-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AsqWHl0mniyKG/XTbOqp2bevtZHzisWFto6kIQlEZJPRZOg/ADHHhAMl8M9kNztO ys4NVdC20C6Sq2HVR9Hnsg== 0000947871-01-501183.txt : 20020413 0000947871-01-501183.hdr.sgml : 20020413 ACCESSION NUMBER: 0000947871-01-501183 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011217 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXTENDED STAY AMERICA INC CENTRAL INDEX KEY: 0001002579 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 363996573 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13125 FILM NUMBER: 1816104 BUSINESS ADDRESS: STREET 1: 450 E LAS OLAS BLVD STREET 2: STE 1100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33301 BUSINESS PHONE: 9547131600 MAIL ADDRESS: STREET 1: 450 E LAS OLAS BLVD STREET 2: STE 1100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33301 8-K 1 f8k_121701.txt FORM 8-K 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): December 17, 2001 EXTENDED STAY AMERICA, INC. ------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-27360 36-3996573 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) l01 North Pine Street, Suite #200, Spartanburg, South Carolina 29302 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (864) 573-1695 Item 5. Other Events. On December 17, 2001, Extended Stay America, Inc. (the "Company") announced an amendment, dated as of January 1, 2002, (the "Amendment") of its credit agreement, dated July 24, 2001, by and among the Company, the various lenders party thereto, Morgan Stanley Senior Funding, Inc., as sole Lead Arranger, Bear Stearns Corporate Lending Inc. and Fleet National Bank, as Co-Syndication Agents. The Amendment increases the total leverage covenant to 5.25 for the period from January 1, 2002 to March 31, 2003. On April 1, 2003 and thereafter, the total leverage covenant returns to 4.50. The amendment also imposes a pricing grid which increases the interest rate on outside loans under the credit facility by 0.25% from January 1, 2002 through March 31, 2002. Thereafter, the interest rate is increased by 0.25% if total leverage is greater than or equal to 4.25 or by 0.75% if total leverage is greater than 4.75. The Company issued a news release announcing the amendment. A copy of the news release is filed herewith as Exhibit 99.1 to this report. A copy of the Amendment is filed herewith as Exhibit 99.2. Item 7. Financial Statements and Exhibits. (a) The following exhibits are filed as part of this report on Form 8-K: 99.1 Press release dated December 17, 2001. 99.2 First Amendment, dated as of January 1, 2002, among Extended Stay America, Inc., the Lenders party to the Credit Agreement referred to therein, Morgan Stanley Senior Funding, Inc., as Sole Lead Arranger and Sole Book Runner, Bear Stearns Corporate Lending Inc. and Fleet National Bank, as Co-Syndication Agents, and The Industrial Bank of Japan, Limited, as Administrative Agent. 2 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 hereunto duly authorized. EXTENDED STAY AMERICA, INC. By: /s/ Gregory R. Moxley --------------------------------- Name: Gregory R. Moxley Title: Chief Financial Officer, Vice President, Finance Date: December 17, 2001 3 EXHIBIT INDEX Exhibit No. Descriptions - ----------- ------------ 99.1 Press release dated December 17, 2001. 99.2 First Amendment, dated as of January 1, 2002, among Extended Stay America, Inc., the Lenders party to the Credit Agreement referred to therein, Morgan Stanley Senior Funding, Inc., as Sole Lead Arranger and Sole Book Runner, Bear Stearns Corporate Lending Inc. and Fleet National Bank, as Co-Syndication Agents, and The Industrial Bank of Japan, Limited, as Administrative Agent 4 EX-99.1 3 ex99-1_121701.txt PRESS RELEASE Exhibit 99.1 EXTENDED STAYAMERICA LOGO For Immediate Release For More Information, Contact: Robert A. Brannon, President & COO (864) 573-1603 Gregory R. Moxley, CFO (864) 573-1635 EXTENDED STAY AMERICA, INC. AMENDS CREDIT FACILITY TO PROVIDE DEVELOPMENT FLEXIBILITY Spartanburg, SC - December 17, 2001 - Extended Stay America, Inc. (NYSE:ESA), a leading provider of extended stay lodging, today reported that it has amended its $900 million bank credit facility to provide additional flexibility in managing the development of new hotels. By increasing the total leverage permitted under the credit facility, the Company expects that it will be able to accelerate the development of hotels as market conditions warrant. The Company has continued the construction of the sites that were under construction at September 30, 2001. Due to short term uncertainties caused by the terrorist events on September 11, 2001, however, the Company recently deferred the commencement of construction of new hotels and began negotiating extended periods of time to develop the sites that it had under option at September 30, 2001. The