WASHINGTON, D.C.--(BUSINESS WIRE)--Dec. 18, 2001--MeriStar Hospitality Corporation (NYSE: MHX), the nation's third largest hotel real estate investment trust (REIT), today announced that it had amended its senior secured credit facility to provide more flexibility with certain financial covenants and allow the company the option to extend the maturity of the revolver from August 2002 until August 2003.
The interest rate on the revolver increases to LIBOR plus 400 basis points from LIBOR plus 188 basis points.
The company also said that it expects to complete the previously announced sale of $250 million of senior, unsecured notes on Wednesday, December 19, and will use the proceeds to pay off Term Loans A and B, with the balance to be used to reduce the amount outstanding under the revolver to approximately $228 million. The notes mature in June 2009 and carry a 10.5 percent interest rate.
The sale of the notes enhances our overall capital structure with less restrictive, longer term debt, said John Emery, president and chief operating officer. Our goal was to reduce our bank debt to 10 to 15 percent of our total debt, and the sale of the notes will accomplish that goal. Our total debt as of today is $1.705 billion with an average maturity of six years at an average rate of 8.6 percent. Our balance sheet remains prudently leveraged, and we are well prepared to weather the current economic conditions.
Fourth Quarter Update
Revenue per available room (RevPAR) in October declined 25.6 percent and November RevPAR dropped 24.1 percent, compared to the same months a year earlier. Occupancy was off 17.5 percent and 15.8 percent in October and November, respectively. We expect December RevPAR to decline approximately 20 to 25 percent, said Paul W. Whetsell, MeriStar chairman and chief executive officer. Our hotels are located primarily in major urban markets and have been dramatically impacted by the severe slowdown in business travel, meetings and convention business and the sharp drop off in air travel following the tragic events of September 11.
Immediately after the terrorist attacks, we worked closely with our management company, MeriStar Hotels & Resorts (NYSE: MMH), to implement significant cost containment strategies, which resulted in our achieving better than expected gross operating profit margins in both October and November, he added. As a result, we expect to meet or exceed the upper end of our previous FFO estimate of $0.15 to $0.25 per diluted share for the 2001 fourth quarter.
Washington, D.C.-based MeriStar Hospitality Corporation owns 112 principally upscale, full-service hotels in major markets and resort locations with 28,597 rooms in 27 states, the District of Columbia and Canada. The company owns hotels under such internationally known brands as Hilton, Sheraton, Marriott, Westin, Radisson and Doubletree. For more information about MeriStar Hospitality Corporation, visit the company's Web site: www.meristar.com.
This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, about the Company, including those statements regarding future operating results and the timing and composition of revenues, among others, and statements containing words such as expects, believes or will, which indicate that those statements are forward-looking. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including the effects of the events of September 11, 2001 and the downturn in the economy. Additional risks are discussed in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the year ended December 31, 2000.
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