As filed with the Securities and Exchange Commission on February 25, 2005
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ORIENT-EXPRESS HOTELS LTD.
(Exact name of registrant as specified in its charter)
Bermuda 98-0223493
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22 Victoria Street
Hamilton HM 12, Bermuda
(441) 295-2244
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
John T. Landry, Jr., Esq.
Orient-Express Hotels Inc.
1114 Avenue of the Americas
New York, New York 10036
(212) 302-5066
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------
Copies to:
Stephen V. Burger Rohan S. Weerasinghe
Carter Ledyard & Milburn LLP Shearman & Sterling LLP
2 Wall Street 599 Lexington Avenue
New York, New York 10005 New York, New York 10022
(212) 732-3200 (212) 848-4000
------------------
Approximate date of commencement of proposed sale to the public: As
soon as possible after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate Amount of
securities to be registered registered(1) per unit offering price registration fee
--------------------------------------------------------------------------------------------------------------------
Class A Common Shares, par 8,050,000 shs. $24.07(2) $193,763,500 $22,805.97(4)
value $.01 each ...............
--------------------------------------------------------------------------------------------------------------------
Preferred Share Purchase Rights 8,050,000 rights -- (3) -- (3) None
====================================================================================================================
-----------------
(1) Includes 1,050,000 shares and 1,050,000 rights issuable upon
the exercise of the underwriters' over-allotment option.
(2) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, on the
basis of the average of the high and the low prices ($24.39 and $23.75,
respectively) of a class A common share as reported for New York Stock
Exchange composite transactions on February 22, 2005.
(3) The rights are presently attached to and transferable only with the
class A common shares of the registrant. The value, if any,
attributable to the rights to be offered, is reflected in the proposed
offering price of the class A common shares.
(4) Pursuant to Rule 457(p) under the Securities Act of 1933, $3,071.88 of
the registration fee previously paid with the registrant's Registration
Statement on Form S-3, Registration No. 333-102576 (initial filing date
January 17, 2003), is being offset against the registration fee
currently due for this Registration Statement ($22,805.97). Therefore,
$19,734.09 of the $22,805.97 registration fee for this filing is being
paid with this filing.
------------------
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
ii
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
iii
Subject to Completion
Preliminary Prospectus dated February 25, 2005
P R O S P E C T U S
-------------------
7,000,000 Shares
Orient-Express Hotels Ltd.
Class A Common Shares
----------
Orient-Express Hotels Ltd. is selling 4,000,000 of the class A common
shares, and Sea Containers Ltd. is selling 3,000,000 of the class A common
shares. Orient-Express Hotels will not receive any of the proceeds from the sale
of the 3,000,000 shares by Sea Containers.
The class A common shares trade on the New York Stock Exchange under
the symbol "OEH." On February 24, 2005, the last sale price of the class A
common shares as reported on the New York Stock Exchange was $25.65 per share.
Orient-Express Hotels' bye-laws provide that its board of directors
cannot declare a cash dividend on either of its class A or class B common shares
without at the same time declaring an equal cash dividend on the other class of
common shares. In general, holders of class A common shares and class B common
shares vote together as a single class on all matters submitted to a vote of
Orient-Express Hotels' shareholders, with holders of class B common shares
having one vote per share and holders of class A common shares having one-tenth
of one vote per share. Each class B common share is convertible at any time into
one class A common share. In all other material respects, the class A common
shares and class B common shares are identical and are treated as a single class
of common shares. See "Description of the Common Shares."
This prospectus also relates to 7,000,000 rights to purchase
Orient-Express Hotels' series A junior participating preferred shares. Each of
these rights will be attached to and transferable only with a class A common
share sold in this offering. See "Description of the Common Shares--Preferred
Share Purchase Rights."
Investing in the class A common shares involves risks that are
described in the "Risk Factors" section beginning on page 11 of this prospectus.
---------
Per Share Total
--------- -----
Public offering price..................................... $ $
Underwriting discount..................................... $ $
Proceeds, before expenses, to Orient-Express Hotels....... $ $
Proceeds, before expenses, to Sea Containers.............. $ $
The underwriters may also purchase up to an additional 1,050,000 class
A common shares from Orient-Express Hotels at the public offering price, less
the underwriting discount, within 30 days from the date of this prospectus to
cover over-allotments.
None of the Securities and Exchange Commission, any state securities
commission or any Bermuda regulatory authority has approved or disapproved of
the class A common shares being offered by this prospectus, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The class A common shares will be ready for delivery on or about
_____________, 2005.
_________
Merrill Lynch & Co. Citigroup
_________
The date of this prospectus is __________, 2005.
TABLE OF CONTENTS
Page
----
Summary................................................................. 2
Risk Factors............................................................ 11
Forward-Looking Statements.............................................. 22
Use of Proceeds......................................................... 22
Price Range and Dividend History of the Class A Common Shares........... 23
Capitalization.......................................................... 24
Directors and Executive Officers of Orient-Express Hotels............... 25
Beneficial Ownership of Class A and Class B Common Shares............... 28
The Selling Shareholder................................................. 30
Description of the Common Shares........................................ 30
Material Tax Considerations............................................. 35
Underwriting............................................................ 40
Authorized Representative............................................... 44
Legal Matters........................................................... 44
Experts................................................................. 44
Where You Can Find More Information..................................... 44
---------
You should rely only on the information contained or incorporated by
reference in this prospectus. Orient-Express Hotels, Sea Containers and the
underwriters have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. Orient-Express Hotels, Sea Containers and the
underwriters are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results
of operation and prospects may have changed since that date.
---------
In this prospectus, "Orient-Express Hotels," "we," "us" and "our" refer
to Orient-Express Hotels Ltd., a Bermuda company, and, unless otherwise required
by the context, its subsidiaries, and not to the underwriters or Sea Containers.
"Sea Containers" refers to Sea Containers Ltd., a Bermuda company, and, unless
otherwise required by the context, its subsidiaries.
SUMMARY
This summary may not contain all of the information that may be
important to you. You should read this entire prospectus, including the
financial data and related notes appearing in this prospectus and incorporated
by reference into it, before making an investment decision. This summary
contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause or contribute to such
differences include those discussed in "Risk Factors" and "Forward-Looking
Statements." Unless otherwise indicated, all information in this prospectus
assumes that the underwriters do not exercise their over-allotment option.
Orient-Express Hotels Ltd.
Orient-Express Hotels Ltd. is a hotel and leisure company focused on
the luxury end of the leisure market with many well-known and highly acclaimed
properties.
Hotels and restaurants represent the largest segment of our business,
contributing 84% of our revenue in the nine months ended September 30, 2004, and
85% of our revenue in 2003. We have investments in 38 hotels, three restaurants,
six tourist trains and two river cruise operations in 25 countries. Our hotels
include the Hotel Cipriani in Venice, the Hotel Ritz in Madrid, the Mount Nelson
in Cape Town, the Copacabana Palace in Rio de Janeiro, the Observatory in Sydney
and Charleston Place in Charleston, South Carolina. We also own and operate the
'21' Club restaurant in New York, New York and La Cabana restaurant in Buenos
Aires, and have a 49% interest in Harry's Bar, a private dining club in London.
Besides hotels and restaurants, we operate a tourist train and cruise business
which runs six tourist trains, three of which we own, including the legendary
Venice Simplon-Orient-Express in Europe.
We seek properties that are unique and distinctive as well as luxurious
and we avoid the use of a chain brand. Instead, we promote the local brand and
use the Orient-Express Hotels brand as an assurance of quality to our customers.
We believe that discriminating travelers seek distinctive hotels in preference
to a chain brand and that these travelers are prepared to pay higher rates for
this type of travel experience. As a result, we believe that we tend to achieve
higher room rates than the brand chains and other competitors.
Investment Highlights
POSITIONED TO PARTICIPATE IN LODGING INDUSTRY RECOVERY. We
believe that a recovery in the lodging industry is under way. During the
industry downturn that began in 2001, we invested in selected acquisitions and
hotel expansions in anticipation of renewed demand for luxury hotel and tourist
products. We were also generally successful in maintaining room rates throughout
the downturn. As a result, we expect revenue per available room, or RevPAR,
gains to result from increases in occupancy. We also expect to benefit from
increases in the number of affluent individuals worldwide, which should result
in increased demand for niche luxury accommodations.
2
GROWTH THROUGH REVPAR GAINS, ACQUISITIONS AND HOTEL EXPANSIONS. We are
committed to growing our business profitability through a combination of RevPAR
growth at our existing hotels, acquisitions and the expansion of existing
properties. We believe that when demand fully recovers for hotels, we will be
able to increase our room rates further at our established properties, given the
prestige of our brand names and significant barriers to entry.
Since 2001, we have made nine new investments, including the
acquisition in February 2005 of a 93.5% interest in the Grand Hotel Europe in
St. Petersburg, Russia. See "Recent Development" below in this summary for
further details concerning this acquisition. Our other significant investments
since 2001 include the following:
o In November 2004, we purchased the El Encanto Hotel and Garden
Villas in Santa Barbara, California for $26 million. We plan to
invest a further $10 million to refurbish this property.
o In February 2004, we entered into an agreement with the Pansea
Hotel group, the owner of six deluxe hotels in South East
Asia. Under this agreement, we are to provide a maximum of
$8,000,000 in loans to the hotel holding company, which are
convertible after three years into approximately 25% of the
holding company's shares. In addition, we have an option
exercisable after three to five years to acquire all of the
holding company's shares, and the existing shareholders have
the right to put their shares to us after five years.
o In April 2003, we acquired a 50% interest in the Hotel Ritz in
Madrid, Spain for $135 million through a 50/50 joint venture with
a Spanish investment company.
o In March 2002, we acquired a 75% interest in Maroma Resort and
Spa in Mexico's Yucatan Peninsula for $7.5 million.
o In February 2002, we purchased for $40 million both La
Residencia, a hotel situated on Mallorca's northwest coast, and
Le Manoir aux Quat' Saisons, located in Oxfordshire, England.
We intend to continue to acquire additional distinctive luxury
properties throughout the world and are currently evaluating a number of
acquisition opportunities. Factors in our evaluation of potential acquisitions
include the uniqueness of the property, attractions for guests in the vicinity,
acceptability of actual investment returns, upside potential through pricing,
expansion or improved marketing, limitations on nearby competition and
convenient access.
Management believes that investment in expanding existing properties
with additional rooms and facilities such as spas and conference space may lead
to attractive returns on such investments, because the incremental operating
costs of these are low. We have invested $70 million over the last three years
in such expansion projects and plan to invest a further $80 million over the
next few years in our existing hotels.
Beginning in 2005 at La Samanna, on the island of St. Martin in the
French West Indies, Orient-Express Hotels is constructing its first high-end
vacation villa and apartment development on available land adjacent to the
hotel. We plan to develop up to 150 units on this land and sell
3
them in phases, with Orient-Express Hotels retaining management of the units
sold. Other hotels owned by Orient-Express Hotels with available vacant land
include Bora Bora Lagoon Resort, Maroma Resort and Spa, and Keswick Hall.
Management anticipates future profits from both sales of completed units and
from ongoing management of the units for the purchasers as integral parts of the
adjacent hotels.
UNIQUE PORTFOLIO OF PROPERTIES IN AREAS WHERE THERE ARE HIGH BARRIERS
TO ENTRY. Our properties are in distinctive locations throughout the world. Many
of our properties are part of the local history and could not be replaced or
would be prohibitively expensive to replicate. Also, strict zoning regulations
in a number of countries where we operate, particularly Italy, prohibit or
significantly restrict new hotel development in our areas.
DISTINGUISHED BRAND NAMES. Our brand name "Orient-Express Hotels"
originated with the legendary luxury train traveling between Paris and Istanbul
in the late 19th and early 20th centuries. This brand name is recognized
worldwide and is synonymous with sophisticated travel and refined elegance.
Also, many of our individual properties, such as the Hotel Cipriani and the '21'
Club, have distinctive, local brand identities.
LUXURY MARKET FOCUS. We focus exclusively on the luxury end of the
leisure market. We serve those guests who are less price sensitive and are
willing to pay a premium for services and accommodations which have a special
image, style and character. Our philosophy is that "quality is luxury with
personality."
PRICING POWER. Management believes that given their strong reputation
and distinctive character, our properties tend to command a considerable rate
premium over those of our competitors.
SALES, MARKETING AND DISTRIBUTION ADVANTAGES. We attract guests whom we
believe have often made a specific decision to stay at one or more of our
properties and therefore are more likely to book directly with our hotels. As a
result, this reduces our marketing costs and third-party sales commissions. We
extensively utilize public relations as a communications tool by working with
journalists and travel writers, and we enjoy substantial media exposure because
of the distinctive nature of our properties. During 2004, we hosted about 1,400
journalists at our various properties. As a result, we estimate that about 6,000
articles and stories were published or broadcast about our properties, many in
publications with large local, regional or international circulations.
GLOBAL PRESENCE. We operate hotels and restaurants in 22 countries
across five continents. Also, our trains and cruise business operate in the
U.K., continental Europe, Southeast Asia and South America. Our geographic
diversification makes our results of operations less dependent upon any
particular region.
