-----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, Bjgp4IFc6DNhUz+r8FXgmdXFrxOuhw/pmlEwsMWict1tKB4hIlRdQdfVFIl8je0Q fzOy2r3Xsf/p2w6YBitcQg== 0000950142-02-000482.txt : 20020516 0000950142-02-000482.hdr.sgml : 20020516 20020516164339 ACCESSION NUMBER: 0000950142-02-000482 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20020516 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERSTATE HOTELS CORP CENTRAL INDEX KEY: 0001072780 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 752767215 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: 1934 Act SEC FILE NUMBER: 000-26805 FILM NUMBER: 02655187 BUSINESS ADDRESS: STREET 1: 680 ANDERSEN DRIVE STREET 2: FOSTER PLAZA TEN CITY: PITTSBURGH STATE: PA ZIP: 15220 BUSINESS PHONE: 4129370600 MAIL ADDRESS: STREET 1: 680 ANDERSEN DRIVE STREET 2: FOSTER PLAZA TEN CITY: PITTSBURGH STATE: PA ZIP: 15220 FORMER COMPANY: FORMER CONFORMED NAME: INTERSTATE HOTELS MANAGEMENT INC DATE OF NAME CHANGE: 19981029 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MERISTAR HOTELS & RESORTS INC CENTRAL INDEX KEY: 0001059341 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 510379982 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 1010 WISCONSIN AVE NW CITY: WASHINGTON STATE: DC ZIP: 20007 BUSINESS PHONE: 2029654455 MAIL ADDRESS: STREET 1: 1010 WISCONSIN AVE N W CITY: WASHINGTON STATE: DC ZIP: 20007 425 1 form4252-51602.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 INTERSTATE HOTELS & RESORTS FORMED THROUGH THE MERGER OF MERISTAR HOTELS & INTERSTATE HOTELS RESORTS CORPORATION (NYSE: MMH) (NASDAQ: IHCO) [GRAPHIC OMITTED] [GRAPHIC OMITTED] [PHOTOGRAPH - Los Angeles Marriott] [PHOTOGRAPH - Don CeSar Beach Resort]
Los Angeles Marriott - Los Angeles, CA Don CeSar Beach Resort - St. Pete Beach, FL
INTERSTATE HOTELS & RESORTS TRANSACTION COMBINES THE TWO LARGEST INDEPENDENT HOTEL OPERATORS MeriStar Hotels & Resort Interstate Hotels Corporation o Largest independent hotel operator o Proven track record with more than 40 years in the industy o 276 hotels, resorts, and o 135 hotels and resorts conference centers o 3,400 corporate housing units Forms INTERSTATE HOTELS & RESORTS INTERSTATE HOTELS & RESORTS o Global management company with operations in 5 countries o Largest independent hotel management company in North America o 411 hotels, resorts, and conference centers o 86,000 rooms o BridgeStreet Corporate Housing Worldwide o 17 North American markets o London and Paris [GRAPHIC OMITTED] [PHOTOGRAPH - Hilton Houston SW] Hilton Houston SW - Houston, TX TRANSACTION OVERVIEW o Tax-free, stock-for-stock merger o Exchange ratio: 4.6 MMH shares for each IHCO share o Interstate convertible debt and preferred equity converted to common o 105M fully diluted shares o Cost synergies of $8-10M o Headquarters in Washington; maintain operating presence in Pittsburgh o Paper-clip with MeriStar Hospitality stays in place [GRAPHIC OMITTED] [PHOTOGRAPH - Sawgrass Marriott Resort] Sawgrass Marriott Resort - Ponte Vedra Beach, FL FINANCIAL HIGHLIGHTS - -------------------------------------------------- 2002 2003 (pro forma) Revenue $340M* $360M* EBITDA $33-35M $45-50M EPS $.01-.02 $.09-.12 Free Cash Flow $20-22M $33-38M * Excludes effect of EITF 01-14 - -------------------------------------------------- o Equity market capitalization - $90M as of 5/14/02 o Net debt at closing - $135M o Total capitalization - $225M [GRAPHIC OMITTED] [PHOTOGRAPH - Sheraton Biscayne Bay Sheraton Biscayne Bay - Miami, FL CAPITAL STRUCTURE o Free cash flow provides for rapid de-leveraging o Low average cost of debt of 7.3% o Credit statistics improve dramatically in 2003 [GRAPHIC OMITTED] [CHART] $50M Available $66M Sub Debt & Other $75M Bank Debt CREDIT STATISTICS [GRAPHIC OMITTED] [GRAPH] LEVERAGE RATIO Closing 4.7 Dec-02 3.8 Dec-03 2.0 INTEREST COVERAGE RATIO Closing 2.5 Dec-02 3.0 Dec-03 4.3 INTERSTATE HOTELS & RESORTS ADVANTAGES TO SHAREHOLDERS MMH o Accretive o Platform for growth o European expansion o Greater distribution for Doral and BridgeStreet o De-levers balance sheet o Cost synergies o Provides greater access to capital markets IHCO o Unlocks value o Platform for growth o Cost synergies o Increases analyst coverage o Stronger institutional investor relationships INTERSTATE HOTELS & RESORTS MANAGEMENT TEAM [GRAPHIC OMITTED] [ORGANIZATIONAL CHART] BOARD 13 Members PAUL WHETSELL Chairman & CEO JOHN EMERY President & COO BOB MORSE KEVIN KILKEARY BRUCE WILES THOM VINCENT JIM CALDER President President Chief Investment President Chief Financial Hotel Operations Hotel Operations Officer BridgeStreet Officer INTERSTATE HOTELS & RESORTS FOUR CORE BUSINESSES [GRAPHIC OMITTED] [ORGANIZATIONAL CHART] INTERSTATE HOTEL REAL BRIDGESTREET DORAL MANAGEMENT ESTATE 208 FULL- 200 LTD- NORTH EUROPE SERVICE SERVICE AMERICA HOTELS HOTELS 2,700 UNITS 700 UNITS HOTEL MANAGEMENT o Focusing on fundamental hotel operations o Expanded marketing o Operating systems leverage o Internet-based business information systems o Yield management o Benefits of scale o External growth through sliver investments and acquisition funds o Operating flow-through performance will attract new owners [GRAPHIC OMITEED] [PHOTOGRAPH - Crowne Plaza] Crowne Plaza - Washington, DC HOTEL MANAGEMENT, CONT. HOSPITALITY SERVICES o Wide array of services available to current and prospective owners o Increased cost efficiency through national purchasing o NetEffect Alliance o Telecom discounts o Business information o Insurance savings o Design and construction [GRAPHIC OMITTED] [PHOTOGRAPH - The Roosevelt Hotel] The Roosevelt Hotel - New York, NY POSITIVE INDUSTRY FUNDAMENTALS SUPPLY NON-FACTOR FOR FORESEEABLE FUTURE, DEMAND IS IN RECOVERY [GRAPHIC OMITTED] [CHART] % GROWTH -------- SUPPLY DEMAND ------ ------ 1999 3.6 3.3 2000 2.7 3.7 2001 1.8 (3.4) 2002E 1.5 4.0 2003E 1.0 2.7 2004E 2.2 2.9 Source: PricewaterhouseCoopers REAL ESTATE JOINT VENTURES o Real estate JV in place to acquire $300-500M of hotel assets o $50M available to participate in joint ventures o Hotel transactions expected to accelerate in the second half of 2002 and in 2003 [GRAPHIC OMITTED] [PHOTOGRAPH - Radisson Resort & Spa] Radisson Resort & Spa - Scottsdale, AZ DORAL RESORTS & CONFERENCE CENTERS o Conference centers: o Doral Forrestal - Princeton, NJ o Doral Eaglewood - Chicago, IL o Nathan Hale University of Connecticut (independent) - Storrs, CT o Resort and conference center growth occurs through new contracts that leverage strength of Doral brand and central reservation system [GRAPHIC OMITTED] [PHOTOGRAPH - Doral Forrestal Conference Center & Spa] Doral Forrestal Conference Center & Spa - Princeton, NJ BRIDGESTREET CORPORATE HOUSING WORLDWIDE o A leading provider of upscale corporate apartments in North America and Europe o Flexible inventory minimizes risk o Recently launched licensing program for North American markets o Growth will be achieved through expansion of national client base and European operations [GRAPHIC OMITTED] [PHOTOGRAPH] UPSIDE TO 2003 BUSINESS PLAN o Incentive fees currently at historical lows - significant economic rebound would result in $5-10M of additional incentive fees o Upside potential in base fees - current forecast assumes 3-4% RevPAR growth - RevPAR growth of 6-8% would provide $2M of additional base fees o Corporate housing - current forecast assumes conservative growth in 2003 - significant rebound in corporate travel could add $2-4M of EBITDA o Real estate joint ventures - potential management fees of $3-5M o Hospitality services - current forecast does not include any growth in 2003 - new customers and services add additional EBITDA INTERSTATE HOTELS & RESORTS PREMIER INDEPENDENT HOTEL MANAGEMENT COMPANY o Alternative to brand management o Synergies result in immediate accretion to shareholders o Expansive resources will result in state-of-the-art services for hotel owners o Size will attract new capital sources o Global presence enables worldwide expansion o Capital structure provides for significant growth potential [GRAPHIC OMITTED] [PHOTOGRAPH - The Charles Hotel] The Charles Hotel - Cambridge, MA THIS PRESENTATION CONTAINS "FORWARD-LOOKING STATEMENTS," WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, ABOUT THE COMPANIES, INCLUDING THOSE STATEMENTS REGARDING FUTURE OPERATING RESTULS AND THE TIMING AND COMPOSITION OF REVENUES, AMONG OTHERS, AND STATEMENTS CONTAINING WORDS SUCH AS "EXPECTS," "BELIEVES" OR "WILL," WHICH INDICATE THAT THOSE STATEMENTS AR FORWARD-LOOKING. EXCEPT FOR HISTORICAL INFORMATION, THE MATTERS DISCUSSED IN THIS PRESENTATION ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES TAHT COULD CAUSE THE ACTUAL RESULTS TO DIFFER MATERIALLY, INCLUDING THE CURRENT SLOWDOWN OF THE NATIONAL ECONOMY, ECONOMIC CONDITIONS GENERALLY AND THE REAL ESTATE MARKET SPECIFICALLY, THE IMPACT OF THE EVENTS OF SEPTEMBER 11, 2001, LEGISLATIVE AND REGULATORY CHANGES, AVAILABILITY OF DEBT AND EQUITY CAPITAL, INTEREST RATES, COMPETITION, SUPPLY AND DEMAND FOR LODGING FACILITIES IN OUR CURRENT AND PROPOSED MARKET AREAS AND THE POTENTIAL DE-LISTING OF MERISTAR HOTELS & RESORTS BY THE NYSE. ADDITIONAL RISKS ARE DISCUSSED IN THE COMPANIES' FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE COMPANIES' ANNUAL REPORTS ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001. THIS PRESENTATION SHALL