Sol Melia's Take-Over Of Tryp Gets Majority Shareholder Approval

The Extraordinary General Shareholders’ Meeting also approves changes to company statutes

The Sol Meliá Extraordinary General Shareholders’ Meeting, held today, Monday, 23rd. October, in the Meliá Confort Palas Atenea Hotel in Palma de Majorca in Spain, has given majority approval to the ten items on the agenda, including a capital increase providing the TRYP hotel chain with a stake in the company and modifications to company statutes. The meeting registered a quorum of 82.41%.

Take-over of the TRYP hotel chain

After the agreement reached in August by the Sol Meliá Vice Chairman, Sebastián Escarrer, and the Chairman and CEO of TRYP, Antonio Briones and Rufino Calero respectively, by which Sol Meliá would take over TRYP with a total investment of 60,000 million pesetas, the Sol Meliá Extraordinary General Shareholders’ Meeting has approved the capital increase required to complete the operation.

The capital increase approved is for a maximum amount of 2,644,421.40 Euros through the emission of a maximum of 13,222,107 new ordinary shares. The total share capital of Sol Meliá will thus consist of a maximum of 184,776,777 shares.

During his speech the Chairman of Sol Meliá, Gabriel Escarrer, explained that “in line with our incessant efforts and policies to create greater value for our shareholders, this agreement will allow us to increase the size and profitability of the company, increase our earnings per share and be in a better position to approach the greatest challenge faced by major global companies in the 21st. century: the challenge of consolidation within an unstoppable process of globalisation”.

Escarrer added that “this ambitious operation will result in the consolidation of a major hotel group which, once we have incorporated all of the projects currently under construction, will enter the ranking of the top ten hotel companies in the world.

With the acquisition of TRYP, the new Sol Meliá has further strengthened its leadership in the Spanish hotel market, with over 200 hotels, while we have also increased our leadership position in the Spanish city hotel market, the fastest growing market segment in Europe. I would also like to add and emphasise that the operation also makes it much more difficult for foreign hotel groups to disembark in Spain, currently the second most popular travel destination in the world”.

The Sol Meliá Chairman also added that “as a company with a current market capitalisation of over 2,000 million Euros, and in order to maintain or improve our privileged position in the industry, Sol Meliá is also considering other consolidation opportunities given that we are fully aware that if we do not, bearing in mind the rapid developments affecting the tourism industry, we understand that in 3 or 4 years time the company’s size may not be appropriate to optimise its performance.

Although our priority objective at this moment in time is the integration of the TRYP hotel chain and the consolidation of the impressive expansion programme in which we are currently involved, we are confident that additional consolidation opportunities will become a reality in the medium term”.

Change in company statutes

Another of the items on the agenda approved by the Sol Meliá Extraordinary General Shareholders’ Meeting today refers to changes in company statutes.

As the Chairman explained during his intervention, “the main reason for the change is to adapt the statutes to the new circumstances of the company after our merger with Inmotel Inversiones and take-over of Meliá Inversiones Americanas (MIA), and also to make the decision-making process more flexible and efficient”.

According to Escarrer, “the previous statutes were written to prevent any possible conflict of interest between Sol Meliá as a hotel management company and Inmotel Inversiones, which at that time was the company which owned a majority of the properties managed by Sol Meliá. Now the company has become both a manager and owner of hotels our needs are different and the change in the statutes reflects those needs”.

He also added that, “the changes submitted to the Extraordinary General Shareholders’ Meeting today are very similar to those that have been made by other Spanish companies in the Ibex 35. Many of the new articles are the same as those included by companies of the prestige of the BBVA, BSCH, Iberdrola, ENDESA, Ferrovial or Koipe, amongst many others, as recommended by the Spanish National Stock Exchange Commission”.

The approved changes include the creation of a shareholder register that will allow greater transparency and monitoring of the company shareholder base, a measure which is believed to benefit both Sol Meliá and its shareholders. The Meeting also approved new percentages to be applied to quorums and majority votes to allow greater efficiency and flexibility in decision-making.

Another change is the approval of an increase in the number of members on the Board of Directors, which will now comprise a minimum of five and maximum of twenty members instead of the nine members permitted until today. This change will allow new Board members to be appointed, as is the case with Mr. Rufino Calero who has joined the Board as a representative of previous TRYP shareholders. The measure is also seen as a means of achieving greater efficiency and participation in Board decisions.

Finally, the Meeting also agreed to modify requirements for non-independent Directors, as well as the proportions of independent and non-independent Directors, in order to allow vacant positions on the Board to be filled by representatives of companies with which future alliances may be formed.

Adaptation to new technologies

During the year 2000, Sol Meliá has already completed several of the projects foreseen within the “E-transformation” of the company which began one year ago with the objective of adapting the company structure and operations to the needs of the new economy and thus produce improved operating results.

Internally there have been progressive improvements in the technological infrastructures in place in hotels and corporate offices, as well as the implementation of advanced online management programmes, all involving a total investment of 5,000 million pesetas.

As part of the company’s investment programme in the new economy, Sol Meliá has also become a founder member of two Internet portal which are both to be launched before the end of the year. These investments are expected to generate significant advantages in the company’s core business: the sale of hotel rooms, leading to increased revenues and reduced costs.

The first portal, “Hotelnetb2b”, a business-to-business site, has managed to bring in nearly all of the competing major Spanish hotel companies to work together on the project.

The second project, “Prodigios”, is a generalist family portal specialising in leisure, travel, finance and education. This ambitious project is primarily aimed at families and will build upon a new technological platform to provide a greater level of personalisation in its offerings to its clients. “Prodigios” will be characterised by its rapid access, easy-to-use interface and cheap connections, making it the expected portal of reference for more than 1 million Spanish users.

Sol Meliá has also guaranteed its position as the exclusive provider of travel-related services within “Prodigios”, services which will be provided through “Meliaviajes.com”, an online travel agency to be launched in parallel with “Prodigios”. “Prodigios” is currently in the final stages of negotiations with a major international online business to join the project, an event that would raise the company’s capital to almost 100,000 million pesetas.

According to Escarrer, “after arduous negotiations, we are proud to have been able to convince all of our partners in the projects to locate the headquarters of both businesses on the island of Majorca. We trust that this will also ensure that Sol Meliá benefits from all of the technological advances imported by both companies, as well as encouraging the creation of skilled employment opportunities on the island and attracting other investors and other companies in the sector to the benefit of the Balearic Island economy and its diversification”.

Sol Meliá currently operates more than 330 hotels in 30 countries on 4 continents. Once all of the projects currently under development reach fruition, the company will operate more than 400 hotels with over 100,000 rooms, forming part of the top ten hotel companies in the world.

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