8-K 1 l22176ae8vk.htm BOYKIN LODGING COMPANY 8-K Boykin Lodging Co. 8-K
 

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 11, 2006
Boykin Lodging Company
(Exact Name of Registrant as Specified in its Charter)
         
Ohio   001-11975   34-1824586
(State or Other Jurisdiction of   (Commission File Number)   (IRS Employer Identification Number)
Incorporation)        
     
Guildhall Building, Suite 1500, 45 W. Prospect Avenue, Cleveland, Ohio   44115
(Address of Principal Executive Offices)   (Zip Code)
(216) 430-1200
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

SECTION 2 FINANCIAL INFORMATION
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On September 8, 2006, Boykin Fort Myers, LLC, a subsidiary of Boykin Lodging Company (“Boykin”), sold the Best Western Fort Myers Island Gateway Hotel (“Fort Myers”) in Fort Myers, Florida to LQ Acquisition Properties L.L.C., an unrelated third party, for a price of $11.225 million. The sales price for the transaction was the result of arm’s-length negotiations.
SECTION 8 OTHER EVENTS
ITEM 8.01 OTHER EVENTS
On September 11, 2006, the Company issued a press release announcing the sale, which is furnished as Exhibit 99.1 hereto.
CAUTIONARY STATEMENTS
          This report is being made in respect of a proposed merger transaction involving the Company and affiliates of Westmont Hospitality Group and Cadim, Inc., a wholly-owned subsidiary of Caisse de dépôt et placement du Québec. In connection with the transaction, the Company has filed with the SEC a definitive proxy statement on Schedule 14A and a proxy statement supplement concerning the proposed transaction. Before making any voting or investment decision, shareholders are urged to read the definitive proxy statement and proxy statement supplement carefully and in their entirety because they will contain important information about the proposed transaction.
          The definitive proxy statement and the proxy statement supplement have been mailed to the Company’s shareholders. In addition, the definitive proxy statement, proxy statement supplement and other documents are available free of charge at the SEC’s Internet Web site, www.sec.gov. The definitive proxy statement, proxy statement supplement and other pertinent documents also may be obtained for free at the Company’s web site, www.boykinlodging.com.
          The Company and its executive officers and directors may be deemed, under SEC rules, to be participants in the solicitation of proxies from the Company’s shareholders with respect to the merger involving the Company. Information regarding the Company’s executive officers and directors, including their direct or indirect interest, by securities, holdings, or otherwise, is set forth in the Company’s definitive proxy statements filed with the SEC on April 25, 2006 and August 4, 2006.
SECTION 9 FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial information for Boykin Lodging Company gives effect to the disposition of the Best Western Fort Myers Island Gateway Hotel in Fort Myers, Florida, as well as the receipt of proceeds from the sale as described in this Current Report on Form 8-K.
The June 30, 2006 unaudited Pro Forma Condensed Consolidated Balance Sheet presents the disposition of the Best Western Fort Myers Island Gateway Hotel as if it was effective June 30, 2006. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the six months ended June 30, 2006, and each of the years in the three year period ended December 31, 2005 assume the sale was effective as of the beginning of the fiscal year ended December 31, 2003.
The unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements and related footnotes included in Boykin Lodging Company’s 2005 Annual Report on Form 10-K.
THE FOLLOWING UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION IS PRESENTED FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT
NECESSARILY AN INDICATION OF THE FUTURE FINANCIAL POSITION OR RESULTS
OF OPERATIONS OF BOYKIN LODGING COMPANY.

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2006
(unaudited, dollar amounts in thousands)
                                         
          Pro Forma Adjustments        
    (a)     (b)     (c)     (d)        
                    Marco     Fort     Pro  
    Historical     Hotel 71     Island     Myers     Forma  
Investment in hotel properties
   $ 520,377       —       —       (5,810 )   $ 514,567  
Accumulated depreciation
     (146,034 )     —       —       2,017       (144,017 )
 
                              
Investment in hotel properties, net
     374,343       —       —       (3,793 )     370,550  
Cash and cash equivalents
     12,241       —       57,170       10,875 (e)     80,286  
Restricted cash
     9,460       —       —       —       9,460  
Accounts receivable, net of allowance for doubtful accounts of $292
     7,955       —       —       (42 )     7,913  
Inventories
     1,174       —       —       (17 )     1,157  
Deferred financing costs and other, net
     1,272       —       —       (46 )     1,226  
Investment in unconsolidated joint ventures
     1,412       (504 )     —       —       908  
Other assets
     16,349       —       —       (227 )     16,122  
Assets related to discontinued operations, net
     28,216       —       (28,216 )     —       —  
 
                              
 
