SOL MELIA ANNUAL REPORT 00 COMP

GUARANTEES,
COMMITMENTS AND CONTINGENCIES
Sol Meliá, S.A. has acquired the commitment of financing, if needed, up to Ptas. 2,000 million of the construction of one
of the hotels it will rent and of mortgaging other owned assets.
Sol Meliá, S.A. is the guarantor of Lomondo Ltd. (a Group company) and Promociones Playa Blanca, S.A. for loans formalised
with banks, the debts of which at December 31, 2000 amount to Sterling Pounds 15.6 million and Euros 4.8
million, respectively.
Sol Meliá, S.A., Meliá Inversiones Americanas, N.V. and Inmotel Inversiones, S.A. (absorbed company) signed a Global
Agreement in March 1998 in order to regulate certain aspects of the intercompany relationship. The main terms of the
Global Agreement are:
Non-competition Covenant: Inmotel Inversiones, S.A. and Sol Meliá, S.A agreed not to compete in the tourist business in
Latin American and the Caribbean area unless otherwise authorized by Meliá Inversiones Americanas, N.V.
First refusal right: Meliá Inversiones Americanas, N.V. has granted to Sol Meliá, S.A. the first refusal right of operating
any hotel owned by Meliá Inversiones Americanas. N.V. that the latter may acquire or use.
Management contracts: The following standard terms will be applied to any management contract signed by Meliá
Inversiones Americanas, N.V.and Sol Meliá, S.A. or by any of their subsidiaries:
Initial period for the management contract
20 years
Sales fees
4% on gross income
Fees on G.O.P 10%
Market price: All the transactions between Meliá Inversiones Americanas, N.V. and Sol Meliá, S.A. which might imply a
clash of interests will be carried out at market price.
Sol Meliá, S.A. has firm rental commitments, which range between one and eighteen years, including documentary commitments
for approximately Ptas. 15,000 million, in accordance with the maturities of the corresponding rentals.
Sol Meliá has agreed with Tryp, S.A. (a Group company) that any amount it may receive from the former owners of the
said company to cover risks materialised in the Tryp Group would be handed over to Tryp, S.A.
Sol Meliá secures up to Euros 1,500 million the fulfilment by the subsidiary Sol Meliá Europe, B.V. of any assumed obligation
relating to the issue of “Euro Medium-Term Note Programme” Bonds to be carried out by the subsidiary. At
December 31, 2000 Sol Meliá Europe, B.V. had issued Bonds for Euros 206 million, which mature on March 30, 2001.
During the year, Hoteles Mallorquines Agrupados, S.A., Hoteles Mallorquines Asociados, S.A. and Hoteles Mallorquines
Consolidados, S.A., have paid to Sol Meliá, S.A. all the expenses and payments deriving from the warrants given to the
shareholders of Melia Inversiones Americanas, N.V., who accepted the Public Offering of Acquisition of Shares of Melia
Inversiones Americanas, N.V. approved by the Spanish National Stock Market Committee on December 30, 1998.
Claims for damages were lodged with a United States Court against various Group companies by a guest of one of the
hotels managed in Mexico. The lawyer has affirmed that he cannot as yet give an opinion on the final outcome. The
Company’s directors consider, however, that these claims will not have a significant impact on the Group’s results and
equity since Sol Meliá has a minority holding in the company that owns and operates the hotel, and in any case the Group
has an insurance policy to cover such contingencies.
S OL
M ELIÁ
A NNUAL R EPORT 2000
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