INDUSTRY AWARDS. We have gained a worldwide reputation for quality and
service in the luxury segment of the leisure and business travel market. Over
the years, our properties have won numerous national and international awards
given by trade or consumer publications, such as Conde Nast Traveller, Gourmet,
Travel & Leisure and Tatler and private subscription newsletters, such as Andrew
Harper's Hideaway Report, or industry bodies, such as the
4
American Automobile Association. The awards are based on opinion polls of their
readers or the professional opinion of journalists or panels of experts. The
awards are believed to influence consumer choice and are therefore highly
prized.
STRONG MANAGEMENT TEAM. Our executive management team includes eleven
individuals who are responsible for our global strategic direction and have an
average of 14 years of experience with Orient-Express Hotels.
Recent Development
On February 10, 2005, Orient-Express Hotels announced that it had
acquired a 93.5% interest in, and full management and operational control of,
the 301-room Grand Hotel Europe in St. Petersburg, Russia. Our total investment
in this property over three years is expected to approximate $125 million,
consisting of the purchase price of the hotel and the land on which it is
located, the management contract, related goodwill and other assets, and the
cost of projected refurbishments. Floating rate financing for this investment,
in an aggregate amount of $65 million, is being provided by the International
Finance Corporation and a syndicate of banks.
Originally built in 1875, the hotel occupies one side of an entire city
block on the fashionable Nevsky Prospect in the heart of the city near the
Russian Museum, the Shostakovich Philarmonia and other tourist and cultural
attractions, as well as the business center. There are six restaurants on the
premises, popular with locals and visitors alike, as well as a grand ballroom,
meeting facilities, a health club and seven retail shops. Management plans
significant refurbishment of the hotel and hopes to acquire in the future the
6.5% minority interest and the land on which the hotel is located, each of which
is owned by the City of St. Petersburg.
Relationship with Sea Containers
Sea Containers Ltd., a Bermuda company with shares listed on the New
York Stock Exchange, currently owns 11,943,901 of our class A common shares and
2,459,399 of our class B common shares, representing in the aggregate about 42%
of our currently outstanding class A and class B common shares, excluding
18,044,478 class B common shares owned by one of our subsidiaries. After giving
effect to the sale by Sea Containers of 3,000,000 class A common shares in this
offering, and to the sale by Orient-Express Hotels of 4,000,000 newly issued
class A common shares in this offering, Sea Containers will own 8,943,901 of our
class A common shares and 2,459,399 of our class B common shares, representing
in the aggregate about 30% of our then outstanding class A and class B shares,
again excluding the 18,044,478 class B common shares owned by one of our
subsidiaries. The class A and class B common shares currently owned by Sea
Containers represent about 15%, and the shares to be owned by Sea Containers
after this offering will represent about 14%, of the combined voting power of
all outstanding class A and class B common shares of Orient-Express Hotels,
including the class B common shares owned by such subsidiary.
Until the initial public offering of our class A common shares in
August 2000, Orient-Express Hotels was a wholly-owned subsidiary of Sea
Containers. In November 2002, Orient-Express Hotels ceased to be a consolidated
subsidiary of Sea Containers and since then has been accounted for in Sea
Containers' financial statements using the equity method of accounting.
5
Orient-Express Hotels filed a registration statement with the SEC
(which was declared effective on February 19, 2003) for sales by Sea Containers
from time to time, in one or more transactions, of any or all of its remaining
8,943,901 class A common shares of Orient-Express Hotels plus the 2,459,399
Orient-Express Hotels class A common shares issuable upon conversion of
2,459,399 Orient-Express Hotels class B common shares held by Sea Containers.
* * *
Orient-Express Hotels maintains its registered office at 22 Victoria
Street, Hamilton HM 12, Bermuda, telephone 441-295-2244. Its main service
subsidiary--Orient-Express Services Ltd.--in the United Kingdom is located at
Sea Containers House, 20 Upper Ground, London SE1 9PF, England, telephone
011-44-20-7805-5060, and its main United States service
subsidiary--Orient-Express Hotels Inc.--has offices at 1114 Avenue of the
Americas, New York, New York 10036, telephone 212-302-5066.
Our website is www.orient-express.com. The information on this website
is not a part of this prospectus.
6
The Offering
Class A common shares offered (1):
by Orient-Express Hotels........ 4,000,000 shares
by Sea Containers .............. 3,000,000 shares
---------
Total........................ 7,000,000 shares
Class A and B common shares to be
outstanding immediately
after this offering(2)(3). ..... 38,250,000 shares
Use of proceeds........................ We estimate that the net proceeds to
Orient-Express Hotels from this
offering, assuming no exercise of the
underwriters' over-allotment option,
will be approximately $94,800,000. We
intend to use the net proceeds from
this offering primarily for our
general corporate purposes, which may
include the reduction of our debt,
the purchase of hotels and related
businesses, capital investment in
existing properties and the funding of
our working capital needs. See "Use of
Proceeds."
Orient-Express Hotels will not receive
any proceeds from the sale of class A
common shares by Sea Containers.
New York Stock Exchange symbol......... OEH
Risk factors........................... See "Risk Factors" and other
information in this prospectus for a
discussion of matters you should
carefully consider before deciding to
invest in the class A common shares.
-------------
(1) Holders of class B common shares have in general one vote per share,
and holders of class A common shares have one-tenth of one vote per
share, on most matters to be submitted to the vote of the common
shareholders of Orient-Express Hotels. The holders of class A and class
B common shares vote together as a single class on most matters. See
"Description of the Common Shares -- Voting Rights" beginning on page
31 of this prospectus.
(2) Our wholly-owned subsidiary Orient-Express Holdings 1 Ltd., or
Holdings, owns 18,044,478 class B common shares of Orient-Express
Hotels. These shares are outstanding under Bermuda law and may be voted
by Holdings, although they are disregarded for purposes of calculating
our earnings per share. Thus, Holdings has voting control of
Orient-Express Hotels. As of the date of this prospectus, Holdings
holds common shares representing approximately 76% of the combined
voting power of the outstanding common shares of Orient-Express Hotels
for most matters submitted to a vote of its shareholders (75% after
giving effect to the issuance of an additional 4,000,000 class A common
shares in this offering).
(3) The number of outstanding common shares disregards the 18,044,478 class
B common shares owned by Holdings as described in note (2) above.
7
The number of class A and class B common shares outstanding (a)
excludes 1,250,000 class A and class B common shares reserved for issuance under
the 2000 and 2004 Stock Option Plans of Orient-Express Hotels, and (b) assumes
that the underwriters' over-allotment option is not exercised. If the
underwriters' over-allotment option is exercised in full, Orient-Express Hotels
will issue and sell an additional 1,050,000 of its class A common shares.
Summary Consolidated Financial Data
The income statement and balance sheet information presented in the
following table as of December 31, 2001, 2002 and 2003 and for the years
then ended are derived from the audited consolidated financial statements of
Orient-Express Hotels, which have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm. The income statement
and balance sheet information for the nine months ended September 30, 2003 and
2004, and as of September 30, 2004, have been derived from the unaudited
consolidated financial statements of Orient-Express Hotels which, in the opinion
of management, have been prepared on the same basis as the audited financial
statements and reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of our financial position and
results of operations for these periods. Certain reclassifications have been
made within the historical statements of consolidated operations and balance
sheets for the years ended December 31, 2001, 2002 and 2003 to conform to the
classifications in the 2004 statements of consolidated operations and balance
sheets. These classifications had no effect on net earnings, total assets or
total liabilities in any of the periods presented.
Results for the nine-month period ended September 30, 2004 are not
necessarily indicative of results that may be expected for the entire year. The
historical financial information below may not give an accurate indication of
our future performance.
8
Orient-Express Hotels Ltd. and Subsidiaries
Nine months ended
Year ended December 31, September 30,
------------------------------ ----------------------
2001 2002 2003 2003 2004
------ ------ ------ ------ ------
(Dollars in millions except where otherwise indicated)
Consolidated income statement data:
Revenue............................................... $252.2 $279.3 $315.9 $238.2 $264.4
Expenses:
Depreciation and amortization...................... 16.4 19.5 25.3 18.7 21.2
Operating.......................................... 120.0 136.2 158.6 118.2 129.5
Selling, general and administrative................ 72.2 86.1 101.8 75.6 84.3
Gain on sale of hotel asset........................ - - 4.3 - -
------ ------ ------ ------ ------
Earnings from operations before net finance
costs.............................................. 43.6 37.5 34.5 25.7 29.4
Net finance costs..................................... (18.6) (18.4) (17.2) (14.3) (14.6)
------ ------ ------ ------ ------
Earnings before income taxes.......................... 25.0 19.1 17.3 11.4 14.8
Provision for income taxes............................ 2.5 2.3 1.0 2.9 3.6
Earnings from unconsolidated companies................ 7.4 8.5 7.3 6.5 8.6
---- ------ ------ ------ ------
Net earnings.......................................... $ 29.9 $ 25.3 $ 23.6 $ 15.0 $ 19.8
====== ====== ====== ====== ======
Consolidated net earnings per share:
Net earnings per class A and class B share, basic
and diluted........................................ $0.97 $0.82 $0.76 $0.49 $0.58
Weighted average number of shares
(in millions)...................................... 30.9 30.8 31.1 30.8 34.3
Consolidated balance sheet data (at end of period):
Cash and cash equivalents............................. $57.9 $37.9 $ 81.3 $ 53.5 $ 51.8
Total assets.......................................... 836.3 998.5 1,169.2 1,155.1 1,157.6
Long-term debt (including current portion)............ 362.9 459.0 554.2 567.9 505.6
Total shareholders' equity............................ 392.6 426.5 512.4 446.9 530.1
Other consolidated financial data:
Cash flows provided by (used in):
Operating activities............................... 40.5 35.3 33.2 25.6 45.0
Investing activities............................... (76.8) (119.0) (40.6) (92.7) (58.7)
Financing activities............................... 79.1 63.3 48.3 81.0 (15.9)
Capital expenditures (excluding acquisitions)......... 37.6 56.9 54.5 44.4 44.1
Segment EBITDA(1)..................................... 69.1 67.0 64.8 50.8 59.4
Segment EBITDA margin (% of total revenue
and total earnings from unconsolidated
companies)......................................... 26% 23% 21% 21% 22%
---------------------
(1) "Segment EBITDA" is net earnings before interest, tax (including tax on
earnings from unconsolidated companies) depreciation, amortization and
gain on sale of hotel asset. Management evaluates the operating
performance of our segments on this basis and believes that Segment
EBITDA is a useful measure of operating performance to help determine
our ability to incur capital
9
expenditure or service indebtedness, because Segment EBITDA is not
affected by non-operating factors such as leverage and the historic
cost of assets. EBITDA is a financial measure commonly used in
Orient-Express Hotels' industry. However, our Segment EBITDA may not be
comparable in all instances to EBITDA as disclosed by other companies.
You should not consider Segment EBITA as an alternative to earnings
from operations or net earnings (as determined in accordance with
generally accepted accounting principles) as a measure of our operating
performance, or as an alternative to net cash provided by operating,
investing and financing activities (as determined in accordance with
generally accepted accounting principles) as a measure of our ability
to meet cash needs.
Segment EBITDA is reconciled to net earnings as follows:
Nine months ended
Year ended December 31, September 30,
--------------------------- -----------------
2001 2002 2003 2003 2004
------ ------ ------ ------ ------
(Dollars in millions)
Total Segment EBITDA................................ $ 69.1 $ 67.0 $ 64.8 $ 50.8 $ 59.4
Add gain on sale of hotel asset..................... -- -- 4.3 -- --
Deduct:
Depreciation and amortization..................... (16.4) (19.5) (25.3) (18.7) (21.2)
Net finance costs................................. (18.6) (18.4) (17.2) (14.3) (14.6)
Provision for income taxes (2).................... (4.2) (3.8) (3.0) (2.9) (3.9)
---- ---- ---- ---- ----
Net earnings......................................... $ 29.9 $ 25.3 $ 23.6 $ 15.0 $ 19.8
====== ====== ====== ====== ======
-----------------
(2) Includes provision for income taxes on earnings from
unconsolidated companies.
10
RISK FACTORS
You should carefully consider the risks described below and the other
information contained in or incorporated by reference in this prospectus before
making a decision to purchase class A common shares.
We have separated the risks into four general groups:
o risks that relate to our financial condition and results of
operations;
o risks of our business;
o risks connected with our relationship with Sea Containers; and
o risks of owning and selling class A common shares.
We have only described the risks we consider to be the most material.
There may be additional risks that we currently deem less material or that are
not presently known to us.
If any of these risks occurs, Orient-Express Hotels' business,
prospects, financial condition, results of operations or cash flows could be
materially adversely affected. When we state below that a risk may have a
material adverse effect, we mean that the risk may have one or more of these
effects. In that case, the market price of the class A common shares could
decline.
This prospectus, including the documents incorporated by reference
herein, also contains forward-looking statements that involve risks and
uncertainties. We refer you to "Forward-Looking Statements" in this prospectus.
Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including the risks
described below and elsewhere in this prospectus.
Risks Relating to Our Financial Condition and Results of Operations
Covenants in Orient-Express Hotels' financing agreements could limit its
discretion in operating its businesses, causing it to make less advantageous
business decisions; Orient-Express Hotels' indebtedness is collateralized by
substantially all of its properties.
--------------------------------------------------------------------------------
Orient-Express Hotels' financing agreements with about 20 commercial
bank lenders contain covenants that include limits on additional debt
collateralized by mortgaged properties, limits on liens on property and limits
on mergers and asset sales, and financial covenants requiring maintenance of a
minimum net worth amount or a minimum interest expense coverage, or establishing
a maximum debt to equity ratio. Our indebtedness is also collateralized by
substantially all of our properties. Future financing agreements may contain
similar, or even more restrictive, provisions and covenants. If Orient-Express
Hotels fails to comply with the restrictions in its present or future financing
agreements, a default may occur. A default could allow the creditors to
accelerate the related debt as well as any other debt to which a
cross-acceleration or cross-default provision applies. A default could also
allow the creditors to foreclose on the properties collateralizing such debt.
11
Increases in prevailing interest rates may increase our interest payment
obligations.
--------------------------------------------------------------------------------
Substantially all of Orient-Express Hotels' consolidated long-term debt
at September 30, 2004, accrued interest at rates that fluctuate with prevailing
interest rates, so that any increases in prevailing interest rates may increase
Orient-Express Hotels' interest payment obligations. From time to time,
Orient-Express Hotels enters into hedging transactions in order to manage its
floating interest-rate exposure, but we cannot assure you that such transactions
will be successful. At September 30, 2004, Orient-Express Hotels had no interest
rate hedges in place.
Orient-Express Hotels' ability to pay dividends on the class A common shares is
limited.
--------------------------------------------------------------------------------
Beginning in January 2004, Orient-Express Hotels has been paying
quarterly dividends on its class A and class B common shares in the amount of
$0.025 per share. We cannot assure you that we will be able to make dividend
payments in the future because of debt repayment requirements, a downturn to our
business, or other reasons.
Under Bermuda law, Orient-Express Hotels may pay dividends on, or make
other distributions with respect to the class A and class B common shares (1)
unless there are reasonable grounds for believing that Orient-Express Hotels is,
or after the payment or distribution would be, unable to pay its liabilities as
they become due, or (2) unless the realizable value of Orient-Express Hotels'
assets are less than the aggregate of its liabilities, issued share capital and
"share premium accounts" (share premium is defined as the amount of
shareholders' equity over and above the aggregate par value of Orient-Express
Hotels' issued shares). We cannot assure you that Orient-Express Hotels will not
be restricted by Bermuda law from paying dividends.
Orient-Express Hotels' substantial indebtedness could adversely affect its
financial health.
--------------------------------------------------------------------------------
Orient-Express Hotels and its subsidiaries have a significant amount of
debt and may incur additional debt from time to time. As of September 30, 2004,
its consolidated long-term indebtedness was $505 million. Our substantial
indebtedness could
o require us to dedicate much of our cash flow from operations
to payments on our indebtedness, and so reduce the
availability of cash flow to fund our working capital, capital
expenditures, product and service development and other
general corporate purposes; for example, in 2003
Orient-Express Hotels generated $33 million in cash from
operating activities after paying interest of $17 million and
before loan principal repayments of $64 million,
o limit our ability to obtain additional financing to fund
future working capital, capital expenditures, product and
service development and other general corporate purposes,
o increase our vulnerability to adverse economic and industry
conditions, including the seasonality of some of our businesses,
or
o limit our flexibility in planning for, or reacting to, changes in
our business and industry as well as the economy generally.
12
Orient-Express Hotels must also repay or refinance a significant amount
of indebtedness in future years. Although Orient-Express Hotels may seek to
refinance its indebtedness, it may be unable to obtain refinancing. Any failure
of Orient-Express Hotels to repay any indebtedness when due may result in a
default under such indebtedness and cause cross-defaults under other
indebtedness.
Risks of Our Business
Orient-Express Hotels' operations are subject to adverse factors generally
encountered in the hospitality industry.
--------------------------------------------------------------------------------
Besides the specific conditions discussed in the risk factors below,
these adverse factors include
o cyclical downturns arising from changes in general and local
economic conditions,
o political instability of governments of some countries where
properties are located,
o falling disposable income of consumers and the traveling public,
o dependence on varying levels of tourism, business travel and
corporate entertainment,
o changes in popular travel patterns,
o competition from other hotels and leisure time activities,
o periodic local oversupply of guest accommodation, which may
adversely affect occupancy rates and actual room rates achieved,
o increases in operating costs due to inflation and other factors
which may not be offset by increased revenues,
o regional and local economic and political conditions affecting
market demand, including recessions, civil disorder and acts of
terrorism,
o foreign exchange rate movements,
o adverse weather conditions or destructive forces like fire or
flooding, and
o seasonality, in that many of our hotels and tourist trains are
located in the northern hemisphere where they operate at low
revenue or close during the winter months.
The effect of these factors varies among our hotels and other
properties because of their geographic diversity. For example, the SARS epidemic
in Asia in 2003 caused a reduction in passenger bookings on the tourist train of
Orient-Express Hotels operating between Bangkok and
13
Singapore and had a negative impact on travel to Australia and Tahiti. Although
the SARS outbreak was contained, it is possible that the disease could re-emerge
or another potential epidemic could occur.
In particular, as a result of terrorist attacks in the United States on
September 11, 2001 and the subsequent military actions in Afghanistan and Iraq,
international, regional and even domestic travel was disrupted. Demand for most
of Orient-Express Hotels' properties declined substantially in the latter part
of 2001, and the effects of the disruption are continuing to be felt. For
example, American leisure travelers seem more reluctant than in the past to go
abroad, and the booking lead-times by guests, travel agents and tour operators
at our properties have shortened since September 11th. Further acts of terrorism
or a military action could again reduce leisure and business travel.
The hospitality industry is highly competitive, both for acquisitions of new
hotels and restaurants and for customers for Orient-Express Hotels' properties.
--------------------------------------------------------------------------------
We compete for hotel and restaurant acquisition opportunities with
others who have substantially greater financial resources than we do. These
competitors may be prepared to accept a higher level of financial risk than we
can prudently manage. This competition may have the effect of reducing the
number of suitable investment opportunities offered to us and increasing our
acquisition costs by enhancing the bargaining power of property owners seeking
to sell or to enter into management agreements.
Some of our properties are located in areas where there are numerous
competitors. For example, in recent years competing deluxe hotels opened near
our properties in New Orleans, Sydney and Rio de Janeiro. Competitive factors in
the hospitality industry include convenience of location, the quality of the
property, room rates and menu prices, the range and quality of food services and
amenities offered, types of cuisine, and name recognition. Demographic,
geographic or other changes in one or more of our markets could impact the
convenience or desirability of our hotels and restaurants, and so could
adversely affect their operations. Also, new or existing competitors could
significantly lower rates or offer greater conveniences, services or amenities,
or significantly expand, improve or introduce new facilities in the markets in
which our hotels and restaurants compete.
The hospitality industry is heavily regulated, including with respect to food
and beverage sales, employee relations, construction and environmental concerns,
and compliance with these laws could reduce revenues and profits of properties
owned or managed by Orient-Express Hotels.
--------------------------------------------------------------------------------
Orient-Express Hotels and its various properties are subject worldwide
to numerous laws, including those relating to the preparation and sale of food
and beverages, liquor service, and health and safety of premises. Our properties
are also subject to laws governing our relationship with our employees in such
areas as minimum wage and maximum working hours, overtime, working conditions,
hiring and firing employees and work permits. Also, the success of expanding our
existing properties depends upon our obtaining necessary building permits or
zoning variances from local authorities.
14
Orient-Express Hotels also is subject to foreign and U.S. laws and
regulations relating to the environment and the handling of hazardous substances
that may impose or create significant potential environmental liabilities, even
in situations where the environmental problem or violation occurred on a
property before we acquired it.
Orient-Express Hotels' acquisition, expansion and development strategy may be
less successful than we expect, and, therefore, its growth may be limited.
--------------------------------------------------------------------------------
We intend to increase the revenues and net income of Orient-Express
Hotels through acquisitions of new properties and expansion of its existing
properties. Our ability to pursue new growth opportunities successfully will
depend on our ability to identify properties suitable for acquisition and
expansion, to negotiate purchases or construction on satisfactory terms, to
obtain the necessary financing and permits and to integrate new properties into
our operations. Also, our acquisition of properties in new locations may present
operating and marketing challenges that are different from those we encounter in
our existing locations. We cannot assure you that we will succeed in our growth
strategy.
We may develop new properties in the future. New project development is
subject to such adverse factors as market or site deterioration after
acquisition, inclement weather, labor or material shortages, work stoppages and
the continued availability of construction and permanent financing. For example,
the opening of the Westcliff Hotel in Johannesburg occurred about six months
later than originally planned, as construction took longer than expected. This
delay had a significant adverse impact on the revenues and profitability of our
African operations.
We cannot assure you that Orient-Express Hotels will obtain the necessary
additional capital to finance the growth of its business.
--------------------------------------------------------------------------------
The acquisition and expansion of leisure properties, as well as the
ongoing renovations, refurbishments and improvements required to maintain or
upgrade our existing properties, are capital intensive. The availability of
future borrowings and access to the capital markets for equity financing to fund
these acquisitions and expansions depends on prevailing market conditions and
the acceptability of financing terms offered to us. We cannot assure you that
future borrowings or equity financing will be available to us, or available on
acceptable terms, in an amount sufficient to fund our needs. Future equity
financings may be dilutive to the existing holders of our common shares. Future
debt financings could involve restrictive covenants that would limit
Orient-Express Hotels' flexibility in operating its business.
Currency fluctuations may have a material adverse effect on Orient-Express
Hotels' financial statements and/or its operating margins.
--------------------------------------------------------------------------------
Substantial portions of the revenues and expenses of Orient-Express
Hotels are denominated in non-U.S. currencies such as European euros, British
pounds sterling, South African rand, Australian dollars, Peruvian nuevos soles,
Botswana pula, Brazilian reais, Mexican pesos and French Pacific francs. In
addition, we buy assets and incur liabilities in these foreign currencies.
Foreign exchange rate fluctuations may have a material adverse effect on our
financial statements and/or our operating margins.
15
Our financial statements, which are presented in U.S. dollars, can be
impacted by foreign exchange fluctuations through both
o translation risk, which is the risk that our financial
statements for a particular period or as of a certain date
depend on the prevailing exchange rates of the various
currencies against the U.S. dollar, and
o transaction risk, which is the risk that the currency of our
costs and liabilities fluctuates in relation to the currency
of our revenue and assets, which fluctuations may adversely
affect our operating margins.
Orient-Express Hotels' operations may be adversely affected by extreme weather
conditions and the impact of natural disasters.
--------------------------------------------------------------------------------
Orient-Express Hotels operates properties in a variety of locales, each
of which is subject to local weather patterns and their effects on our
properties, as well as on customer travel. As Orient-Express Hotels' revenues
are dependent on the revenues of individual properties, extreme weather
conditions can from time to time have a major adverse impact upon individual
properties or particular regions. For example, our La Samanna hotel, which is
located on St. Martin, suffered substantial wind and flood damage from a
hurricane in November 1999. Although the hotel was fully insured for the repair
costs, it remained closed until February 2000, so that we missed much of the
high season that year.
If the relationships between Orient-Express Hotels and its employees were to
deteriorate, it may be faced with labor shortages or stoppages, which would
adversely affect its ability to operate its facilities.
--------------------------------------------------------------------------------
Orient-Express Hotels' relations with its employees in various
countries, including the approximately 2,000 employees represented by labor
unions, could deteriorate due to disputes related to, among other things, wage
or benefit levels, working conditions or our response to changes in government
regulation of workers and the workplace. Operations rely heavily on employees'
providing high-quality personal service, and any labor shortage or stoppage
caused by poor relations with employees, including labor unions, could adversely
affect our ability to provide those services, which could reduce occupancy and
room revenue and even tarnish our reputation.
Orient-Express Hotels' owned hotels and restaurants are subject to risks
generally incident to the ownership of commercial real estate and often beyond
its control.
--------------------------------------------------------------------------------
These include
o changes in national, regional and local economic and political
conditions,
o changes in interest rates and in the availability, cost and terms
of financing,
o the impact of present or future governmental legislation and
regulations (including environmental laws),
o the ongoing need for capital improvements to maintain or upgrade
properties,
16
o changes in property taxes and operating expenses, and
o the potential for uninsured or underinsured losses.
Risks Resulting from Our Relationship with Sea Containers
Orient-Express Hotels' share price may be adversely affected by the limited
liquidity of its class A common shares in the market. Any substantial sales of
Orient-Express Hotels' class A common shares by Sea Containers might adversely
affect the market price for those shares.