amendment provides the Company with greater flexibility in negotiating these extensions, continuing the development process which often takes two or more years to complete, and commencing construction earlier than would have otherwise been possible under the credit agreement. The amendment modifies certain definitions and increases the total leverage covenant from 4.75 to 5.25 for the period from January 1, 2002 to March 31, 2003. The leverage covenant returns to the previously scheduled level of 4.50 beginning April 1, 2003. The amendment institutes a pricing grid which increases the interest rate on outstanding loans under the credit facility by 0.25% from January 1, 2002 through March 31, 2002. Thereafter, the interest rate is increased by 0.25% if total leverage is greater than or equal to 4.25 or by 0.75% if total leverage is greater than or equal to 4.75. George D. Johnson, Jr., CEO, commented, "With the projected decline in the rate of supply of new hotel rooms for the next few years, we anticipate that lodging will benefit from expected increases in demand as our economy recovers from the current recession. We believe that our Company will benefit from increased market share by having additional hotels in operation during that period. This amendment gives us the flexibility to accelerate our development as the economy improves." Extended Stay America currently owns and operates 425 hotels under the Extended StayAmerica, StudioPLUS, and Crossland brands. The Company currently has 26 hotels under construction which are expected to be completed at various dates through September 30, 2002. The Company has also identified 55 additional sites with total development costs of approximately $450 million for which construction could commence in 2002. The Company will continue to seek the necessary approvals and permits for these sites so that construction can commence as soon as possible within the constraints of the amended credit agreement. While the Company does not currently expect that it will commence construction on all of these sites in 2002, it will seek to accelerate the number of construction starts based on a number of factors including improvements in the overall US economy, improvements in demand for lodging products in the overall lodging industry and improvements in the demand for the Company's extended stay lodging products. Subject to adjustments based on the factors discussed above, the Company currently plans to commence construction of at least 15 hotels with total costs of approximately $150 million during 2002, the majority of which are expected to open in 2003. EXTENDED STAY AMERICA, INC. PAGE TWO Certain statements and information included in this release constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations is contained in the Company's SEC filings. ### EX-99.2 4 ex99-2_121701.txt FIRST AMENDMENT Exhibit 99.2 FIRST AMENDMENT --------------- FIRST AMENDMENT (this "Amendment"), dated as of January 1, 2002, among EXTENDED STAY AMERICA, INC., a Delaware corporation (the "Borrower"), the Lenders party to the Credit Agreement referred to below (the "Lenders"), MORGAN STANLEY SENIOR FUNDING, INC., as Sole Lead Arranger and Sole Book Runner (in such capacity, the "Lead Arranger"), BEAR STEARNS CORPORATE LENDING INC. and FLEET NATIONAL BANK, as Co-Syndication Agents (in each capacity, the "Co-Syndication Agents"), and THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Administrative Agent (the "Administrative Agent"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the Credit Agreement referred to below. W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Borrower, the Lenders, the Lead Arranger, the Co-Syndication Agents and the Administrative Agent are parties to a Credit Agreement, dated as of July 24, 2001 (the "Credit Agreement"); and WHEREAS, the Borrower has requested the Lenders to amend, and the Lenders have agreed to amend, certain provisions of the Credit Agreement on the terms and conditions set forth herein; NOW, THEREFORE, it is agreed: 1. Section 8.01(d) of the Credit Agreement is hereby amended by (i) deleting the word "and" appearing at the end of clause (x) thereof and inserting a comma in lieu thereof, (ii) redesignating existing clause (y) thereof as clause (z) and (iii) inserting the following new clause (y) immediately following existing clause (x) thereof: ", (y) from and after March 31, 2002, set forth the calculation of the Consolidated Leverage Ratio as at the last day of the respective fiscal quarter or fiscal year of the Borrower". 2. Section 9.09 of the Credit Agreement is hereby amended by deleting the table appearing therein and inserting the following new table in lieu thereof: "Period Ratio ------ ----- Effective Date to December 31, 2001 4.75:1.00 January 1, 2002 to March 31, 2003 5.25:1.00 April 1, 2003 and thereafter 4.50:1.00". 