Regal Hotels International Holdings' plan to sell its North American hotels to Millennium & Copthorne (M&C) may have run into an obstacle. The company said yesterday it had missed last Thursday's deadline to sign a definitive sale agreement with M&C, a unit of CDL Hotels International. M&C on September 3 signed a memorandum of general agreement to acquire Regal's interests in 29 North America hotels valued at US$725 million. Regal and M&C yesterday refused to explain why the September 30 deadline to finalise the agreement was missed. Regal said it would continue to hold discussions with M&C 'on a non-exclusive basis', triggering speculation that it might also start talks with other potential buyers for the North American Hotels. However, 'we consider the talks to be exclusive', said Gerry DeSilva, a spokesman for CDL Hotels. Mr DeSilva said the memorandum M&C signed with Regal was binding. Moreover, analysts said they doubted whether any potential buyers would be willing to agree to a higher valuation of the hotels than M&C. Regal, the 74 per cent-owned hotel unit of Paliburg Holdings, had said its debt load would be cut by $5 billion through the proposed hotel sale. Consequently, the financial restructuring plan of Century City International could be adversely affected if the hotel sale falls through, according to analysts. Century City owns 60.4 per cent of Paliburg. After repaying debt on the North American hotels, Regal is expected to gain at least $200 million under the proposed arrangement with M&C. It would also retain a 50 per cent interest in 16 of the 29 hotels. The market viewed the proposed sale of the hotels negatively, as investors complained Regal would lose a major income source, according to brokers. Regal's share price yesterday fell two HK cents to 66 cents, while Paliburg Holdings' was unchanged at 66 cents. Century City's stock slid 0.5 cent to 28.5 cents. DEALS
