425 1 form425-509.txt FORM 425 Filed by MeriStar Hotels & Resorts, Inc. pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Interstate Hotels Corporation Commission File No.: 0-26805 [GRAPHIC OMITTED] [LOGO - MERISTAR HOTELS & RESORTS, INC.] MERISTAR ---------------------- HOTELS & RESORTS, INC. FACT SHEET THE TRANSACTION o MeriStar Hotels & Resorts (NYSE: MMH) merges with Interstate Hotels Corporation (NASDAQ: IHCO) to form new company o Tax-free, stock-for-stock exchange o Estimated closing third quarter 2002 EQUITY o Interstate shareholders receive 4.6 shares of MeriStar Hotels & Resorts common stock for each share of IHCO held on the record date of the transaction o Upon completion, the new company will have approximately 105 million fully diluted shares outstanding DEBT o New $113 million bank facility replaces the existing revolving credit facilities of both companies o Total debt outstanding net of cash of $135 million o Replaces existing senior credit facilities of both companies o Three-year term, LIBOR plus 400 basis points KEY VALUE MEASURES OF THE MERGED COMPANY o Pro forma FY 2002 revenues of $340 million o Pro forma EBITDA FY 2002 of $33 million to $35 million MERGER COMPONENTS Interstate Hotels Corporation o Nation's second largest independent hotel management company o Manages 135 hotels with more than 27,000 rooms in 36 states, the District of Columbia, Canada, and Russia o Operates hotels under more than 25 franchise brands MeriStar Hotels & Resorts, Inc. o Nation's largest independent hotel management company o Manages 277 hotels, resorts and conference centers with more than 58,000 rooms in 42 states, the District of Columbia, and Canada o Manages 4 golf courses o Operates hotels under more than 30 franchise brands o Owns Doral brand name o Owns BridgeStreet Corporate Housing Worldwide, world's third largest corporate housing provider, offering upscale furnished corporate housing throughout the United States, Canada, and Europe POST-MERGER COMBINED MANAGEMENT PORTFOLIO o 412 properties o 209 full-service hotels o 200 limited-service hotels o 3 conference centers o 85,000 rooms o 4 golf courses COMBINED ENTITY HIGHLIGHTS o World's largest independent hotel management company, with twice as many properties and three times as many rooms as the next largest competitor o Offers growth potential through two highly regarded brand names - Doral and BridgeStreet - with domestic and international growth potential MERGER RATIONALE o Merges complementary hospitality products o Achieves significant cost synergies, saving $8 million to $10 million annually o Combines two experienced management teams o Provides multiple growth opportunities o Increases public float, creating greater liquidity o Enhances financial strength and lowers cost of capital o Creates size to attract broader investor interest MERGED COMPANY'S EXTERNAL GROWTH STRATEGIES o Provide state-of-the-art services to hotel owners o Acquire hotel assets through joint ventures o Obtain additional hotel management contracts o Further build BridgeStreet Corporate Housing Worldwide brand domestically and internationally o Seek other related hospitality management opportunities DORAL INTERNATIONAL INTERNAL GROWTH STRATEGIES o Achieve economies of scale o Exploit new revenue streams such as retail, spas, restaurants and other facilities ORGANIZATION o Chairman and CEO: Paul Whetsell o President and COO: John Emery o Approximate number of employees: 40,000 o Headquarters: Washington, D.C. OTHER INFORMATION o Subject to: Approval of both companies' shareholders Hart-Scott-Rodino review o Expected closing: Third quarter 2002 o Financial Advisors: Salomon Smith Barney for MeriStar, Merrill Lynch for Interstate