PITTSBURGH--(BUSINESS WIRE)--March 12, 2002--Shaner Hotel Group, a major Interstate Hotels (Nasdaq:IHCO) shareholder, announced it made an all-cash offer for a controlling stake in Interstate last week. The proposal was delivered March 6 to the Interstate Board of Directors. The deal represents an opportunity for Interstate to immediately benefit from efficiencies gained by combining resources of the two organizations. This transaction is valued at approximately $40 million and stands until Wednesday, March 13 at 5 p.m. (tomorrow). The Interstate Board has not yet commented on the content of Shaner's current proposal.
Yesterday, Interstate Chairman and CEO Thomas Hewitt received a separate request from Shaner asking for a mailing list of all current stockholders, signaling a move to alert Interstate investors of this important and timely opportunity.
In its plan to reset the financial course of Interstate, Shaner is prepared to acquire 1,650,000 shares of Class A Common stock at $3 per share and 500,000 shares of Series B Preferred stock at a premium. In connection with the transaction, Interstate will redeem convertible notes in the principal amount of $25 million and all remaining shares of Series B Preferred stock. Shaner already holds 320,000 shares of Interstate's Class A Common.
Shaner will set aside additional funding for other expenses related to the transaction, such as fees for transitioning contracts.
We are sincere and highly committed to our vision for improving Interstate's performance, said Lance Shaner, chairman and chief executive officer of Shaner Hotel Group. We want to implement our strategy while Interstate is still in a viable position. The time for Shaner and Interstate to join forces is right now.
On February 13, Interstate Hotels Corporation announced a fourth-quarter loss of $3.1 million and a loss of $8 million for 2001.
Efficiency and Strength with Combined Resources
The Interstate and Shaner hotel management contracts that would be combined after the deal would represent more than 150 properties and about 32,000 rooms in nearly all 50 states and several international destinations. The inherent synergies and cost savings with the combination of the two companies would touch nearly every aspect of operations.
Shaner's management team is eager to tackle the challenges of the evolving travel industry, having successfully done so for its own company since 1983. Shaner's proposal calls for a restructuring of Interstate's Board and reduced compensation for executives.
Shaner has been trying to acquire Interstate since October 2000 when the Interstate Board instead ratified a deal with Lehman Brothers Holdings Inc. In January and February of 2002, Shaner again submitted two separate joint-venture proposals to the Interstate Board with the goal of initiating negotiations and bringing the notion before shareholders. Interstate's board rejected both plans. Today's announcement is Shaner's first all-cash offer since approaching Interstate earlier this year, and reinforces Shaner's goal of making its good intentions known to other shareholders.
About Shaner Hotel Group
The Shaner Hotel Group (SHG), with over $260 million in assets, is a privately held fully integrated hotel company that specializes in the acquisition, refurbishment, repositioning, development and long-term ownership of full-service hotels. SHG also has extensive limited-service and extended-stay experience. The company owns 22 hotels, representing 10 different hotel brands in 15 states. Formed in 1983, SHG is headquartered in State College, Pa.
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