8-K 1 l21408ae8vk.htm BOYKIN LODGING COMPANY 8-K/DEFA14A Boykin Lodging Company 8-K/DEFA14A
 

 
 
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): July 17, 2006
Boykin Lodging Company
(Exact Name of Registrant as Specified in its Charter)
         
Ohio
(State or Other Jurisdiction of
Incorporation) 		  001-11975
(Commission File Number) 		  34-1824586
(IRS Employer Identification Number)
     
Guildhall Building, Suite 1500, 45 W. Prospect Avenue, Cleveland, Ohio
(Address of Principal Executive Offices) 		  44115
(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):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ 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 July 17, 2006, Boykin Marco LLC (“Boykin Marco”), a subsidiary of Boykin Lodging Company (“Boykin”), sold the Radisson Suite Beach Resort — Marco Island (“Marco Island”) in Marco Island, Florida, to Marriott Ownership Resorts, Inc., an unrelated third party, for a price of $58.0 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 July 18, 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 will file with the SEC a definitive proxy statement on Schedule 14A concerning the proposed transaction. Before making any voting or investment decision, shareholders are urged to read the definitive proxy statement carefully and in its entirety when it becomes available because it will contain important information about the proposed transaction.
     The definitive proxy statement will be mailed to the Company’s shareholders. In addition, the definitive proxy statement and other documents will be available free of charge at the SEC’s Internet Web site, www.sec.gov. The definitive proxy statement 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 statement filed with the SEC on April 25, 2006 and the Company’s preliminary proxy statement filed with the SEC on June 21, 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 Radisson Suite Beach Resort — Marco Island in Marco Island, Florida, as well as the receipt of proceeds from the sale as described in this Current Report on Form 8-K.
The March 31, 2006 unaudited Pro Forma Condensed Consolidated Balance Sheet presents the disposition of the Radisson Suite Beach Resort — Marco Island as if it was effective March 31, 2006. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 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 MARCH 31, 2006
(unaudited, dollar amounts in thousands)
                                 
            Pro Forma Adjustments        
    (a)     (b)     (c)        
            Prior     Marco        
    Historical     Transaction     Island     Pro Forma  
Investment in hotel properties
   $ 536,420       —       (29,393 )   $ 507,027  
Accumulated depreciation
     (143,017 )     —       2,142       (140,875 )
 
                        
Investment in hotel properties, net
     393,403       —       (27,251 )     366,152  
Cash and cash equivalents
     25,217       —       57,170 (d)     82,387  
Restricted cash
     7,280       —       —       7,280  
Accounts receivable, net of allowance for doubtful accounts of $307
     9,852       —       (638 )     9,214  
Inventories
     1,217       —       (68 )     1,149  
Deferred financing costs and other, net
     1,765       —       (13 )     1,752  
Investment in unconsolidated joint ventures
     1,213       (497 )     —       716  
Other assets
     17,469       —       (1,040 )     16,429  
 
                        
 
   $ 457,416       (497 )     28,160     $ 485,079  
 
                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                
Borrowings against credit facility
   $ 37,000       —       —     $ 37,000  
Term notes payable
     105,292       —       —       105,292  
Accounts payable and accrued expenses
     43,907       —       (1,373 )     42,534  
Accounts payable to related party
     1,557       —       (158 )     1,399  
Dividends/distributions payable
     1,188       —       —       1,188  
Minority interest in joint ventures
     2,529       —       —       2,529  
Minority interest in operating partnership
     13,453       (73) (e)     4,385 (e)     17,765  
SHAREHOLDERS’ EQUITY:
                                
Preferred shares, without par value; 10,000,000 shares authorized; 181,000 shares issued and outstanding as of March 31, 2006 (liquidation preference of $45,250)
     —       —       —       —  
Common shares, without par value; 40,000,000 shares authorized; 17,687,567 issued and outstanding as of March 31, 2006
     —       —       —       —  
Additional paid-in capital
     361,068       —       —       361,068  
Distributions and losses in excess of income
     (106,301 )     (424) (e)     25,306 (e)     (81,419 )
Unearned compensation — restricted shares
     (2,277 )     —       —       (2,277 )
 
                        
Total shareholders’ equity
     252,490       (424 )     25,306       277,372  
 
                        
 
   $ 457,416       (497 )     28,160     $ 485,079  
 
                        

 

 

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2006
(unaudited, amounts in thousands, except for per share data)
                                 
            Pro Forma Adjustments        
    (a)     (b)     (f)        
            Prior     Marco        
    Historical     Transaction     Island     Pro Forma  
Revenues:
                                
Hotel revenues
                                
Rooms
   $ 34,685       —       (3,436 )   $ 31,249  
Food and beverage
     15,201       —       (627 )     14,574  
Other
     2,129       —       (299 )     1,830  
 
