Sol Meliá, Spain’s largest multinational hotel company, will begin today, 4th April, the initial period of subscription, through its subsidiary Sol Meliá Finance, of a preferred share issue of 150 million euros, an amount which may be increased to 300 million euros if required, as published in the Informative Prospectus approved today by the Spanish Stock Exchange Commission (CNMV).

According to Sol Meliá‘s Vice-Chairman, Sebastián Escarrer, “we firmly believe that the preferred shares offered by Sol Meliá represent a good investment for savers, as they guarantee an excellent profit, receiving interest every quarter. This issue will enable the Company to strengthen its financial structure and, at the same time, diversify its traditional sources of financing.”

The issue is mainly aimed at individual investors and subscription orders will be taken for a minimum of 10 shares at 100 euros each, equivalent to a total of 1000 euros. The values are expected to be negotiated in the Spanish securities market (AIAF). Should the shares be oversubscribed, the preferred shares will be assigned on a prorrata basis, although subscribers will be allowed a minimum of 30 shares, if, in this way, all petitions could be attended. Furthermore, it has been decided that if the oversubscription should reach a stage where it is double the amount of shares offered, the period of subscription may be closed earlier than anticipated.

The preferred shares will pay out a fixed annual dividend equivalent to an annual rate of 8.03% over the first ten years, payable at the end of each quarter. The first dividend of 1,43 euros per share will be paid on the 30th June 2002, in accordance with the number of days which have elapsed between the beginning of the operation and that date.

After the tenth year, the issuer will have the right to amortize the issue. If this is not effected, from that date onwards the dividend will be variable, equivalent to Euribor at three months, plus a differential of 5%, with a minimum of 12,30% annually.

Sol Meliá‘s Guarantee: The payment of the dividend of the preferred shares is guaranteed by Sol Meliá and taken from the distributable profit, which is understood to be the consolidated net profit, plus the freely disposable reserves which, in Sol Meliá‘s case, totaled more than 500 million euros on the 31st December 2001. During the lifetime of the preferred shares, Sol Meliá‘s distributable profit cannot be less than the amount of 150 million euros, at the end of each fiscal period.

The subscription will not be subject to charges and commissions if carried out at any banking entity underwriting the issues. The underwriting syndicate comprises Ahorro Corporación Financiera (in representation of the majority of Savings Banks), BBVA, Bankinter, Bankpyme, Caja Madrid, Banco Urquijo, Natexis and ABN Amro. Furthermore, BBVA will act as entity for co-ordination, deposit and payment and as representative for the Issuer to all the relevant organisations in the Spanish markets.

This issue is the first of its kind to be effected by the hotel company and, due to the fact that it has similar characteristics to the Shareholder’s Equity, will considerably strengthen the financial structure of Sol Meliá, amortize existing debt and thus prolong the average term of the same. The issue of preferred shares will not modify the present number of the Company’s ordinary shares.

Liquidity:
Sol Meliá Finance has signed a contract with the banking syndicate, by which the said entities agree to offer up to 5% liquidity to the holders of preferred shares through the Spanish securities market (AIAF).

The preferred shares are a financial product which has been used by all of Spain’s principal financial institutions, as well as by many international hotel companies including Host Marriot, Hilton Hotels Corporation and FelCor Lodging Trust.

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