--------------------------------------------------------------------------------
Sea Containers currently owns 11,943,901 class A common shares of
Orient-Express Hotels and 2,459,399 class B common shares of Orient-Express
Hotels, or approximately 42% of the class A and class B common shares currently
outstanding, excluding 18,044,478 class B common shares owned by Orient-Express
Holdings 1 Ltd., a wholly-owned subsidiary of Orient-Express Hotels.
Orient-Express Hotels filed with the SEC a registration statement (which was
declared effective on February 19, 2003) for sales by Sea Containers from time
to time, in one or more transactions, of any or all of its 11,943,901 class A
common shares of Orient-Express Hotels plus the 2,459,399 Orient- Express Hotels
class A common shares issuable upon conversion of the 2,459,399 Orient-Express
Hotels class B common shares held by Sea Containers. Included in the
abovementioned 14,403,300 class A common shares of Orient-Express Hotels are the
3,000,000 class A common shares Sea Containers is offering in combination with
Orient-Express Hotels' offering of 4,000,000 class A common shares by means of
this prospectus offering.
See "Underwriting."
Sea Containers has advised Orient-Express Hotels that it plans to sell
all its remaining class A common shares of Orient-Express Hotels, but the timing
of these sales will depend on market conditions.
The liquidity of the class A common shares in the market will continue
to be limited unless and until Sea Containers elects to make future sales of the
class A common shares. However, any future sales by Sea Containers of
substantial amounts of the class A common shares in the public market, or the
perception that such sales might occur, could adversely affect the market price
of the class A common shares.
Some of Orient-Express Hotels' directors and executive officers may have
potential conflicts of interest because they own Sea Containers' shares or have
positions at Sea Containers, or because of contractual rights relating to one of
our properties.
--------------------------------------------------------------------------------
Some of Orient-Express Hotels' directors and executive officers--James
B. Sherwood, John D. Campbell and Edwin S. Hetherington--hold Sea Containers
class A and class B common shares and options to purchase Sea Containers class A
and class B common shares. Also, these persons are executive officers or
directors of Sea Containers. Ownership of Sea Containers class A and class B
common shares by Orient-Express Hotels' directors and officers, or their
positions as executive officers or directors of Sea Containers, could create, or
appear to create, potential conflicts of interest when directors and officers
are faced with decisions that could have different implications for Sea
Containers and Orient-Express Hotels.
17
In addition, Orient-Express Hotels has granted to James B. Sherwood,
the chairman of the board of directors of Orient-Express Hotels and the
president of Sea Containers, a right of first refusal to purchase the Hotel
Cipriani in Venice and related assets if Orient-Express Hotels proposes to sell
or transfer them. Also, a subsidiary of Orient-Express Hotels has granted to Mr.
Sherwood an option to purchase the hotel at its fair market value if a change of
control of Orient-Express Hotels occurs.
We have in place a code of business practices administered by the audit
committee of our board of directors and applicable to our principal executive,
financial and accounting officers to avoid conflicts of interest. However, we
cannot assure you that this will prevent future conflicts.
Risks of Owning and Selling Class A Common Shares
Orient-Express Hotels will not be restricted from issuing additional class A
common shares and any such sales could negatively affect the trading price of
the class A common shares.
--------------------------------------------------------------------------------
Upon the expiration of a "lock-up" period of 90 days after the date of
this prospectus (see "Underwriting -- No Sales of Similar Securities"),
Orient-Express Hotels may in its discretion sell newly issued class A common
shares in addition to the newly issued 4,000,000 class A common shares that it
is offering in this prospectus. We cannot assure you that we will not make
significant sales of such other class A common shares. Any such sales could
materially and adversely affect the trading price of the class A common shares.
The price of the class A common shares may fluctuate significantly, which may
make it difficult for you to resell the class A common shares when you want or
at prices you find attractive.
--------------------------------------------------------------------------------
The price of the class A common shares on the New York Stock Exchange
constantly changes. We expect that the market price of the class A common shares
will continue to fluctuate. Holders of class A common shares will be subject to
the risk of volatility and depressed prices.
Orient-Express Hotels' share price can fluctuate as a result of a
variety of factors, many of which are beyond Orient-Express Hotels, control.
These factors include
o quarterly variations in operating results,
o operating results that vary from the expectations of management,
securities analysts and investors,
o changes in expectations as to future financial performance,
including financial estimates by securities analysts and
investors,
o developments generally affecting Orient-Express Hotels'
businesses,
18
o announcements by Orient-Express Hotels or its competitors of
significant contracts, acquisitions, joint ventures or capital
commitments,
o announcements by third parties of significant claims or
proceedings against Orient-Express Hotels,
o the dividend policy for the class A and class B common shares,
o future sales of equity or equity-linked equities, and
o general domestic and international economic conditions.
In addition, the stock market in general has experienced volatility
that has often been unrelated to the operating performance of a particular
company. These broad market fluctuations may adversely affect the market price
of the class A common shares.
Orient-Express Hotels' directors and officers may control the outcome of most
matters submitted to a vote of its shareholders.
--------------------------------------------------------------------------------
A wholly-owned subsidiary of Orient-Express Hotels--Orient-Express
Holdings 1 Ltd., or Holdings--currently holds 18,044,478 class B common shares
of Orient-Express Hotels representing about 76% of the voting power for most
matters submitted to a vote of Orient-Express Hotels' shareholders, and
Holdings, together with the directors and officers of Orient-Express Hotels,
holds common shares of Orient-Express Hotels representing about 77% of the
combined voting power for most matters submitted to a vote of its shareholders.
In general, holders of Orient-Express Hotels' class A common shares and holders
of its class B common shares vote together as a single class, with holders of
class A common shares having one-tenth of one vote per share and holders of
class B common shares having one vote per share. Therefore, as long as the
number of outstanding class B shares exceeds one-tenth the number of outstanding
class A common shares, the holders of class B common shares could control the
outcome of most matters submitted to a vote of the shareholders. Under Bermuda
law, common shares of Orient-Express Hotels owned by Holdings are outstanding
and may be voted by Holdings. The manner in which Holdings votes its
Orient-Express Hotels common shares will be determined by the six directors of
Holdings, two of whom -- John D. Campbell and James B. Sherwood--are also
directors or officers of Orient-Express Hotels, consistently with the exercise
by those directors of their fiduciary duties to Holdings. Those directors,
should they choose to act together, will be able to control substantially all
matters affecting Orient-Express Hotels, and to block a number of matters
relating to any potential change of control of Orient-Express Hotels. See
"Beneficial Ownership of Class A and Class B Common Shares" and "Description of
Common Shares--Voting Rights."
19
Provisions in Orient-Express Hotels' charter documents, and the preferred share
purchase rights currently attached to the class A and class B common shares, may
discourage potential acquisitions of Orient-Express Hotels, even those that the
holders of a majority of its class A common shares might favor.
--------------------------------------------------------------------------------
Orient-Express Hotels' memorandum of association and bye-laws contain
provisions that could make it harder for a third party to acquire it without the
consent of its board of directors. These provisions include
o supermajority shareholder voting provisions for the removal of
directors from office with or without cause, and for "business
combination" transactions with beneficial owners of shares
carrying 15% or more of the votes which may be cast at any
general meeting of Orient-Express Hotels, and
o limitations on the voting rights of such 15% beneficial owners.
Also, our board of directors has the right under Bermuda law to issue
preferred shares without shareholder approval, which could be done to dilute the
stock ownership of a potential hostile acquirer. Although we believe these
provisions provide an opportunity to receive a higher bid by requiring potential
acquirers to negotiate with our board of directors, these provisions apply even
if the offer is favored by shareholders of Orient-Express Hotels holding a
majority of its equity.
Orient-Express Hotels has in place a shareholder rights agreement
providing for rights to purchase series A junior participating preferred shares
of Orient-Express Hotels. The rights are not currently exercisable and they are
attached to and trade together with the class A and class B common shares on a
one-to-one basis. See "Description of Common Shares--Preferred Share Purchase
Rights." Such rights may have anti-takeover effects.
These anti-takeover provisions are in addition to the ability of
Holdings and directors and officers to vote shares representing a significant
majority of the total voting power of our common shares. See the "risk factor"
immediately above and "Description of Common Shares--Voting Rights."
20
We cannot assure you that a judgment of a United States court for liabilities
under U.S. securities laws would be enforceable in Bermuda, or that an original
action can be brought in Bermuda against Orient-Express Hotels for liabilities
under U.S. securities laws.
--------------------------------------------------------------------------------
Orient-Express Hotels is a Bermuda company, a majority of its directors
and officers are residents of Bermuda, the United Kingdom and elsewhere outside
the United States, and most of its assets and the assets of its directors and
officers are located outside the United States. As a result, it may be difficult
for you to
o effect service of process within the United States upon
Orient-Express Hotels or its directors and officers, or
o enforce judgments obtained in United States courts against
Orient-Express Hotels or its directors and officers based upon
the civil liability provisions of the United States federal
securities laws.
Orient-Express Hotels has been advised by its Bermuda counsel, Appleby
Spurling Hunter, that there is doubt as to
o whether a judgment of a United States court based solely upon
the civil liability provisions of the United States federal
securities laws would be enforceable in Bermuda against
Orient-Express Hotels or its directors and officers, and
o whether an original action could be brought in Bermuda against
Orient-Express Hotels or its directors and officers to enforce
liabilities based solely upon the United States federal
securities laws.
21
FORWARD-LOOKING STATEMENTS
This prospectus, and the reports and other information that
Orient-Express Hotels filed with the SEC that are incorporated by reference in
this prospectus, contain forward-looking statements, including statements
regarding, among other things
o competitive factors in our businesses,
o future capital expenditures,
o future legislation in any country where Orient-Express Hotels has
significant assets or operations,
o strikes or other labor disruptions,
o currency fluctuations, and
o trends in our future operating performance.
We have based these forward-looking statements largely on our
expectations as well as assumptions we have made and information currently
available to our management. When used in this prospectus or in incorporated
reports, the words "anticipate," "believe," "estimate," "expect" and similar
expressions, as they relate to Orient-Express Hotels or its management, are
intended to identify forward-looking statements. Forward-looking statements are
subject to a number of risks and uncertainties, some of which are beyond our
control. Actual results could differ materially from those anticipated, as a
result of the factors described under "Risk Factors" in this prospectus and
other factors. Furthermore, in light of these risks and uncertainties, the
forward-looking events and circumstances discussed in this prospectus and
incorporated reports might not transpire.
Except as required by law, we have no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
USE OF PROCEEDS
Management estimates that Orient-Express Hotels will receive net
proceeds of approximately $94,800,000 from its offering of 4,000,000 class A
common shares, after deducting underwriting discounts and commissions and the
estimated offering expenses payable by Orient-Express Hotels. If the
underwriters exercise their over-allotment option, management estimates that
Orient-Express Hotels will receive additional net proceeds of approximately
$24,900,000 million. Orient-Express Hotels will not receive any of the proceeds
from the sale by Sea Containers of 3,000,000 class A common shares of
Orient-Express Hotels.
We intend to use the net proceeds from the sale of class A common
shares in this offering primarily for general corporate purposes, which may
include reduction of our debt, funding the purchase of hotels and related
businesses and the capital investment for some of our existing owned properties,
and funding our working capital needs. Any net proceeds we may use to pay
revolving debt may be immediately reborrowed and used for our general corporate
purposes.
22
PRICE RANGE AND DIVIDEND HISTORY OF THE CLASS A COMMON SHARES
The class A common shares of Orient-Express Hotels are listed on the
New York Stock Exchange under the symbol "OEH." The following table presents the
quarterly high and low sales prices of the class A common shares for the periods
indicated as reported for New York Stock Exchange composite transactions:
High Low
2003 ------ -------
First quarter................................. $13.50 $8.50
Second quarter................................ 14.81 9.35
Third quarter................................. 17.20 13.89
Fourth quarter................................ 17.70 15.55
2004
First quarter................................. 19.79 16.35
Second quarter................................ 18.23 14.50
Third quarter................................. 17.04 14.50
Fourth quarter................................ 23.05 15.71
2005
First quarter (through February 23)........... 26.20 19.60
Orient-Express Hotels paid no cash dividends on its class A and B
common shares in 2003, and paid quarterly cash dividends at the rate of $0.025
per class A common share and per class B common share in 2004.
The Islands of Bermuda, where Orient-Express Hotels is incorporated,
have no applicable governmental laws, decrees or regulations which restrict the
export or import of capital or affect the payment of dividends or other
distributions to nonresident holders of the class A and class B common shares or
which subject United States holders to taxes.
At February 23, 2005, there were approximately 30 record holders of the
class A common shares.