                        
Total hotel revenues
     52,015       —       (4,362 )     47,653  
Other operating revenue
     33       —       —       33  
Revenues from condominium development and unit sales
     1,006       —       —       1,006  
 
                        
Total revenues
     53,054       —       (4,362 )     48,692  
 
                        
Expenses:
                                
Hotel operating expenses
                                
Rooms
     8,253       —       (635 )     7,618  
Food and beverage
     10,187       —       (465 )     9,722  
Other direct
     1,424       —       (117 )     1,307  
Indirect
     16,268       —       (1,091 )     15,177  
Management fees to related party
     1,748       —       (210 )     1,538  
 
                        
Total hotel operating expenses
     37,880       —       (2,518 )     35,362  
Property taxes, insurance and other
     4,770       —       (335 )     4,435  
Cost of condominium development and unit sales
     908       —       —       908  
Real estate related depreciation and amortization
     5,437       —       (224 )     5,213  
Corporate general and administrative
     3,092       —       —       3,092  
 
                        
Total operating expenses
     52,087       —       (3,077 )     49,010  
 
                        
 
                                
Operating income
     967       —       (1,285 )     (318 )
 
                                
Interest income
     504       —       —       504  
Other income
     16       —       —       16  
Interest expense
     (2,893 )     —       —       (2,893 )
Amortization of deferred financing costs
     (466 )     —       —       (466 )
Minority interest in earnings of joint ventures
     (15 )     —       —       (15 )
Minority interest in loss of operating partnership
     493       1       270       764  
Equity in income of unconsolidated joint ventures
     3       (9 )     —       (6 )
 
                        
 
Loss before preferred dividends and gain on sale/disposal of assets
     (1,391 )     (8 )     (1,015 )     (2,414 )
 
                                
Preferred dividends
     (1,188 )     —       —       (1,188 )
 
                        
 
                                
Loss attributable to common shareholders before gain on sale/disposal of assets
   $ (2,579 )   $ (8 )   $ (1,015 )   $ (3,602 )
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets
                                
Basic
   $ (0.15 )                   $ (0.20 )
Diluted
   $ (0.15 )                   $ (0.20 )
 
                                
Weighted average number of common shares outstanding
                                
Basic
     17,688                       17,688  
Diluted
     17,956                       17,956  

 

 

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        
    (g)     (b)     (f)        
            Prior     Marco        
    Historical     Transaction     Island     Pro Forma  
Revenues:
                                
Hotel revenues
                                
Rooms
   $ 128,856       —       (9,703 )   $ 119,153  
Food and beverage
     59,968       —       (1,873 )     58,095  
Other
     15,463       —       (1,065 )     14,398  
 
                        
Total hotel revenues
     204,287       —       (12,641 )     191,646  
Other operating revenue
     198       (49 )     —       149  
 
                        
Total revenues
     204,485       (49 )     (12,641 )     191,795  
 
                        
Expenses:
                                
Hotel operating expenses
                                
Rooms
     32,296       —       (2,243 )     30,053  
Food and beverage
     40,577       —       (1,737 )     38,840  
Other direct
     5,729       —       (444 )     5,285  
Indirect
     63,136       —       (4,087 )     59,049  
Management fees to related party
     5,635       —       (532 )     5,103  
 
                        
Total hotel operating expenses
     147,373       —       (9,043 )     138,330  
Property taxes, insurance and other
     16,680       —       (894 )     15,786  
Real estate related depreciation and amortization
     22,291       (9 )     (839 )     21,443  
Corporate general and administrative
     11,664       —       —       11,664  
Impairment of real estate
     5,500       —       —       5,500  
 
                        
Total operating expenses
     203,508       (9 )     (10,776 )     192,723  
 
                        
 
                                
Operating income
     977       (40 )     (1,865 )     (928 )
 
                                
Interest income
     1,106       —       —       1,106  
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 income of operating partnership
     (620 )     1,644       278       1,302  
Equity in income of unconsolidated joint ventures including gain on sale
     11,343       (11,014 )     —       329  
 
                        
Loss before preferred dividends, gain on sale/disposal of assets and discontinued operations
     (355 )     (9,410 )     (1,587 )     (11,352 )
 
                                
Preferred dividends
     (4,751 )     —       —       (4,751 )
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations
   $ (5,106 )   $ (9,410 )   $ (1,587 )   $ (16,103 )
 
                        
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations
                                
Basic
   $ (0.29 )                   $ (0.92 )
Diluted
   $ (0.29 )                   $ (0.92 )
 
                                
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)     (f)        
    Historical     Marco Island     Pro Forma  
Revenues:
                        
Hotel revenues
                        
Rooms
   $ 127,505       (10,226 )   $ 117,279  
Food and beverage
     57,791       (2,195 )     55,596  
Other
     10,683       (1,040 )     9,643  
 