3. The definition of "Applicable Margin" appearing in Section 11.01 of the Credit Agreement is hereby deleted and the following new definition of "Applicable Margin" is inserted in lieu thereof: "Applicable Margin" shall mean (i) with respect to A Term Loans, B Term Loans, Revolving Loans and Swingline Loans, during the Applicable Period, the respective percentage per annum set forth below under the respective Type of Loan and opposite the respective Level (i.e., Level 1, Level 2 or Level 3, as the case may be) indicated to have been achieved on the applicable Test Date for the Applicable Period (as shown on the respective officer's certificate delivered pursuant to Section 8.01(d) or the first proviso below):
A Term Loans and A Term Loans and Revolving Loans Revolving Loans Maintained as Base B Term Loans B Term Loans Consolidated maintained as Rate Loans and maintained as Maintained as Level Leverage Ratio Eurodollar Loans Swingline Loans Eurodollar Loans Base Rate Loans - ----- -------------- ---------------- --------------- ---------------- --------------- 1 Greater than or equal 3.00% 2.00% 3.50% 2.50% to 4.75:1.00 2 Less than 4.75:1.00 2.50% 1.50% 3.00% 2.00% but greater than or equal to 4.25:1.00 3 Less than 4.25:1.00 2.25% 1.25% 2.75% 1.75%
; provided, however, that if the Borrower fails to deliver the financial statements required to be delivered pursuant to Section 8.01(a) or (b) (accompanied by the officer's certificate required to be delivered pursuant to Section 8.01(d) showing the applicable Consolidated Leverage Ratio on the relevant Test Date) on or prior to the respective date required by such Sections, then Level 1 (or, from and after April 1, 2003, Level 2) pricing shall apply until such time, if any, as the financial statements required as set forth above and the accompanying officer's certificate have been delivered showing the pricing for the respective Applicable Period is at a level which is less than Level 1 (or, from and after April 1, 2003, Level 2) (it being understood that, in the case of any late delivery of the financial statements and officer's certificate as so required, any reduction in the Applicable Margin shall apply only from and after the date of the delivery of the complying financial statements and officer's certificate). Notwithstanding anything to the contrary contained above in this definition, (w) the Applicable Margin for Loans outstanding prior to the First Amendment Effective Date shall be as provided in the definition thereof, without giving effect to this Amendment (although after such date the Applicable Margin for all outstanding Loans shall be as provided herein), (x) Level 1 (or, from and after April 1, 2003, Level 2) pricing shall apply at any time when any Default or Event of Default is in existence, (y) subject to preceding clause (x), Level 2 shall apply from January 1, 2002 until the date of the Borrower's delivery of the financial statements for its fiscal quarter ending March 31, 2002 required to be delivered pursuant to Section 8.01(a) or (b) (accompanied by the officer's certificate required to be delivered pursuant to Section 8.01(d)) and (z) from and after April 1, 2003, Level 1 pricing shall no longer be applicable and, on such date, the text "Less than 4.75:1.00 but greater than or equal to 4.25:1.00" appearing under the column entitled "Consolidated Leverage Ratio" in the table above shall be deleted and replaced with the language "Greater than or equal to 4.25:1.00", with all such modifications to be made on such date without any further action of the Borrower, the Administrative Agent or any other Person; and -2- (ii) with respect to Incremental Term Loans incurred under a particular Tranche, the respective Applicable Margins for each Type of such Tranche of Loans as set forth in the applicable Incremental Term Loan Commitment Agreement, provided that all Incremental Term Loans of a particular Tranche shall have the same Applicable Margins for each Type of such Tranche of Incremental Term Loans." 4. The definition of "Consolidated Debt" appearing in Section 11.01 of the Credit Agreement is hereby deleted and the following new definition of "Consolidated Debt" is inserted in lieu thereof: "Consolidated Debt" shall mean, at any time, (i) during the period commencing January 1, 2002, through and including June 30, 2002, and solely for the purposes of calculating the Consolidated Leverage Ratio and the Consolidated Senior Debt Leverage Ratio in determining compliance with Sections 9.09 and 9.10 during such period, the principal amount of all Indebtedness of the Borrower and its Subsidiaries at such time (including any Indebtedness incurred at such time) less all cash and Cash Equivalents that would appear on the Borrower's consolidated balance sheet at such time and (ii) at all other times and for all other purposes the principal amount of all Indebtedness of the Borrower and its Subsidiaries at such time (including any Indebtedness incurred at such time). 