Submit an authorization to the CNMV for a public offer of acquisition of shares in Sotogrande

[04/09/2006]





NH HOTELS, S.A. ("NH") in compliance with the duty of information laid down in section 82 of the Stock Market Act, hereby forwards to you the Relevant Fact that we will detail hereinbelow, so this can be placed at the disposal of the public:




On today’s date, NH has submitted an application to the Spanish Securities and Exchange Commission for a public offer of acquisition of shares in SOTOGRANDE S.A. (the "Offer"), along with other complementary documentation, which is pending authorisation on the part of the CNMV and whose main characteristics are as follows:

1. Objective of the Offer

The Offer concerns the entirety of the shares issued by Sotogrande that are not owned by NH (that is to say, excluding the 33,114,628 shares of Sotogrande of which NH is the holder that represent 79.61% of the share capital of Sotogrande). Accordingly, the objective of the offer is a total of 8,770,130 shares in Sotogrande, as a whole representing 20.939% of its share capital.

2. Consideration

The offer is formulated as an exchange of stocks, with the consideration being offered being newly-issued NH shares. Specifically, for every Sotogrande share, the consideration offered to the Sotograde shareholders who accept the offer will be one newly-issued NH share, with the same rights as the shares presently in circulation. In this respect, it is recorded that the General Shareholder’s Meeting of NH held on May 5, 2006 adopted the opportune resolutions concerning the necessary capital increase, with an express provision for incomplete subscription and the corresponding elimination of the relevant right of first refusal, with the aim of issuing the new NH shares that are necessary in order to meet the settlement of the Offer based on the result thereof. This is any event subject to the prior authorisation of the Offer on the part of the Spanish Securities and Exchange Commission.

3. Agreement with Caja Madrid

Within the context of the offer, Caja Madrid has undertaken with NH to accept the Offer and, accordingly, transfer 17.257% of the share capital of Sotogrande in exchange for newly-issued NH shares. On the other hand, NH and Caja Madrid have agreed on a mechanism that will be extended to all of the shareholders who accept the Offer and that will enable them to participate in the possible capital gains that could be generated as a consequence of the transfer of the shareholding stake of Sotogrande in the period of twelve (12) months following the settlement of the OFFER. NOTWITHSTANDING THIS PROVISION, IT IS EXPRESSLY RECORDED THAT NH HAS NOT RECEIVED, AND DOES NOT REASONABLY EXPECT TO RECEIVE, NOR IS IN NEGOTIATIONS OR CONVERSATIONS TO RECEIVE, ANY OFFER FROM A THIRD PARTY FOR THE TRANSFER OF ITS STAKE IN SOTOGRANDE AND WHICH, AT TODAY’S DATE, MEANS THAT IT CANNOT BE FORESEEN THAT SAID TRANSFER IS TO TAKE PLACE WITHIN THE PERIOD STATED.

4. Reason why the Offer is formulated

After NH reached agreement with Caja Madrid to exchange the shareholding stake that this holds in Sotogrande for new NH shares, the NH Board of Directors, with a view to the principle of market transparency and in order to grant equality of treatment to all of the Sotogrande shareholders, considered it opportune toe extend said purchase terms to the other shareholders of Sotogrande by means of the formulation of the Offer. However, the intention of NH, once the process of concentration and re-arrangement of activities planned in Sotogrande that will be detailed hereinunder is complete, is to reduce its currently shareholding stake in Sotogrande, but without the same being placed at less than the 51% of the total share capital of the latter.

5. Future plans of Sotogrande

Given the growing international demand for top level residential estates and the lack of quality comprehensive operators whose activity is extended to all phases of the real estate process (planning, promotion and exploitation of services), NH considers that currently the right market conditions exist for concentrating the Sotogrande activity in which its main line of business is constituted (comprehensive management of top level residential estates) and to export the model developed in Sotogrande to new projects of national and international scope. Specifically, it is the intention that said main activity of Sotogrande is as follows: (i) develop projects that are comprehensive and of a relatively large size, participating in all of the phases of the generation of value in the project; (ii) create residential environments of quality, endowing them with technical, sports and service infrastructures of the best level; (iii) gaining access to any geographical market in which it could be possible to develop a project of these characteristics; and (iv) participating in projects with strategic partners that contribute the "local factor". In this same respect, it is the aim of NH to concentrate all of the activities of operating tourist-real estate developments that are presently being carried out within the NH group in Sotogrande. In order to achieve said objective, NH ha the intention of proposing to the Sotogrande Board the sale of those activities outside its main activity, defined hereinabove, to NH, and to independent third persons. The aim is for Sotogrande to take on new projects, making use of its brand name, experience and professional team, and for this to become consolidated as a project that is growing and that generates value for shareholders. The following can be cited as the most relevant operations to be carried out by Sotogrande in order to achieve the goals stated in the section above: - Make use of all of the assets outside the main activity as has been described above directly, either through sales, or through the assignment of the management of the same to a third party, or to NH. - Transfer by NH to Sotogrande of such rights as it holds in the real estate projects that are currently being carried out. Given the importance of the Sotogrande brand name, and its relationship with the world of golf, the intention of NH is to maintain the business related to golf under the Sotogrande company and this will thus be proposed to its Board of Directors. Once the Offer has been authorised by the Spanish Securities and Exchange Commission, both the explanatory Prospectus regarding the Offer and the documentation that accompanies it will be placed at the disposal of the public, in the form and within the periods set out in the applicable regulations. This is communicated for the opportune purposes in Madrid, on September 4, 2006. Yours Faithfully NH HOTELES SA Jesus Ignacio Aranguen Gonzalez-Tarrio