23
CAPITALIZATION
The following table sets forth our cash and cash equivalents and our
capitalization as of September 30, 2004,
o on an actual basis, and
o as adjusted to reflect the sale by Orient-Express Hotels of
4,000,000 class A common shares in this offering at an assumed
offering price of $25.00 per share, and the application of the
estimated net proceeds from such sale in the amount of
$94,800,000 as described under "Use of Proceeds:"
September 30, 2004
------------------------
Actual As adjusted*
------ ------------
(in thousands)
(unaudited)
Cash and cash equivalents.......................... $51,753 $146,553
====== =======
Working capital facilities......................... $ 20,071 $ 20,071
Long-term debt (including current portion)......... 505,571 505,571
Shareholders' equity:
Class A common shares.......................... 318 358
Class B common shares.......................... 205 205
Additional paid-in capital..................... 278,821 373,581
Retained earnings.............................. 269,715 269,715
Accumulated other comprehensive loss........... (18,816) (18,816)
Acquired shares................................ (181) (181)
------- -------
Total shareholders' equity................... 530,062 624,862
---------- ----------
Total capitalization..................... $1,055,704 $1,150,504
========== ==========
--------------
* The as adjusted amounts above do not reflect the exercise by the
underwriters of their over-allotment option to purchase from
Orient-Express Hotels up to an aggregate of an additional 1,050,000
shares. If such option were exercised in full at an assumed offering
price of $25.00 per share, Orient-Express Hotels would receive an
additional $24,900,000 in cash proceeds, resulting in a $10,500
increase in class A common shares and $24,889,500 in additional paid-in
capital.
24
DIRECTORS AND EXECUTIVE OFFICERS OF ORIENT-EXPRESS HOTELS
The directors of Orient-Express Hotels are as follows:
Principal occupations and Year first
Name, Age other major affiliations became a director
--------- ------------------------ -----------------
John D. Campbell, 62...................Senior Counsel (retired) of Appleby Spurling Hunter 1994
(attorneys)
James B. Hurlock, 71...................Partner (retired) of White & Case LLP (attorneys) 2000
J. Robert Lovejoy, 60..................Senior Managing Director of Ripplewood Holdings LLC 2000
(a private equity investment firm)
Daniel J. O'Sullivan, 66...............Senior Vice President--Finance (retired) of Sea 1997
Containers
Georg R. Rafael, 67....................Managing Director of Rafael Group S.A.M. (hoteliers) 2002
James B. Sherwood, 71..................Chairman and Co-Chief Executive Officer of 1994
Orient-Express Hotels
Simon M.C. Sherwood, 44................President and Co-Chief Executive Officer of 1994
Orient-Express Hotels
The principal occupation of each director during the last five years is
that shown in the table above supplemented by the following information:
Mr. Campbell retired as Senior Counsel of Appleby Spurling Hunter in
July 2003. Mr. Campbell is also a director of Sea Containers, a non-executive
director and Chairman of the Risk and Audit Committee of The Bank of Bermuda
Ltd., a subsidiary of HSBC Holdings plc, and a non-executive director and
Chairman of the Nominations and Governance Committee of Argus Insurance Company
Ltd., a public company listed on the Bermuda Stock Exchange.
Mr. Hurlock acted as chairman of the management committee of White &
Case LLP, overseeing worldwide operations from 1980 until his retirement in
2000. He also served as Interim Chief Executive Officer of Stolt-Nielsen
Transportation Group Ltd., a chemical transport services company, from July 2003
until June 2004.
Mr. Lovejoy, prior to joining Ripplewood in 2000, was a Managing
Director of Lazard Freres & Co. LLC and a general partner of Lazard's
predecessor partnership for over 15 years.
25
Mr. O'Sullivan held senior financial and accounting positions with Sea
Containers and its predecessor company for over 30 years, including Chief
Financial Officer for seven years until his retirement, effective December 31,
2004.
Mr. Rafael was until early 2002 the Vice Chairman of the Executive
Committee of Mandarin Oriental Hotels, having sold to them in 2000 Rafael Hotels
Ltd., a deluxe hotel owning and operating company that Mr. Rafael established in
1986. Prior to that time, he was joint Managing Director of Regent International
Hotels, a hotel group Mr. Rafael helped start in 1972.
Mr. James B. Sherwood has also been a director and the President of Sea
Containers since 1974, having founded its predecessor company in 1965.
Mr. Simon M.C. Sherwood was Senior Vice President -- Leisure of Sea
Containers until Orient-Express Hotels' initial public offering in August 2000,
and was originally appointed Vice President of Sea Containers in 1991. He is the
stepson of James B. Sherwood.
The executive officers of Orient-Express Hotels are as follows:
Name, Age Position
--------------------------------------------- ---------------------------------------------------------
James B. Sherwood, 71........................ Chairman and Co-Principal Executive Officer since 1994
Simon M.C. Sherwood, 44...................... President and Co-Principal Executive Officer since 1994
Dean P. Andrews, 52.......................... Vice President--Hotels, North America since 1997
Roger V. Collins, 58......................... Vice President--Technical Services since 2001
Adrian D. Constant, 44....................... Vice President--Hotels, Europe and Asia since 2001
Pippa Isbell, 51............................. Vice President--Public Relations since 2000
Natale Rusconi, 78........................... Vice President since 2004
James G. Struthers, 41....................... Vice President--Finance and Chief Financial Officer since
2000
Nicholas R. Varian, 50....................... Vice President--Tourist Trains and Cruises since 1994
Paul White, 40............................... Vice President--Hotels, Africa, Australia and South
America since 2000
David C. Williams, 50........................ Vice President--Sales and Marketing since 2004
Edwin S. Hetherington, 55.................... Secretary since 1994
26
The principal occupation of each person during the last five years is
that shown in the table above supplemented by the following information:
The previous experience of Messrs. James B. Sherwood and Simon M.C.
Sherwood is reported under the table of directors.
Mr. Andrews was with Omni Hotels from 1981 to 1997, working in new
hotel development and financial and asset management.
Mr. Collins, an engineer, has worked in the hotel industry since 1979
with Grand Metropolitan Hotels, Courage Inns and Taverns, and Trusthouse Forte
Hotels, joining Orient-Express Hotels' predecessor, Orient-Express Hotels Inc.,
in 1991.
Mr. Constant began his career in the hotel industry in 1983, including
positions at Intercontinental and Forte Hotels, and worked for Le Meridien
Hotels (1993-2001) ending as Regional Manager for Brazil.
Ms. Isbell was appointed a Manager of Orient-Express Hotels in 1998
after selling the public relations consultancy she founded in 1987. Her work in
the hospitality industry included positions at Intercontinental Hotels, Forte,
Hilton International, Jarvis Hotels, and Millennium and Copthorne.
Mr. Rusconi has been the Managing Director of the Hotel Cipriani in
Venice since 1977. Previously, he worked with the Savoy Hotel Group and CIGA
Hotels.
Mr. Struthers qualified as a chartered accountant in 1986. He joined
Sea Containers in 1991 and in 1995 became Group Financial Controller. From June
1997 until August 1999, he was Finance Director of Eurostar (UK) Ltd., operator
of the high speed passenger train services between Britain and Continental
Europe. Mr. Struthers returned to Sea Containers as Vice President, Controller
in September 1999 and was appointed Vice President -- Finance and Chief
Financial Officer of Orient-Express Hotels in May 2000.
Mr. Varian joined Orient-Express Hotels Inc. in 1985 from P&O Steam
Navigation Company and has worked extensively on various cruise and tourist
train projects, becoming a Vice President in 1989.
Mr. White was previously a Manager of Orient-Express Hotels working on
hotel financial and operational matters, having joined from Forte Hotels in
1991.
Mr. Williams joined Orient-Express Hotels Inc. in 1981 as sales and
reservations manager. He became responsible for strategic marketing developments
and business initiatives in the Americas, Europe and Asia. He previously worked
for Carlson Marketing Group.
Mr. Hetherington is also Vice President, General Counsel and Secretary
of Sea Containers, having joined Orient-Express Hotels Inc. in 1980.
27
BENEFICIAL OWNERSHIP OF CLASS A AND CLASS B COMMON SHARES
The following table contains information concerning the only persons
known to Orient-Express Hotels to be the beneficial owners of more than 5% of
its outstanding class A common shares and class B common shares before giving
effect to this offering.
Orient-Express Holdings 1 Ltd., or Holdings, is a wholly-owned
subsidiary of Orient-Express Hotels and has sole voting and dispositive power
over its shares of Orient-Express Hotels. The members of the board of directors
of Holdings are James B. Sherwood, John D. Campbell, Daniel J. O'Sullivan, John
R. Edney, A. Shaun Morris and Tammy Richardson. Each of these persons may be
deemed to share beneficial ownership of the class B common shares owned by
Holdings, as well as the class A common shares into which those class B common
shares are convertible, but is not shown in the table below.
Under Bermuda law, the class B common shares held by this subsidiary
are outstanding and carry the same voting rights as the other outstanding class
B common shares. Each class B common share is convertible at any time at the
holder's option into one class A common share of Orient-Express Hotels and,
therefore, the number of shares shown below would also represent the number of
class A common shares into which the class B common shares are convertible.
Percentage
Number of Percentage of Number of Percentage of of
class A class A common class B class B common combined
Name and Address common shares shares(1) common shares shares(2) votes
----------------------------------------- ------------- -------------- ------------- --------------- -----------
Orient-Express Holdings 1 Ltd............ -- -- 18,044,478 88.0% 76.2%
22 Victoria Street
Hamilton HM 12
Bermuda
Citibank International plc et
al.(3)................................ 11,950,751 37.6% 2,459,399 12.0% 15.4%
Citicorp Centre
Canada Square
Canary Wharf
London E14 5LB
Sea Containers Ltd.(4)................... 11,943,901 37.6% 2,459,399 12.0% 15.4%
22 Victoria Street
Hamilton HM 12
Bermuda
Capital Research and
Management Company
and SMALLCAP World Fund, Inc. (5)... 2,350,000 7.4% -- -- (7)
333 South Hope Street
Los Angeles, California 90071
28
Percentage
Number of Percentage of Number of Percentage of of
class A class A common class B class B common combined
Name and Address common shares shares(1) common shares shares(2) votes
----------------------------------------- ------------- -------------- ------------- --------------- -----------
Westport Asset Management, Inc. and
Westport Advisors LLC (6)........ 1,864,600 5.9% -- -- (7)
253 Riverside Avenue
Westport, Connecticut 06880
--------------
(1) The percentage of class A common shares shown in this table is based
on the 31,790,601 class A common shares currently outstanding.
(2) The percentage of class B common shares shown in this table is based
on the 20,503,877 class B common shares currently outstanding.
(3) The information with respect to Citibank International plc and certain
of its affiliated companies is derived from their joint Schedule 13D
report amended as of November 16, 2004, filed with the United States
Securities and Exchange Commission (the "Commission") on November 23,
2004. This report states that (a) Citibank International plc, and the
other reporting companies may be deemed to share voting and dispositive
power with respect to 14,403,300 class A common shares (consisting of
11,943,901 outstanding class A common shares and 2,459,399 class A
common shares issuable upon conversion of 2,459,399 class B common
shares) which were pledged by Sea Containers in connection with its
entering into a $158 million secured term loan facility, later amended
to be a $120 million revolving loan facility, (b) reporting company
Citigroup Inc. may be deemed to share voting power with subsidiaries of
Citigroup Inc. with respect to 6,850 class A common shares that may be
deemed to be beneficially owned by other subsidiaries of Citigroup Inc.
for the benefit of third party customers, and (c) by virtue of their
potential status as a "group" for purposes of the rules of the
Commission, each of the reporting companies may be deemed to share
voting and/or dispositive power over the shares that may be deemed to
be beneficially owned by the other reporting companies.
(4) Sea Containers has sole voting and dispositive power with respect to
11,943,901 class A common shares and 2,459,399 class B common shares,
subject to the pledge referred to in footnote (3) above.
(5) The information with respect to Capital Research and Management Co.
("Capital") and SMALLCAP World Fund, Inc. ("SMALLCAP") is derived from
their joint Schedule 13G report amended as of December 31, 2004, filed
with the Commission on February 14, 2005. This report states that
Capital, a registered investment adviser, has sole dispositive power
with respect to 2,350,000 class A common shares, and that SMALLCAP, a
registered investment company which is advised by Capital, has sole
voting power with respect to 2,050,000 class A common shares.
29
(6) The information with respect to Westport Asset Management Inc.
("Westport") is derived from its Schedule 13G report amended as of
December 31, 2004, filed with the Commission on February 14, 2005. This
report states that (a) Westport is a registered investment adviser and
a parent holding company, and owns 50% of Westport Advisors LLC, also a
registered investment adviser, and (b) Westport has sole voting and
dispositive power with respect to 979,100 class A common shares, has
shared voting power with Westport Advisors LLC with respect to 541,300
class A common shares, and has shared dispositive power with Westport
Advisors LLC with respect to 885,500 class A common shares, including
the 541,300 class A common shares referred to above.
(7) Less than 1%.
