6C’s Clarke: CMI Shouldn’t Reap Windfall

NEW YORK— Tim Clarke, chief executive of Six Continents, said that the separation of its lodging and pubs business will allow the company to accelerate plans to secure value for shareholders, with 6C adding there can be no rationale for sharing this value with Capital Management & Investments, according to a Dow Jones report out of London. As previously reported in HOTEL BUSINESS®, CMI, in jockeying for a potential run at 6C supported by British entrepreneur Hugh Osmond, noted its offer would be better for shareholders than the current de-merger plan that is in process at 6C that would create InterContinental Hotels Group (lodging/soft drinks) and Mitchells & Butlers (retail). Clarke stated, “The refinancing of M&B and the increased cost savings in IHG are high on the agenda. CMI should not share in any of these benefits,” according to the report. CMI reportedly has borrowed certain of 6C’s existing plans articulated in the “Listing Particulars” for Mitchells & Butler and InterContinental Hotels Group, particularly, the plans to dispose of noncore assets and to make use of longer term financing techniques to unlock value for shareholders, according to Six Continents. CMI will seek to extract some of this value for itself, Six Continents said, adding that there can be no rationale for sharing this value with CMI. Six Continents said cost savings at IHG are to be at least $100 million per year, with a reduction of yearly overhead against the cost base for the fiscal year 2003 of at least $50 million expected, the report indicated. Plans for implementing the savings strategies currently are under way. The hotels group is reviewing its present asset base in order to redeploy capital; assets will only be retained if they have strategic value or the potential to generate superior returns, according to 6C. For example, the Mayfair InterContinental was put on the market in November 2002 and discussions on its sale are in progress. The pubs piece also has reviewed its portfolio to identify individual sites where, current high prices for alternative use might allow value enhancing disposals. The demerger process is set for shareholder approval on March 12 during an “extraordinary general meeting.”