Holiday Corp. Sets Special Dividend
MEMPHIS, Tenn. (AP) _ The Holiday Corp. announced Monday its board of directors has approved payment of a special cash dividend of $30 per share by the Promus Companies Inc. after Promus is spun off from Holiday. The dividend is $5 lower than originally anticipated.
The dividend is one of several developments announced by the Memphis-based corporation in connection with the pending acquisition of the Holiday Inn hotel system by Bass PLC of Great Britain and the spinoff of a subsidiary, recently named Promus.
Promus, which will own Holiday’s gaming operations and the Embassy Suites, Hampton Inn and Homewood Suites hotel chains, will be managed by the current Holiday Corp. senior management.
The payment of the dividend from Promus is subject to approval of the transaction by stockholders at a meeting expected in January.
The corporation also announced an agreement with Sumitomo Bank Limited providing financing for the special dividend.
″Until recently, indications were that financing was available on favorable terms to pay a $35-per-share dividend,″ said Michael D. Rose, chairman, president and chief executive officer of Holiday Corp.
″However, in the current financial markets, financing that level of payment could be accomplished only at a cost significantly higher than originally planned,″ Rose said in a statement.
″Therefore, management and our board believe it prudent to fix the special dividend at $30 per share, which positions us to finance our dividend through bank facilities and strengthens our equity base for the growth of Promus’ businesses.″