THE SELLING SHAREHOLDER
As of the date of this prospectus, Sea Containers owns, and has sole
voting and dispositive power with respect to, 11,943,901 class A common shares
and 2,459,399 class B common shares, subject to a pledge under its secured term
loan facility as described in footnote (3) to the table under the caption
"Beneficial Ownership of Class A and Class B Common Shares." These class A and
class B common shares represent approximately 38% and 12%, respectively, of the
class A and class B common shares currently outstanding, including 18,044,478
class B common shares held by Holdings, a wholly-owned subsidiary of
Orient-Express Hotels, or 38% and 100%, respectively, of the shares of each such
class outstanding, excluding the shares held by Holdings. If Sea Containers
sells the 3,000,000 class A common shares to be sold for its account in this
offering, and Orient-Express Hotels issues and sells the 4,000,000 class A
common shares to be sold for its account in this offering, then Sea Containers
will continue to own, and have sole voting and dispositive power with respect
to, 8,943,901 class A common shares and 2,459,399 class B common shares. This
would represent approximately 25% and 12%, respectively, of the shares of the
class A and class B common shares outstanding at the time of sale, including
the18,044,478 class B common shares held by Holdings, or 25% and 100%,
respectively, of the shares of each such class outstanding, excluding the shares
held by Holdings.
For information concerning the relationship between Orient-Express
Hotels and Sea Containers, we refer you to the portion of this prospectus under
the heading "Risk Factors -- Risks Resulting from Our Relationship with Sea
Containers."
DESCRIPTION OF THE COMMON SHARES
The authorized capital of Orient-Express Hotels consists of 120,000,000
class A common shares, 120,000,000 class B common shares and 30,000,000
preferred shares, all of $.01 par value each. There are currently 31,790,601
class A common shares and 2,459,399 class B common shares outstanding. The
number of class B common shares outstanding does not include the 18,044,478
shares which are owned by Holdings, a wholly-owned subsidiary of Orient-Express
Hotels, and accounted for as a reduction to outstanding shares, including for
purposes of computing earnings per share while they are owned by Holdings.
30
The following description of our common shares is not a complete
description of all of the terms of our common shares and should be read in
conjunction with our charter documents and bye-laws.
Dividend Rights
Holders of class A and class B common shares receive such dividends as
the Orient-Express Hotels board of directors declares out of amounts available
under Bermuda law for that purpose. The board of directors may not declare a
cash dividend on the class A or class B common shares without at the same time
declaring an equal cash dividend on the other class of common shares.
For distributions other than cash dividends, the class A and class B
common shares rank equally and have the same rights, except that
o Orient-Express Hotels can distribute class A common shares, or
rights, options or warrants to subscribe for class A common
shares, only to the holders of class A common shares,
o Orient-Express Hotels can distribute class B common shares, or
rights, options or warrants to subscribe for class B common
shares, only to the holders of class B common shares, and
o the ratio of the number of class A common shares outstanding
to the number of class B common shares outstanding, each on a
fully diluted basis, must be the same immediately after such a
distribution as immediately before it, except as may be
provided in the shareholder rights agreement described below.
No Bermuda law, decree or regulation restricts the export or import of
capital, affects payment of dividends or other distributions by Orient-Express
Hotels to non-resident shareholders, or subjects United States holders of class
A or class B common shares to Bermuda taxes. Payment of dividends depends upon
Orient-Express Hotels' results of operations, financial position, capital
requirements and other relevant factors.
Voting Rights
Except as otherwise provided by Bermuda law, the holders of class A and
class B common shares have exclusive voting rights at any general meeting of
shareholders of Orient-Express Hotels, subject to the voting rights of the
holders of any preferred shares which Orient-Express Hotels may issue in the
future.
In general, holders of class A common shares and holders of class B
common shares vote together as a single class with holders of class A common
shares having one-tenth of one vote per share and holders of class B common
shares having one vote per share. However,
o Any action varying the rights of either class would require
the separate approval of that class as well as the approval of
both classes voting together.
31
o Any "Business Combination," as defined in the bye-laws,
involving Orient-Express Hotels and an "interested person" must
be approved by the holders of not less than 90% of the
outstanding class A and class B common shares voting together as
a single class, each with one vote, unless the Business
Combination meets certain procedural and fair price requirements.
An interested person is defined generally as a person, other than
Orient-Express Hotels, Sea Containers and each of their
respective subsidiaries, which is the beneficial owner of shares
or rights over shares carrying 15% or more of the votes which may
be cast at any general meeting of Orient-Express Hotels.
o The shareholders of Orient-Express Hotels may remove directors
from office, with or without cause, at a special general
meeting only by a resolution adopted by the holders of not
less than 90% of the outstanding class A and class B common
shares voting together as a single class, each with one vote.
A director may also be removed for cause by resolution of the
directors, or can be defeated for re-election at an annual
general meeting.
o If at any time a person becomes an interested person as
defined above, that person, with certain exceptions, will not
be able to cast more than 15% of the votes which may be cast
at any general meeting of Orient-Express Hotels for a period
of five years from the date that such person first became an
interested person.
There is no provision for cumulative voting for the election of our
directors, under which, for example, a shareholder with ten votes participating
in an election for three directors could cast 30 votes for one nominee rather
than 10 votes for each of three nominees. In the absence of cumulative voting,
all of the directors can be elected by those shareholders which together can
cast a majority of the votes represented by all outstanding class A common
shares each with one-tenth of a vote and all outstanding class B common shares
each with one vote. As long as the number of outstanding class B common shares
exceeds one-tenth the number of outstanding class A common shares, the holders
of class B common shares could control the outcome of most matters submitted to
a vote of our shareholders.
In general, under The Companies Act 1981 of Bermuda and Orient-Express
Hotels' bye-laws, approval of any matter proposed at any general meeting
requires the affirmative vote of a simple majority of the total votes cast on
that matter by the holders of class A common shares and class B common shares
present in person or represented by proxy. Matters requiring such simple
majority approval include proposals for the sale of all or substantially all of
Orient-Express Hotels' assets, and amendments to its memorandum of association
or bye-laws. A few matters would require more than majority approval under The
Companies Act 1981, such as loans to directors, which would require the
affirmative vote of at least 90% of the total votes of all outstanding class A
and class B common shares, or a change of Orient-Express Hotels' independent
auditors, which would require the affirmative vote of at least two-thirds of the
total votes cast of class A and class B common shares, or a proposal for the
amalgamation or merger of Orient-Express Hotels with another corporation, which
would require the affirmative vote of at least 75% of the total votes cast of
class A and class B common shares.
32
The normal quorum for general meetings is the presence, in person or by
proxy, of the holders of class A and class B common shares carrying a majority
of the votes which may be cast at the meeting. However, at any special general
meeting called for the purpose of electing directors or increasing or reducing
the number of directors, the holders of not less than 90% in number of the
outstanding class A and class B common shares must be present in person or by
proxy to constitute a quorum.
There are no limitations imposed by Bermuda law or by Orient-Express
Hotels' memorandum of association and bye-laws on the rights of persons who are
not citizens or residents of Bermuda to hold or vote class A or class B common
shares.
Preferred Share Purchase Rights
Orient-Express Hotels has in place a shareholder rights agreement
providing for rights to purchase series A junior participating preferred shares
of Orient-Express Hotels. The rights are not currently exercisable and they are
attached to and trade together with the class A and class B common shares on a
one-to-one basis. A right will be attached to each class A common share sold in
this offering.
The shareholder rights agreement will take effect not earlier than the
tenth day after the first to occur of
o the public announcement that a person or group has become an
"acquiring person," that is, a person or group that has
acquired beneficial ownership of shares carrying 20% or more
of the total votes which may be cast at any general meeting of
Orient-Express Hotels, but excluding any subsidiary of
Orient-Express Hotels, Sea Containers or any subsidiary of Sea
Containers, and
o the commencement or announcement of an intended tender offer
or exchange offer for shares carrying 30% or more of the total
votes which may be cast at any general meeting of
Orient-Express Hotels.
At that time, the rights then attached to all outstanding class A and
class B common shares will become separate securities, and each right will
entitle its holder to purchase one one-hundredth of a Series A junior
participating preferred share of Orient-Express Hotels at an exercise price of
$142. The exercise price will be adjusted in the future to reflect stock splits
and other changes to the class A and class B common shares.
33
However,
o From and after the date on which any person becomes an
acquiring person, each holder of a right other than the
acquiring person may exercise the right and receive, at the
then current exercise price of the right, that number of class
A common shares, in the case of a right which previously was
attached to a class A common share, or that number of class B
common shares, in the case of a right which previously was
attached to a class B common share, or other securities, cash
or property, then having a market value of twice the exercise
price;
o If, after the shareholder rights agreement takes effect,
Orient-Express Hotels is acquired by consolidation, merger or
amalgamation, or Orient-Express Hotels sells or otherwise
transfers 50% or more of its consolidated assets or earning
power, each holder of a right, other than an acquiring person,
may exercise the right and receive, at the then current
exercise price of the right, an amount of the common equity of
the acquiring company or its public company parent which at
the time of such transaction would have a market value of
twice the exercise price of the right; and
o At any time after any person becomes an acquiring person and
before a person or group (other than Orient-Express Hotels,
Sea Containers or certain of their affiliates) acquires
beneficial ownership of 50% or more of the total voting rights
which may be cast at any general meeting of Orient-Express
Hotels, the board of directors of Orient-Express Hotels may
exchange all or some of the rights other than rights
beneficially owned by an acquiring person, which rights will
thereafter be void, at an exchange ratio of
(A) one class A common share per right in the case of
rights which, prior to the date they became separate
securities, were evidenced by certificates for class
A common shares, and
(B) one class B common share per right in the case of
rights which, prior to the date they became separate
securities, were evidenced by certificates for class
B common shares,
subject to adjustment in certain events.
Until a right is exercised, the holder thereof, as such, will have no
rights as a shareholder including, without limitation, the right to vote or to
receive dividends. While the issuance of the rights will not be taxable to
shareholders or to us for United States federal income tax purposes,
shareholders may, depending on the circumstances, recognize taxable income for
United States federal income tax purposes in the event the rights become
exercisable, or upon their exercise, for class A or class B common shares (or
other consideration). The rights will expire on June 1, 2010. However, the board
of directors of Orient-Express Hotels may redeem all but only all of the rights
sooner at a price of $0.05 per right at any time before the close of business on
the tenth day after the date on which a person becomes an acquiring person.
34
The purpose of the rights is to diminish the attractiveness of
Orient-Express Hotels to persons who might otherwise have an interest in
acquiring control of Orient-Express Hotels on unfair or coercive terms and to
impede such persons from attempting to gain control of Orient-Express Hotels on
such terms through a tender or exchange offer, by a proxy contest or by other
means.
Liquidation Rights
In a liquidation, dissolution or winding-up of Orient-Express Hotels,
holders of class A and class B common shares as a single class would participate
equally per share in the assets remaining available for distribution to
shareholders, after payment of the liabilities of Orient-Express Hotels and the
liquidation preferences on its preferred shares.
Conversion Rights
The class A common shares are not convertible into any other security.
Each class B common share is convertible at any time without any additional
payment into one class A common share.
Miscellaneous
Neither class A nor class B common shares have the benefit of sinking
fund provisions or are redeemable or carry any preemptive or other rights to
subscribe for additional shares, except that holders of class B common shares
may convert their shares into class A common shares as described above. The
holders of class A and class B common shares are not liable for any further
calls or assessments.
MATERIAL TAX CONSIDERATIONS
The income tax consequences of an investment in Orient-Express Hotels
are complex and may vary significantly with the particular situation of each
investor. Before purchasing any class A common shares, each prospective investor
should consult his or her own tax counsel about the particular tax consequences
of investing in Orient-Express Hotels. There can be no assurance that the United
States or Bermuda tax laws will not be changed.
Material Bermuda Tax Considerations
As of the date of this prospectus, there is no Bermuda income,
corporation, or profits tax, withholding tax, capital gains tax, capital
transfer tax, estate duty or inheritance tax payable by us or our shareholders,
other than shareholders ordinarily resident in Bermuda.
Orient-Express Hotels has received from the Minister of Finance in
Bermuda under the Exempted Undertakings Tax Protection Act, 1966, as amended, an
undertaking that, in the event of there being enacted in Bermuda any legislation
imposing tax computed on profits or income, or computed on any capital assets,
gain or appreciation or any tax in the nature of estate duty or inheritance tax,
such tax shall not until March 28, 2016 be applicable to Orient-Express Hotels
or to any of its operations, or to the class A common shares, debentures or
other obligations of Orient-Express Hotels, except insofar as such tax applies
to persons ordinarily resident in
35
Bermuda and holding such class A common shares, debentures or other obligations
of Orient-Express Hotels or any land leased or let to Orient-Express Hotels.
Material United States Federal Income Tax Considerations
Subject to the limitations described in the next paragraph, the
following discussion describes the material United States federal income tax
consequences that generally will apply to a holder of Orient-Express Hotels'
class A common shares, referred to for purposes of this discussion as a "U.S.
Holder," that is:
o an individual who is a citizen or, for United States federal
income tax purposes, a resident of the United States;
o a corporation (or other entity treated as a corporation for
United States federal income tax purposes) created or
organized in or under the laws of the United States or of any
state therein (or the District of Columbia);
o an estate, the income of which is includible in gross income
for United States federal income tax purposes regardless of
its source; or
o a trust, (a) if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more United States persons have the authority
to control all substantial decisions of the trust or (b) if it
has a valid election in effect under applicable Treasury
regulations to be treated as a United States person.