5. The definition of "Consolidated EBIT appearing in Section 11.01 of the Credit Agreement is hereby amended by (i) deleting the word "and" appearing at the end of clause (y) thereof, (ii) and redesignating existing clauses (u) through (z) thereof as clause (t) through (y), respectively, and (iii) inserting the following new clause (z) at the end thereof: "(z) in the case of calculating Consolidated Leverage Ratio and Consolidated Senior Debt Leverage Ratio in determining compliance with Sections 9.09 and 9.10 only, expenses written off during such period to the extent such expenses (i) resulted from costs incurred or otherwise capitalized associated with sites under option that will not be developed in the future, (ii) otherwise reduced Consolidated Net Income during such period and (iii) do not in the aggregate exceed $12,500,000". 6. Section 11.01 of the Credit Agreement is hereby further amended by inserting the following new definitions in the appropriate alphabetical order: "Applicable Period" shall mean each period which shall commence on a date on which financial statements are delivered pursuant to Section 8.01(a) or (b), as the case may be, and which shall end on the date of actual delivery of the next financial statements pursuant to Section 8.01(a) or (b), as the case may be; provided that in the event that the Borrower does not deliver such next financial statements pursuant to Section 8.01(a) or (b), as the case may be, the Applicable Margin for the respective Applicable Period shall be subject to the first proviso contained in the definition of Applicable Margin appearing in this Section 11.01. "First Amendment Effective Date" shall mean the date of the effectiveness of the First Amendment to this Agreement, dated as of January 1, 2002, among the Borrower, the Agents and the Lenders. -3- "Start Date" shall mean the first day of any Applicable Period. "Test Date" shall mean, with respect to any Applicable Period, the last day of the most recent fiscal quarter or fiscal year (as the case may be) of the Borrower ended immediately prior to the Start Date with respect to such Applicable Period. 7. The parties hereto agree that as a technical modification to the Credit Agreement, the text "9.15% Senior Subordinated Notes and the 9-7/8% Senior Subordinated Notes" appearing in Section 7.22 is hereby deleted and Schedule VI of the Credit Agreement is deemed modified to include the same thereon. 8. In order to induce the Lenders to enter into this Amendment, the Borrower hereby represents and warrants that (i) the representations and warranties contained in Section 7 of the Credit Agreement are true and correct in all material respects on and as of the First Amendment Effective Date (as defined below), both before and after giving effect to this Amendment (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date), and (ii) there exists no Default or Event of Default on the First Amendment Effective Date, both before and after giving effect to this Amendment. 9. In order to further induce the Lenders to enter into this Amendment, the Borrower hereby agrees that on the First Amendment Effective Date it shall pay to each Lender which executes and delivers to the Administrative Agent a counterpart of this Amendment on or before 5:00 p.m. (New York City time) on the First Amendment Effective Date, an amendment fee (the "Amendment Fee") equal to (i) 0.125% multiplied by (ii) the sum of such Lender's outstanding Term Loans plus its undrawn A-3 Term Loan Commitment plus its Revolving Loan Commitment, in each case on December 31, 2001. 10. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Credit Agreement or any other Credit Document. 11. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with the Borrower and the Administrative Agent. 12. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 13. This Amendment shall become effective as of January 1, 2002 (the "First Amendment Effective Date"); provided that (i) the Borrower and the Required Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of facsimile transmission) the same to the Administrative Agent at the Notice Office on or prior to such date and (ii) the Borrower shall have paid the Amendment Fee to the applicable Lenders on or prior to such date. -4- 14. From and after the First Amendment Effective Date, all references in the Credit Agreement and each of the Credit Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby. * * * -5- IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written. [NAME OF INSTITUTION] By: ------------------------------------- Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----