                  
Total hotel revenues
     195,979       (13,461 )     182,518  
Other operating revenue
     184       —       184  
Revenues from condominium development and unit sales
     7,541       —       7,541  
 
                  
Total revenues
     203,704       (13,461 )     190,243  
 
                  
Expenses:
                        
Hotel operating expenses
                        
Rooms
     32,056       (2,330 )     29,726  
Food and beverage
     39,310       (1,895 )     37,415  
Other direct
     5,563       (468 )     5,095  
Indirect
     62,743       (4,183 )     58,560  
Management fees to related party
     5,454       (565 )     4,889  
 
                  
Total hotel operating expenses
     145,126       (9,441 )     135,685  
Property taxes, insurance and other
     14,441       (601 )     13,840  
Cost of condominium development and unit sales
     5,509       —       5,509  
Real estate related depreciation and amortization
     22,181       (816 )     21,365  
Corporate general and administrative
     8,778       26       8,804  
 
                  
Total operating expenses
     196,035       (10,832 )     185,203  
 
                  
 
                        
Operating income
     7,669       (2,629 )     5,040  
 
                        
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
     1,741       393       2,134  
Equity in income of unconsolidated joint ventures
     121       —       121  
 
                  
Loss before preferred dividends, gain on sale/disposal of assets and discontinued operations
     (5,080 )     (2,236 )     (7,316 )
 
                        
Preferred dividends
     (4,751 )     —       (4,751 )
 
                  
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations
   $ (9,831 )   $ (2,236 )   $ (12,067 )
 
                  
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations per share
                        
Basic
   $ (0.56 )           $ (0.69 )
Diluted
   $ (0.56 )           $ (0.69 )
 
                        
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)     (f)        
    Historical     Marco Island     Pro Forma  
Revenues:
                        
Hotel revenues:
                        
Rooms
   $ 115,812       (1,992 )   $ 113,820  
Food and beverage
     53,341       (526 )     52,815  
Other
     7,220       (204 )     7,016  
 
                  
Total hotel revenues
     176,373       (2,722 )     173,651  
Other operating revenue
     120       —       120  
Revenues from condominium development and unit sales
     36,883       —       36,883  
 
                  
Total revenues
     213,376       (2,722 )     210,654  
Expenses:
                        
Hotel operating expenses:
                        
Rooms
     28,981       (627 )     28,354  
Food and beverage
     36,917       (481 )     36,436  
Other direct
     4,406       (131 )     4,275  
Indirect
     56,115       (1,200 )     54,915  
Management fees to related party
     3,976       (85 )     3,891  
Management fees — other
     746       —       746  
 
                  
Total hotel operating expenses
     131,141       (2,524 )     128,617  
Property taxes, insurance and other
     13,863       (303 )     13,560  
Cost of condominium development and unit sales
     24,645       —       24,645  
Real estate related depreciation and amortization
     24,030       (267 )     23,763  
Corporate general and administrative
     8,098       (48 )     8,050  
 
                  
Total operating expenses
     201,777       (3,142 )     198,635  
 
                  
 
                        
Operating income
     11,599       420       12,019  
 
                        
Interest income
     597       —       597  
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
     1,938       (63 )     1,875  
Equity in loss of unconsolidated joint ventures
     (133 )     —       (133 )
 
                  
Loss before preferred dividends, gain on sale/disposal of assets and discontinued operations
     (2,800 )     357       (2,443 )
 
Preferred dividends
     (4,751 )     —       (4,751 )
 
 
                  
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations
   $ (7,551 )   $ 357     $ (7,194 )
 
                  
Loss attributable to common shareholders before gain on sale/disposal of assets and discontinued operations per share
                        
Basic
   $ (0.44 )           $ (0.41 )
Diluted
   $ (0.44 )           $ (0.41 )
 
                        
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 March 31, 2006 filed on May 5, 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 2005 and 2006 financial statements. Historical data for periods prior to 2005 in this Form 8-K, obtained from the Form 8-K filed on November 21, 2005, reflect this reclassification.
 
      The necessary adjustments for this transaction are reflected within the “Prior Transaction” column within this Form 8-K.
 
  (c)   Represents 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 net proceeds from the sale totaling approximately $57.2 million.
 
  (e)   Reflects the estimated impact of the sales on minority interest and shareholders’ equity as if the sales took place on March 31, 2006. The actual impact of the transactions was based upon the carrying value of the assets at the time of the sales.
 
  (f)   Reflects the adjustment to Boykin’s historical financial statements to present them as if the disposition of Marco Island 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 $25.3 million.
 
  (g)   Historical data presented reflects amounts reported on Form 10-K for the year ended December 31, 2005 filed on March 15, 2006.
 
  (h)   Historical data presented reflects amounts reported on Form 8-K filed on November 21, 2005.

 

 

(c) Exhibits.
     99.1     Boykin Lodging Company press release announcing transaction dated July 18, 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: July 20, 2006