Unless otherwise indicated, all statements describing United States
federal income tax consequences that are contained in this summary represent the
opinion of Carter Ledyard & Milburn LLP, United States counsel for
Orient-Express Hotels. This summary does not purport to be a comprehensive
description of all of the tax considerations that may be relevant to each
person's decision to purchase class A common shares. This summary considers only
U.S. Holders that will hold class A common shares as capital assets within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code").
This discussion is based on current provisions of the Code, current and
proposed Treasury regulations promulgated thereunder, and administrative and
judicial decisions as of the date hereof, all of which are subject to change,
possibly on a retroactive basis. This discussion does not address all aspects of
United States federal income taxation that may be relevant to any particular
U.S. Holder based on such holder's individual circumstances. In particular, this
discussion does not address the potential application of the alternative minimum
tax or the United States federal income tax consequences to U.S. Holders that
are subject to special treatment, including U.S. Holders that:
o are broker-dealers or insurance companies;
o are real estate investment trusts or regulated investment
companies;
36
o have elected mark-to-market accounting;
o are tax-exempt organizations;
o are financial institutions or "financial services entities";
o hold class A common shares as part of a straddle or as part of
a hedging, conversion, constructive sale or other integrated
transaction;
o own directly, indirectly or by attribution at least 10% of our
voting power; or
o have a functional currency that is not the U.S. dollar.
In addition, this discussion does not address any aspect of state,
local or non-United States tax laws.
Furthermore, the discussion does not consider the tax treatment of
persons who hold class A common shares through a partnership or other
pass-through entity or the possible application of United States federal gift or
estate tax. Material aspects of United States federal income tax relevant to a
holder other than a U.S. Holder (a "Non-U.S. Holder") are also discussed below.
Each prospective investor is advised to consult such person's own tax
advisor with respect to the specific tax consequences to such person of
purchasing, holding or disposing of our class A common shares.
Taxation of Dividends Paid on Class A Common Shares
A U.S. Holder will be required to include in gross income, for the year
in which received, the amount of any distributions of cash or other property
received from us to the extent the distribution is paid out of our current or
accumulated earnings and profits, as determined for United States federal income
tax purposes. Such dividends will not be eligible for the dividends-received
deduction otherwise allowable to U.S. corporations in respect of dividends
received from other U.S. corporations.
To the extent that the amount of any distribution exceeds our current
and accumulated earnings and profits, it will be applied against and will reduce
the U.S. Holder's basis in such Holder's class A common shares and, to the
extent in excess of such basis, will be treated as gain from the sale or
exchange of class A common shares.
Dividends that we distribute generally will be treated as "passive
income," or, in the case of certain U.S. Holders, "financial services income"
from non-United States sources for United States foreign tax credit purposes.
U.S. Holders should note that recently enacted legislation eliminates the
"financial services income" category with respect to taxable years beginning
after December 31, 2006. Under this legislation, the foreign tax credit
limitation categories will be limited to "passive category income" and "general
category income." A portion of such dividends, however, may be recharacterized
as United States source if we constitute a "United States-owned foreign
corporation" within the meaning of Section 904(g)(6) of the Code. To
37
constitute a United States-owned foreign corporation, United States persons must
own 50% or more of our total combined voting power or 50% or more of the total
aggregate value of all our classes of stock. U.S. Holders are urged to consult
their own tax advisors regarding the applicability of the foreign tax credit
rules of the Code to the dividends they receive from us.
Subject to certain limitations, "qualified dividend income" received by
a noncorporate U.S. Holder in tax years beginning on or before December 31, 2008
will be subject to tax at a reduced maximum tax rate of 15 percent.
Distributions taxable as dividends paid on the class A common shares should
qualify for the 15 percent rate provided that the class A common shares are
readily tradable on an established securities market in the United States and
certain other requirements are met. We believe that the class A common shares
currently are readily tradable on an established securities market in the United
States. However, no assurance can be given that the class A common shares will
remain readily tradable. The reduced tax rate does not apply unless certain
holding period requirements are satisfied. With respect to the class A common
shares, the U.S. Holder must have held such shares for at least 61 days during
the 121-day period beginning 60 days before the ex-dividend date. The reduced
tax rate also does not apply to dividends received from passive foreign
investment companies, see discussion below, or in respect of certain hedged
positions or in certain other situations. The legislation enacting the reduced
tax rate contains special rules for computing the foreign tax credit limitation
of a taxpayer who receives dividends subject to the reduced tax rate. U.S.
Holders of class A common shares should consult their own tax advisors regarding
the effect of these rules in their particular circumstances.
Taxation of the Disposition of Class A Common Shares
Upon the sale, exchange or other disposition of class A common shares,
a U.S. Holder will recognize gain or loss in an amount equal to the difference
between the amount realized on the disposition and such U.S. Holder's basis in
the class A common shares, which usually will be the cost of such shares. Such
gain or loss generally will be United States source capital gain or loss and
will be long-term capital gain or loss if the class A common shares were held
for more than one year at the time of the sale. Deduction of capital losses is
subject to certain limitations under the Code.
Passive Foreign Investment Company Considerations
We believe that Orient-Express Hotels will not be treated as a passive
foreign investment company (a "PFIC") for United States federal income tax
purposes for the current taxable year or for future taxable years. However, an
actual determination of PFIC status is fundamentally factual in nature and
cannot be made until the close of the applicable taxable year. A non-U.S.
corporation will be a PFIC for any taxable year in which either (1) 75% or more
of its gross income is passive income or (2) the average percentage of its
assets which produce passive income or which are held for the production of
passive income is at least 50%. If Orient-Express Hotels were to become a PFIC,
a U.S. Holder of class A common shares would be subject to adverse tax
consequences with respect to certain distributions on, and gain realized from a
disposition of, such shares. You should consult your own tax advisors regarding
the potential application of the PFIC rules to your ownership of class A common
shares.
38
Tax Consequences for Non-U.S. Holders of Class A common Shares
Except as described in "U.S. Information Reporting and Backup
Withholding Tax" below, a Non-U.S. Holder of class A common shares will not be
subject to U.S. federal income or withholding tax on the payment of dividends
on, and the proceeds from the disposition of, class A common shares, unless:
o such item is effectively connected with the conduct by the
Non-U.S. Holder of a trade or business in the United States,
and, in the case of a resident of a country which has a treaty
with the United States, such item is attributable to a
permanent establishment or, in the case of an individual, a
fixed place of business, in the United States,
o the Non-U.S. Holder is an individual who holds the class A
common shares as a capital asset and is present in the United
States for 183 days or more in the taxable year of the
disposition and does not qualify for an exemption, or
o the Non-U.S. Holder is subject to tax pursuant to the provisions
of United States tax law applicable to U.S. expatriates.
U.S. Information Reporting and Backup Withholding Tax
U.S. Holders generally are subject to information reporting
requirements and potential backup withholding tax with respect to dividends paid
on class A common shares and on proceeds paid from the disposition of class A
common shares. Backup withholding tax (currently at the rate of 28%) will apply
unless the U.S. Holder provides IRS Form W-9 or otherwise establishes an
exemption in the manner required by Treasury regulations.
Non-U.S. Holders generally are not subject to information reporting or
backup withholding tax with respect to dividends paid on, or upon the
disposition of, class A common shares, provided that such non-U.S. Holders
establish their non-U.S. status (or other exemption) in the manner required by
Treasury regulations.
The amount of any backup withholding tax will be allowed as a credit
against a U.S. or Non-U.S. Holder's United States federal income tax liability
and may entitle such holder to a refund, provided that the required information
is furnished to the IRS.
39
UNDERWRITING
Subject to the terms and conditions set forth in the purchase agreement
among Orient-Express Hotels, Sea Containers and the underwriters listed below,
Orient-Express Hotels and Sea Containers have agreed to sell to each
underwriter, and each underwriter has agreed to purchase from Orient-Express
Hotels and Sea Containers, the number of class A common shares listed opposite
its name below.
Number
Underwriter of Shares
----------- ---------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................
Citigroup Global Markets Inc.................................... _________
Total....................................... 7,000,000
=========
The underwriters have agreed to purchase all of the class A common
shares sold under the purchase agreement if any of the class A common shares are
purchased. If an underwriter defaults, the purchase agreement provides that, in
certain circumstances, the purchase commitments of the nondefaulting underwriter
may be increased or the purchase agreement may be terminated.
Orient-Express Hotels and Sea Containers have agreed to indemnify the
underwriters and each person, if any, who controls the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments the underwriters may be required to make
in respect of those liabilities.
The underwriters are offering the class A common shares, subject to
prior sale, when, as and if issued to and accepted by them, subject to approval
of legal matters by their counsel, including the validity of the class A common
shares, and other conditions contained in the purchase agreement, such as the
receipt by the underwriters of officers' certificates and legal opinions. The
underwriters reserve the right to withdraw, cancel or modify offers to the
public and to reject orders in whole or in part.
Commissions and Discounts
The underwriters have advised Orient-Express Hotels and Sea Containers
that the underwriters propose to offer the class A common shares to the public
at the offering price on the cover page of this prospectus and to dealers at
that price less a concession not in excess of $.__ per share. The underwriters
may allow, and dealers may reallow, a discount not in excess of $.__ per share
to other dealers. After the initial offering, the public offering price,
concession and discount may change.
40
The following table shows the offering price, underwriting discount and
proceeds before expenses. The information assumes either no exercise or full
exercise by the underwriters of its over-allotment option.
Per Without With
Share Option Option
----- ------ ------
Public offering price........................ $ $ $
Underwriting discount........................ $ $ $
Proceeds, before expenses, to Orient-
Express Hotels............................ $ $ $
Proceeds, before expenses, to Sea
Containers................................ $ $ $
The expenses of this offering, not including the underwriting discount,
are estimated to be about $400,000, of which $230,000 is payable by
Orient-Express Hotels and $170,000 is payable by Sea Containers.
Over-allotment Option
Orient-Express Hotels has granted an option to the underwriters to
purchase up to 1,050,000 additional class A common shares at the public offering
price set forth on the cover of this prospectus less the underwriting discount.
The underwriters may exercise this option for 30 days from the date of this
prospectus solely to cover any over-allotments. If the underwriters exercise
this option, each will be obligated, subject to conditions contained in the
purchase agreement, to purchase a number of additional shares proportionate to
that underwriter's initial amount reflected in the above table.
No Sales of Similar Securities
Orient-Express Hotels and Sea Containers have agreed not to sell or
transfer any class A or class B common shares of Orient-Express Hotels for 90
days after the date of this prospectus, James B. Sherwood and Simon M.C.
Sherwood have agreed not to sell or transfer any class A or class B common
shares of Orient-Express Hotels for 60 days after the date of this prospectus,
each subject to certain exceptions, without first obtaining the written consent
of Merrill Lynch on behalf of the underwriters. Specifically, Orient-Express
Hotels, Sea Containers and these other shareholders have agreed not to directly
or indirectly:
o offer, pledge, sell or contract to sell any class A or class B
common shares,
o sell any option or contract to purchase any class A or class B
common shares,
o purchase any option or contract to sell any class A or class B
common shares,
o grant any option, right or warrant for the sale of any class A
or class B common shares,
o lend or otherwise dispose of or transfer any class A or class B
common shares,
41
o file or cause to be filed a registration statement under the
Securities Act for the class A or class B common shares, or
o enter into any swap or other agreement that transfers, in
whole or in part, the economic consequence of ownership of any
class A or class B common shares whether any such swap or
transaction is to be settled by delivery of shares or other
securities, in cash or otherwise.
This lock-up provision applies to class A or class B common shares of
Orient-Express Hotels and to securities convertible into or exchangeable or
exercisable for or repayable with class A or class B common shares. It also
applies to class A or class B common shares owned now or acquired later by the
person executing the agreement or for which the person executing the agreement
later acquires the power of disposition. The restrictions described above do not
apply to the sale of shares by the underwriters solely to cover over-allotments
in this offering, or to the sale by Citibank International plc of the shares of
Orient-Express Hotels pledged to Citibank by Sea Containers. See "Beneficial
Ownership of Class A and Class B Common Shares."
The 60-day and 90-day restricted periods described above are subject
to extension. If
o during the last 17 days of the applicable restricted period we
issue an earnings release, or material news or a material event
relating to us occurs, or
o prior to the expiration of the applicable restricted period we
announce that we will release earnings results or become aware
that material news or a material event will occur during the
16-day period beginning on the last day of the applicable
restricted period,
the lock-up restrictions described above will continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event, as applicable,
unless Merrill Lynch waives in writing such extension.
New York Stock Exchange Listing
The class A common shares are listed on the New York Stock Exchange
under the symbol "OEH."
Price Stabilization and Short Positions
Until the distribution of the class A common shares is completed, rules
of the Securities and Exchange Commission may limit the underwriters from
bidding for and purchasing the common shares of Orient-Express Hotels. However,
the underwriters may engage in transactions that stabilize the price of the
class A common shares, such as bids or purchases to peg, fix or maintain that
price.
