AFM has agreed in principle with the issuance of AFM common voting shares, subject to 36 month lockup at an initial price of a minimum of USD $3.00 per share or the average trading price for the week prior the day of receipt of funds, subject to regulatory approvals. Applicable Canadian Securities Laws (Ontario Securities Commission and Toronto Stock Exchange as applicable) apply to the transaction plus acknowledgement by investors that the securities contemplated in the proposed Private Placement will not be registered outside of Canada but may still be subject to waivers by Investors and specific regulatory filings in the jurisdiction in which investor resides.
While subject to best efforts, if successful, AFM anticipates using the proceeds to: a) To provide the cash portion of acquisition capital to expand AFM's growing Collection of internet businesses and related acquisitions of similar interactive luxury hospitality and travel businesses; b) to provide working capital for the expansion of its InterActive reservations and marketing solutions businesses; and for general working capital and expansion purposes.
"The private placement will give us a stronger balance sheet, fund the cash component of growth required by these and other recent acquisitions, fund anticipated expansion plans and permit us to refinance the remaining debt AFM currently has elsewhere," said Lawrence P. Horwitz, AFM Hospitality Corporation Chairman and CEO. "AFM has reported interim year to date results through third quarter 2004 that are significantly better than 2003 and expects to report a similar improvement for the entire year of 2004 compared to 2003. While we have used debt financing for acquisitions within the past year, with the significant upturn in AFM's results, we believe that equity financing appears to be a better alternative for all involved going forward. With the recent acquisition of Boutique Hotels & Resorts International, we expect to announce other similar acquisitions over the next few months for a combination of cash, notes and securities." Horwitz continued, "While not certain as to the completion date or the amount, we hope to complete this Private Placement by mid year." "We are pleased that the Investment Advisors selected have decided to accept AFM as a client and are looking forward to combining their prior experience with internet incubators, telecommunications, and other technologies with our growing hospitality services company."
About AFM Hospitality Corporation
Through its subsidiary companies, AFM Hospitality Corporation operates or has open and/or executed franchise, management, and membership agreements with more than 300 hotels, restaurants and other nationally franchised service businesses throughout Canada and fifteen other countries. The company's focus is to be a leader in global hospitality management and franchising; InterActive Reservations Platforms and Marketing Solutions; and luxury lifestyle brands and branded services. AFM Hospitality Corporation is a publicly traded company listed on the Toronto Stock Exchange (TSX: AFM).
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