Norwegian Property agrees to sell Norgani Hotels for EUR 1.4b

Norwegian Property said on Friday that it had signed a letter of intent to sell Norgani hotel group for NOK 11.2bn (EUR 1.4bn) to an unnamed group. 'This transaction will solve all short-term financial challenges,' Norwegian Property CEO Petter Jansen said. 'Furthermore, the capital gain and cash release creates a favourable investment muscle in a market with great opportunities.'

Norwegian Property said in a statement that its loan-to-value ratio would fall below 70% once the transaction was completed and boost the company's cash position to NOK 1bn.

The Oslo-based company said the identity of the buyers would be disclosed after the signing of a share purchase agreement. The buyers have been granted the exclusive right to buy the hotel chain until mid-May.

Norgani Hotels is owned by Oslo Properties, an investment company in which Norwegian Property has a 17.5% stake and rights to buy more than 90%. Norwegian Property said a completed transaction would settle all its obligations with its partners in Oslo Properties, including Sweden-based private equity firm EQT. The deal will also release about NOK 500mln in cash for Norwegian Property. The transaction is expected to close in mid-June.

Oslo Properties acquired Norgani less than eight months ago after beating Aberdeen Asset Management's offer for the hotel group. Oslo paid NOK 3.75bn and took on NOK 6.3bn in debt to acquire the hotel chain. Norgani has 73 hotels that are leased to hotel operators like Scandic and Choice Hotels in Norway, Sweden, Finland and Denmark.