If the underwriters create a short position in the class A common
shares in connection with this offering (i.e., if they sell more class A common
shares than are set forth on the cover page of this prospectus), the
underwriters may reduce that short position by purchasing class A
42
common shares in the open market. The underwriters may also elect to reduce any
short position by exercising all or part of the over-allotment option described
above. Purchases of the class A common shares to stabilize its price or to
reduce a short position may cause the price of the class A common shares to be
higher than it might be in the absence of such purchases.
Neither Orient-Express Hotels, Sea Containers nor the underwriters make
any representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the class A
common shares. In addition, none of Orient-Express Hotels, Sea Containers or the
underwriters makes any representation that the underwriters will engage in these
transactions or that these transactions, once commenced, will not be
discontinued without notice.
No Public Offering Outside the United States
No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of class A common shares, or
the possession, circulation or distribution of this prospectus or any other
material relating to us or class A common shares in any jurisdiction where
action for that purposes is required. Accordingly, class A common shares may not
be offered or sold, directly or indirectly, and neither this prospectus nor any
other offering material or advertisements in connection with class A common
shares may be distributed or published, in or from any country or jurisdiction
except in compliance with any applicable rules and regulations of any such
county or jurisdiction.
Purchasers of the shares offered by this prospectus may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country in addition to the offering price on the cover page of this
prospectus.
Internet Distribution of Prospectus
The underwriters may be facilitating Internet distribution for this
offering to certain of their Internet subscription customers and may allocate a
number of class A common shares for sale to their online brokerage customers. If
the underwriters facilitate such an Internet distribution, an electronic
prospectus will be made available on the website maintained by the underwriters.
Other than the prospectus in electronic format, the information contained on the
website maintained by the underwriters relating to this offering is not a part
of this prospectus.
Other Relationships
The underwriters and their affiliates have performed, and may in the
future perform, investment banking and advisory services for Orient-Express
Hotels from time to time, for which they received, and may in the future
receive, customary fees and expenses. For instance, in November 2003, Merrill
Lynch acted as the representative of the underwriters in a public offering of
3,450,000 class A common shares of Orient-Express Hotels, and in November 2002,
it acted as co-underwriter in a secondary public offering by Sea Containers of
3,100,000 class A common shares of Orient-Express Hotels.
43
AUTHORIZED REPRESENTATIVE
Orient-Express Hotels' authorized representative in the United States
for this offering as required pursuant to Section 6(a) of the Securities Act of
1933, is J. Robert Lovejoy, One Rockefeller Plaza, New York, New York 10020.
Orient-Express Hotels has agreed to indemnify the authorized representative
against liabilities under the Securities Act of 1933.
LEGAL MATTERS
Carter Ledyard & Milburn LLP, New York, New York, is passing upon
matters of United States law for Orient-Express Hotels and Sea Containers with
respect to this offering, Shearman & Sterling LLP, New York, New York, will pass
upon legal matters for the underwriters with respect to this offering, and
Appleby Spurling Hunter, Hamilton, Bermuda, is passing upon matters of Bermuda
law for Orient-Express Hotels and Sea Containers with respect to this offering.
Robert M. Riggs, who recently retired as a partner of Carter Ledyard & Milburn
LLP, is a director of Sea Containers.
EXPERTS
The consolidated financial statements and related consolidated
financial statement schedule incorporated in this prospectus by reference from
Orient-Express Hotels' Annual Report on Form 10-K for the year ended December
31, 2003 have been audited by Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their report appearing therein (which
report expresses an unqualified opinion and includes an explanatory paragraph
referring to the adoption by Orient-Express Hotels of Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets, effective
January 1, 2002) which is incorporated by reference and have been so
incorporated by reference in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is a part of a registration statement on Form S-3 that
Orient-Express Hotels filed with the Securities Exchange Commission under the
Securities Act of 1933, Registration No. 333-__________. We refer you to this
registration statement for further information about Orient-Express Hotels and
the class A common shares offered hereby.
Orient-Express Hotels files annual, quarterly and special reports and
other information with the Securities and Exchange Commission (Commission File
Number 1-16017). These filings contain important information that does not
appear in this prospectus. For further information about Orient-Express Hotels,
you may read and copy these filings at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330, and
may obtain copies of Orient-Express Hotels' filings from the public reference
room by calling (202) 942-8090. Our SEC filings are also available on the SEC
Internet site as part of the EDGAR database (http:www.sec.gov).
44
The SEC allows Orient-Express Hotels to "incorporate by reference"
information into this prospectus, which means that we can disclose important
information to you by referring you to other documents which Orient-Express
Hotels has filed or will file with the SEC. We are incorporating by reference in
this prospectus
o Orient-Express Hotels' Annual Report on Form 10-K for the fiscal
year ended December 31, 2003,
o Orient-Express Hotels' Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, 2004, June 30, 2004 and
September 30, 2004,
o The description of Orient-Express Hotels' class A common
shares which appears in its Registration Statement on Form 8-A
dated July 28, 2000, for the registration of the class A
common shares under Section 12(b) of the Securities Exchange
Act of 1934, and
o The description of the Rights which appears in Orient-Express
Hotels' Registration Statement on Form 8-A dated July 28, 2000
for the registration of the Rights under Section 12(b) of the
Securities Exchange Act of 1934.
All documents that Orient-Express Hotels files with the SEC pursuant to
Section 13(a), 13(c) or 15(d) of the Securities Exchange Act after the date of
this prospectus and before the termination or completion of this offering of
class A common shares shall be deemed to be incorporated by reference in this
prospectus and to be a part of it from the filing dates of such documents.
Certain statements in and portions of this prospectus update and replace
information in the above listed documents incorporated by reference. Likewise,
statements in or portions of a future document incorporated by reference in this
prospectus may update and replace statements in and portions of this prospectus
or the above listed documents.
We shall provide you without charge, upon your written or oral request,
a copy of any or all of the documents incorporated by reference in this
prospectus, other than exhibits to such documents that are not specifically
incorporated by reference into such documents. Please direct your written or
telephone requests to the Secretary, Orient-Express Hotels Inc., 1114 Avenue of
the Americas, New York, New York 10036 (telephone 212-302-5055).
Orient-Express Hotels is a Bermuda company and is a "foreign private
issuer" as defined in Rule 3b-4 under the Securities Exchange Act of 1934. As a
result, (1) Orient-Express Hotels' proxy solicitations are not subject to the
disclosure and procedural requirements of Regulation 14A under the Exchange Act,
and (2) transactions in Orient-Express Hotels' equity securities by its officers
and directors are exempt from Section 16 of the Exchange Act.
45
================================================================================
7,000,000 Shares
[LOGO]
Orient-Express Hotels Ltd.
Class A Common Shares
__________
PROSPECTUS
__________
Merrill Lynch & Co.
Citigroup
, 2005
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses of the issuance and distribution of the securities being
registered hereby, other than selling discounts and commissions, are estimated
as follows:
Securities and Exchange Commission
registration fee....................................... $ 22,805
NASD filing fee............................................ 19,876
Stock exchange listing fees................................ 17,675
Legal fees and expenses.................................... 190,000
Accounting fees and expenses............................... 25,000
Printing fees and expenses................................. 110,000
Miscellaneous.............................................. 14,644
------
Total............................................ $400,000
=======
$230,000 of such expenses will be paid by the registrant and $170,000
will be paid by Sea Containers in accordance with an agreement between them.
Item 15. Indemnification of Directors and Officers.
Bye-Laws 122-125 of the registrant provide as follows (references
therein to the Company are references to the registrant, and references to the
Companies Act mean Bermuda's Companies Act 1981 and such other statutory
corporate enactments in Bermuda as are from time to time in force concerning
companies insofar as the same applies to the registrant):
"122. Subject to the proviso below, every Director, officer of
the Company and member of a committee duly constituted under Bye-Law 88
and any Resident Representative shall be indemnified out of the funds
of the Company against all civil liabilities, loss, damage or expense
(including but not limited to liabilities under contract, tort and
statute or any applicable foreign law or regulation and all reasonable
legal and other costs and expenses properly payable) incurred or
suffered by him as such Director, officer, committee member or Resident
Representative and the indemnity contained in this Bye-Law shall extend
to any person acting as a Director, officer, committee member or
Resident Representative in the reasonable belief that he has been so
appointed or elected notwithstanding any defect in such appointment or
election; provided that the indemnity contained in this Bye-Law shall
not extend to any matter which would render it void pursuant to the
Companies Act. Nothing in this Bye-Law or Bye-Laws 123, 124
II-1
and 125 below shall operate in favour of any person acting in the
capacity of auditor to the Company.
"123. Every Director, officer, member of a committee duly
constituted under Bye-Law 88 or Resident Representative shall be
indemnified out of the funds of the Company against all liabilities
incurred by him as such Director, officer, committee member or Resident
Representative in defending any proceedings, whether civil or criminal,
in which judgment is given in his favour, or in which he is acquitted,
or in connection with any application under the Companies Act in which
relief from liability is granted to him by the court.
"124. To the extent that any Director, officer, member of a
committee duly constituted under Bye-Law 88 or Resident Representative
is entitled to claim an indemnity pursuant to these Bye-Laws in respect
of amounts paid or discharged by him, the relative indemnity shall take
effect as an obligation of the Company to reimburse the person making
such payment or effecting such discharge."
"125. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Company in advance of the
final disposition of such action, suit or proceeding as authorized by
the Directors in the specific case upon receipt of an undertaking by or
on behalf of the indemnified party to repay such amount if it shall
ultimately be determined that the indemnified party is not entitled to
be indemnified pursuant to Bye-Laws 122 and 123 or otherwise."
Reference is made to the Indemnification Agreement (Exhibit 99 to this
Registration Statement) concerning the indemnification by the registrant of its
authorized representative in the United States for purposes of this Registration
Statement.
The registrant also maintains directors' and officers' liability and
corporate reimbursement insurance. Such insurance, subject to annual renewal and
certain rights of the insurers to terminate, provides an aggregate maximum of
$40 million of coverage to directors and officers of the registrant and its
subsidiaries, against claims made during the policy period.
Item 16. Exhibits.
The exhibit index appears below on the page immediately following the
signature pages of this Registration Statement.
II-2
Item 17. Undertakings.
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions referred to in Item 15
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(3) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(4) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hamilton, Bermuda on the 25th day of February, 2005.
ORIENT-EXPRESS HOTELS LTD.
By: /s/ Simon M.C. Sherwood
-----------------------
Simon M.C. Sherwood
President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes James B.
Sherwood, Simon M.C. Sherwood, Edwin S. Hetherington, and James G. Struthers,
and each of them singly, his true and lawful attorneys-in-fact with full power
to sign on behalf of such person, in the capacities indicated below, any and all
amendments to this registration statement (including post-effective amendments)
and any subsequent related registration statement filed pursuant to Rule 462(b)
under the Securities Act of 1933, and generally to do all such things in the
name and on behalf of such person, in the capacities indicated below, to enable
the registrant to comply with the provisions of the Securities Act of 1933 and
all requirements of the Securities and Exchange Commission thereunder, hereby
ratifying and confirming the signature of such person as it may be signed by
said attorneys-in-fact, or any of them, to any and all amendments to this
registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement and the above power of attorney have been signed below by
the following persons in the capacities indicated on February 25, 2005.
II-4
Signature Title
--------- -----
/s/ Simon M.C. Sherwood
------------------------ President and Director
Simon M.C. Sherwood (Co-Principal Executive Officer)
/s/ James B. Sherwood
------------------------ Chairman and Director
James B. Sherwood (Co-Principal Executive Officer)
Vice President-Finance and
/s/ James G. Struthers Chief Financial Officer
------------------------ (Principal Financial and
James G. Struthers Accounting Officer)
/s/ John D. Campbell Director
------------------------
John D. Campbell
/s/ James B. Hurlock Director
------------------------
James B. Hurlock
/s/ J. Robert Lovejoy Director and Authorized
------------------------ Representative in the
J. Robert Lovejoy United States
/s/ Daniel J. O'Sullivan Director
------------------------
Daniel J. O'Sullivan
/s/ Georg R. Rafael Director
------------------------
Georg R. Rafael
II-5
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
1 - Form of Purchase Agreement
4.1 - Schedule 1 to the Bye-Laws of the Registrant(1)
4.2 - Rights Agreement dated as of June 1, 2000, between the
Registrant and EquiServe Trust Company N.A. (successor to Fleet
National Bank), as Rights Agent(2)
5 - Opinion of Appleby Spurling Hunter
8 - Tax opinion of Carter Ledyard & Milburn LLP
23.1 - Consent of Deloitte & Touche LLP
23.2 - Consent of Appleby Spurling Hunter (included in Exhibit 5)
23.3 Consent of Carter Ledyard & Milburn LLP (included in Exhibit 8)
24 - Powers of Attorney (included in the signature page of this
Registration Statement)
99 - Indemnification Agreement between the Registrant and
J. Robert Lovejoy
-------------
(1) Incorporated by reference to Exhibit 3.2 to Amendment No. 4 to the
Registrant's Registration Statement on Form S-1, Registration No.
333-12030.
(2) Incorporated by reference to Exhibit 4.2 to Amendment No. 4 to the
Registrant's Registration Statement on Form S-1, Registration No.
333-12030.