   $ 452,422       (504 )     28,954       6,750     $ 487,622  
 
                              
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                        
Borrowings against credit facility
   $ 34,000       —       —       —     $ 34,000  
Term notes payable
     103,917       —       —       —       103,917  
Accounts payable and accrued expenses
     44,370       —       —       (235 )     44,135  
Accounts payable to related party
     934       —       —       (15 )     919  
Dividends/distributions payable
     1,188       —       —       —       1,188  
Minority interest in joint ventures
     2,649       —       —       —       2,649  
Minority interest in operating partnership
     13,025       (77 )     4,469 (f)     1,034 (f)     18,451  
Liabilities related to discontinued operations
     1,301       —       (1,301 )     —       —  
SHAREHOLDERS’ EQUITY:
                                        
Preferred shares, without par value; 10,000,000 shares authorized; 181,000 shares issued and outstanding as of June 30, 2006 (liquidation preference of $45,250)
     —       —       —       —       —  
Common shares, without par value; 40,000,000 shares authorized; 17,687,567 issued and outstanding as of June 30, 2006
     —       —       —       —       —  
Additional paid-in capital
     361,068       —       —       —       361,068  
Distributions and losses in excess of income
     (107,964 )     (427 )     25,786 (f)     5,966 (f)     (76,639 )
Unearned compensation – restricted shares
     (2,066 )     —       —       —       (2,066 )
 
                              
Total shareholders’ equity
     251,038       (427 )     25,786       5,966       282,363  
 
                              
 
   $ 452,422       (504 )     28,954       6,750     $ 487,622  
 
                              

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006
(unaudited, amounts in thousands, except for per share data)
                                 
          Pro Forma Adjustments        
    (a)     (b)     (g)        
    Historical     Hotel 71     Fort Myers     Pro Forma  
Revenues:
                                
Hotel revenues
                                
Rooms
   $ 65,057       —       (2,145 )   $ 62,912  
Food and beverage
     29,814       —       (252 )     29,562  
Other
     3,806       —       (15 )     3,791  
 
                        
Total hotel revenues
     98,677       —       (2,412 )     96,265  
Other operating revenue
     74       —       —       74  
Revenues from condominium development and unit sales
     1,248       —       —       1,248  
 
                        
Total revenues
     99,999       —       (2,412 )     97,587  
 
                        
 
                                
Expenses:
                                
Hotel operating expenses
                                
Rooms
     15,699       —       (368 )     15,331  
Food and beverage
     19,630       —       (242 )     19,388  
Other direct
     2,650       —       (20 )     2,630  
Indirect
     30,804       —       (638 )     30,166  
Management fees to related party
     2,785       —       (74 )     2,711  
 
                        
Total hotel operating expenses
     71,568       —       (1,342 )     70,226  
Property taxes, insurance and other
     9,070       —       (224 )     8,846  
Cost of condominium development and unit sales
     1,124       —       —       1,124  
Real estate related depreciation and amortization
     10,393       —       (135 )     10,258  
Corporate general and administrative
     7,088       —       —       7,088  
 
                        
Total operating expenses
     99,243       —       (1,701 )     97,542  
 
                        
 
                                
Operating income
     756       —       (711 )     45  
 
                                
Interest income
     597       —       (1 )     596  
Other income
     16       —       —       16  
Interest expense
     (5,617 )     —       —       (5,617 )
Amortization of deferred financing costs
     (939 )     —       —       (939 )
Minority interest in earnings of joint ventures
     (9 )     —       —       (9 )
Minority interest in loss of operating partnership
     1,324       4       105       1,433  
Equity in income of unconsolidated joint ventures including gain on sale
     212       (25 )     —       187  
 
                        
 
                                
Loss before preferred dividends, gain on sale/disposal of assets and discontinued operations
     (3,660 )     (21 )     (607 )     (4,288 )
 
                                
Preferred dividends
     (2,376 )     —       —       (2,376 )
 
                        
 
                                
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations
   $ (6,036 )     (21 )     (607 )   $ (6,664 )
 
                        
 
                                
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations per share
                                
Basic
   $ (0.34 )                   $ (0.38 )
Diluted
   $ (0.34 )                   $ (0.38 )
 
                                
Weighted average number of common shares outstanding
                                
Basic
     17,688                       17,688  
Diluted
     17,926                       17,926  

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
(unaudited, amounts in thousands, except for per share data)
                         
            Pro Forma        
          Adjustments        
    (h)     (g)        
    Historical     Fort Myers     Pro Forma  
Revenues:
                        
Hotel revenues
                        
Rooms
   $ 119,153       (3,640 )   $ 115,513  
Food and beverage
     58,095       (425 )     57,670  
Other
     14,398       (36 )     14,362  
 
                  
Total hotel revenues
     191,646       (4,101 )     187,545  
Other operating revenue
     149       —       149  
 
                  
Total revenues
     191,795       (4,101 )     187,694  
 
                  
 
