) , Holiday Inn Club Vacations (R) , avid(TM) hotels
, Staybridge Suites (R) , Atwell Suites(TM) , and Candlewood Suites
(R) .
IHG franchises, leases, manages or owns nearly 6,000 hotels and
890,000 guest rooms in more than 100 countries, with approximately
1,900 hotels in its development pipeline. IHG also manages IHG (R)
Rewards Club , our global loyalty programme, which has more than
100 million enrolled members.
InterContinental Hotels Group PLC is the Group's holding company
and is incorporated in Great Britain and registered in England and
Wales. Approximately 400,000 people work across IHG's hotels and
corporate offices globally.
Visit www.ihg.com for hotel information and reservations and
www.ihgrewardsclub.com for more on IHG Rewards Club. For our latest
news, visit: https://www.ihgplc.com/en/news-and-media and follow us
on social media at: https://twitter.com/ihgcorporate ,
www.facebook.com/ihgcorporate and
www.linkedin.com/company/intercontinental-hotels-group .
Cautionary note regarding forward-looking statements
This announcement contains certain forward-looking statements as
defined under United States law (Section 21E of the Securities
Exchange Act of 1934) and otherwise. These forward-looking
statements can be identified by the fact that they do not relate
only to historical or current facts. Forward-looking statements
often use words such as 'anticipate', 'target', 'expect',
'estimate', 'intend', 'plan', 'goal', 'believe' or other words of
similar meaning. These statements are based on assumptions and
assessments made by InterContinental Hotels Group PLC's management
in light of their experience and their perception of historical
trends, current conditions, expected future developments and other
factors they believe to be appropriate. By their nature,
forward-looking statements are inherently predictive, speculative
and involve risk and uncertainty. There are a number of factors
that could cause actual results and developments to differ
materially from those expressed in or implied by, such
forward-looking statements. The main factors that could affect the
business and the financial results are described in the 'Risk
Factors' section in the current InterContinental Hotels Group PLC's
Annual report and Form 20-F filed with the United States Securities
and Exchange Commission.
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END
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