                        
Expenses:
                        
Hotel operating expenses
                        
Rooms
     30,053       (724 )     29,329  
Food and beverage
     38,840       (420 )     38,420  
Other direct
     5,285       (34 )     5,251  
Indirect
     59,049       (1,245 )     57,804  
Management fees to related party
     5,103       (173 )     4,930  
 
                  
Total hotel operating expenses
     138,330       (2,596 )     135,734  
Property taxes, insurance and other
     15,786       (279 )     15,507  
Real estate related depreciation and amortization
     21,443       (299 )     21,144  
Corporate general and administrative
     11,664       —       11,664  
Impairment of real estate
     5,500       —       5,500  
 
                  
Total operating expenses
     192,723       (3,174 )     189,549  
 
                  
 
                        
Operating loss
     (928 )     (927 )     (1,855 )
 
                        
Interest income
     1,106       (1 )     1,105  
Other income
     2       —       2  
Interest expense
     (11,586 )     —       (11,586 )
Amortization of deferred financing costs
     (1,540 )     —       (1,540 )
Federal income taxes
     (75 )     —       (75 )
Minority interest in loss of joint ventures
     38       —       38  
Minority interest in loss of operating partnership
     1,302       136       1,438  
Equity in income of unconsolidated joint ventures including gain on sale
     329       —       329  
 
                  
 
                        
Loss before preferred dividends, gain on sale/disposal of assets and discontinued operations
     (11,352 )     (792 )     (12,144 )
 
                        
Preferred dividends
     (4,751 )     —       (4,751 )
 
                  
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations
   $ (16,103 )     (792 )   $ (16,895 )
 
                  
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations per share
                        
Basic
   $ (0.92 )           $ (0.96 )
Diluted
   $ (0.92 )           $ (0.96 )
 
                        
Weighted average number of common shares outstanding
                        
Basic
     17,567               17,567  
Diluted
     17,887               17,887  

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
(unaudited, amounts in thousands, except for per share data)
                         
            Pro Forma        
          Adjustments        
    (h)     (g)        
    Historical     Fort Myers     Pro Forma  
Revenues:
                        
Hotel revenues
                        
Rooms
   $ 117,279       (3,215 )   $ 114,064  
Food and beverage
     55,596       (432 )     55,164  
Other
     9,643       (43 )     9,600  
 
                  
Total hotel revenues
     182,518       (3,690 )     178,828  
Other operating revenue
     184       —       184  
Revenues from condominium development and unit sales
     7,541       —       7,541  
 
                  
Total revenues
     190,243       (3,690 )     186,553  
 
                  
 
                        
Expenses:
                        
Hotel operating expenses
                        
Rooms
     29,726       (666 )     29,060  
Food and beverage
     37,415       (460 )     36,955  
Other direct
     5,095       (39 )     5,056  
Indirect
     58,560       (1,120 )     57,440  
Management fees to related party
     4,889       (157 )     4,732  
 
                  
Total hotel operating expenses
     135,685       (2,442 )     133,243  
Property taxes, insurance and other
     13,840       (180 )     13,660  
Cost of condominium development and unit sales
     5,509       —       5,509  
Real estate related depreciation and amortization
     21,365       (357 )     21,008  
Corporate general and administrative
     8,804       (2 )     8,802  
 
                  
Total operating expenses
     185,203       (2,981 )     182,222  
 
                  
 
                        
Operating income
     5,040       (709 )     4,331  
 
                        
Interest income
     377       —       377  
Other income
     8       —       8  
Interest expense
     (13,629 )     —       (13,629 )
Amortization of deferred financing costs
     (1,367 )     —       (1,367 )
Minority interest in loss of operating partnership
     2,134       106       2,240  
Equity in income of unconsolidated joint ventures
     121       —       121  
 
                  
 
                        
Loss before preferred dividends, gain on sale/disposal of assets and discontinued operations
     (7,316 )     (603 )     (7,919 )
 
                        
Preferred dividends
     (4,751 )     —       (4,751 )
 
                  
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations
   $ (12,067 )     (603 )   $ (12,670 )
 
                  
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations per share
                        
Basic
   $ (0.69 )           $ (0.73 )
Diluted
   $ (0.69 )           $ (0.73 )
 
                        
Weighted average number of common shares outstanding
                        
Basic
     17,426               17,426  
Diluted
     17,553               17,553  

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(unaudited, amounts in thousands, except for per share data)
                         
            Pro Forma        
          Adjustments        
    (h)     (g)        
    Historical     Fort Myers     Pro Forma  
Revenues:
                        
Hotel revenues:
                        
Rooms
   $ 113,820       (2,597 )   $ 111,223  
Food and beverage
     52,815       (385 )     52,430  
Other
     7,016       (42 )     6,974  
 
                  
Total hotel revenues
     173,651       (3,024 )     170,627  
Other operating revenue
     120       —       120  
Revenues from condominium development and unit sales
     36,883       —       36,883  
 
                  
Total revenues
     210,654       (3,024 )     207,630  
 
                        
Expenses:
                        
Hotel operating expenses:
                        
Rooms
     28,354       (638 )     27,716  
Food and beverage
     36,436       (402 )     36,034  
Other direct
     4,275       (26 )     4,249  
Indirect
     54,915       (1,124 )     53,791  
Management fees to related party
     3,891       (101 )     3,790  
Management fees – other
     746       —       746  
 
                  
Total hotel operating expenses
     128,617       (2,291 )     126,326  
Property taxes, insurance and other
     13,560       (229 )     13,331  
Cost of condominium development and unit sales
     24,645       —       24,645  
Real estate related depreciation and amortization
     23,763       (300 )     23,463  
Corporate general and administrative
     8,050       (12 )     8,038  
 
                  
Total operating expenses
     198,635       (2,832 )     195,803  
 
                  
 
                        
Operating income
     12,019       (192 )     11,827  
 
                        
Interest income
     597       (1 )     596  
Other income
     28       —       28  
Interest expense
     (14,923 )     —       (14,923 )
Amortization of deferred financing costs
     (1,906 )     —       (1,906 )
Minority interest in loss of operating partnership
     1,875       29       1,904  
Equity in loss of unconsolidated joint ventures
     (133 )     —       (133 )
 
                  
 
                        
Loss before preferred dividends, gain on sale/disposal of assets and discontinued operations
     (2,443 )     (164 )     (2,607 )
 
                        
Preferred dividends
     (4,751 )     —       (4,751 )
 
                  
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations
   $ (7,194 )     (164 )   $ (7,358 )
 
                  
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations per share
                        
Basic
   $ (0.41 )           $ (0.42 )
Diluted
   $ (0.41 )           $ (0.42 )
 
                        
Weighted average number of common shares outstanding
                        
Basic
     17,336               17,336  
Diluted
     17,470               17,470  

 

 

(a)   Historical data presented reflects amounts reported on Form 10-Q for the quarterly period ended June 30, 2006 filed on August 8, 2006.
 
(b)   On March 30, 2005, Boykin Chicago, L.L.C., a joint venture between Boykin and AEW Partners III L.P., sold Hotel 71 in Chicago, Illinois, for a price of $95.05 million to Chicago H&S Hotel Property, LLC, an unrelated third party. Since Boykin accounts for its investment in Boykin Chicago, L.L.C. using the equity method, amounts relating to this entity or the sale of Hotel 71 have not been reclassified to discontinued operations within the historical 2006 financial statements. Historical data for periods prior to 2006 in this Form 8-K, obtained from the Form 8-K filed on July 20, 2006, reflect this reclassification. Amounts representing the necessary adjustments to Boykin’s historical financial statements for this transaction are reflected within the “Hotel 71” column of this Form 8-K.
 
(c)   On July 17, 2006, a subsidiary of Boykin sold the Radisson Suite Beach Resort – Marco Island (“Marco Island”) to Marriott Ownership Resorts, Inc., for a price of $58.0 million. As of June 30, 2006, Marco Island was classified as discontinued operations within the financial statements. Amounts in the column entitled “Marco Island” represent the necessary adjustments to Boykin’s historical financial statements to remove the assets and liabilities associated with Marco Island, as applicable, as well as to reflect the receipt of the sales proceeds.
 
(d)   Represents the necessary adjustments to Boykin’s historical financial statements to remove the assets and liabilities associated with Fort Myers, as applicable, as well as to reflect the receipt of the sale proceeds.
 
(e)   Represents the net proceeds from the sale totaling approximately $10.9 million.
 
(f)   Reflects the estimated impact of the sale on minority interest and shareholders’ equity as if the sale took place on June 30, 2006. The actual impact of the transactions was based upon the carrying value of the assets at the time of the sale.
 
(g)   Reflects the adjustments to Boykin’s historical financial statements to present them as if the disposition of Fort Myers had occurred on January 1, 2003. The gain or loss on the sale is not reflected in the pro forma condensed consolidated statements of operations. Boykin anticipates that the actual gain on the sale, net of minority interest, will approximate $5.9 million.
 
(h)   Historical data presented reflects amounts reported on Form 8-K filed on July 20, 2006.

 

 

(c)   Exhibits.
     
99.1
  Boykin Lodging Company press release announcing transaction dated September 11, 2006.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  BOYKIN LODGING COMPANY
 		  
  By:   /s/ Shereen P. Jones    
    Shereen P. Jones   
    Executive Vice President, Chief Financial and
Investment Officer 		  
 
Date: September 11, 2006