NOT CONSITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES NOR SHALL THERE BE ANY SALE OF ANY SECURITIES IN ANY STATE OR PROVINCE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER APPLICABLE SECURITIES LAWS. MERISTAR PLANS TO FILE A REGISTRATION STATEMENT ON FORM S-4 WITH THE SEC IN CONNECTION WITH THE MERGER TRANSACTION. THE FORM S-4 WILL CONTAIN A PROSPECTUS, A PROXY STATEMENT, AND OTHER DOCUMENTS FOR THE STOCKHOLDERS' MEETINGS OF MERISTAR AND INTERSTATE AT WHICH TIME THE PROPOSED TRANSACTION WILL BE CONSIDERED. MERISTAR AND INTERSTATE PLAN TO MAIL THE PROXY STATEMENT AND PROSPECTUS CONTAINUED IN THE FORM S-4 TO THEIR RESPECTIVE STOCKHOLDERS. THE FORM S-4, PROXY STATEMENT AND PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT MERISTAR, INTERSTATE, THE MERGER AND RELATED MATTERS. INVESTORS AND STOCKHOLDERS SHOULD READ THE FORM S-4, PROXY STATEMENT AND PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER CAREFULLY BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE -MORE- MERGER. A COPY OF THE MERGER AGREEMENT WILL BE FILED WITH THE SEC BY BOTH MERISTAR AND INTERSTATE. THE FORM S-4, PROXY STATEMENT AND PROSPECTUS, AND ALL OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER TRANSACTION WILL BE AVAILABLE WHEN FILED FREE OF CHARGE AT THE SEC'S SEB SITE, AT WWW.SEC.GOV. IN ADDITION TO THE FORM S-4, THE PROXY STATEMENT, AND THE OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER, BOTH MERISTAR AND INTERSTATE ARE OBLIGATED TO FILE ANNUAL, QUARTERLY AND SPECIAL REPORT, PROXY STATEMENTS AND OTHER INFORMATION WITH THE SEC. YOU MAY READ AND COPY ANY REPORTS, STATEMENTS AND OTHER INFORMATION FILED WITH THE SEC AT THE SEC'S PUBLIC REFERENCE ROOM AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549. PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR FURTHER INFORMATION ON THE PUBLIC REFERENCE ROOM. FILINGS WITH THE SEC ALSO ARE AVAILABLE TO THE PUBLIC FROM COMMERCIAL DOCUMENT-RETRIEVAL SERVICES AND AT THE WEB SITE MAINTAINED BY THE SEC AT WWW.SEC.GOV. PURSUANT TO INSTRUCTION 3 OF ITEM 4 OF SCHEDULE 14A, THE PARTICIPANTS IN THE SOLICITATION INCLUDE MERISTAR, INTERSTATE, THEIR RESPECTIVE DIRECTORS, AND MAY INCLUDE CERTAIN EXECUTIVE OFFICERS OF EACH. INFORMATION CONCERNING THE MERISTAR DIRECTORS AND EXECUTIVE OFFICERS AND THEIR DIRECT AND INDIRECT INTERESTS OF MERISTAR IS CONTAINED IN ITS PROXY STATEMENT FOR ITS ANNUAL MEETING OF SHAREHOLDERS DATED MAY 8, 2001. INFORMATION CONCERNING THE INTERSTATE DIRECTORS AND EXECUTIVE OFFICERS AND THEIR DIRECT AND INDIRECT INTERESTS IN INTERSTATE IS CONTAINED IN ITS ANNUAL REPORT ON FORM 10-K/A FILED WITH THE SEC ON APRIL 19, 2002. THE IDENTITY OF THE PEOPLE WHO, UNDER SEC RULES, MAY BE CONSIDERED PARTICIPANTS IN THE SOLICITATION OF INTERSTATE AND MERISTAR STOCKHOLDERS IN CONNECTION WITH THE PROPOSED MERGER, AND A DESCRIPTION OF THEIR INTERESTS, WILL BE AVAILABLE IN A SCHEDULE 14A TO BE FILED BY INTERSTATE AND A FILING -MORE- UNDER FULE 425 UNDER THE SECURITIES ACT BY MERISTAR. AS OF THE DATE OF THIS COMMUNICATION, NONE OF THE FOREGOING PARTICIPANTS BENEFICIALLY OWNED IN EXCESS OF 1% OF THE MERISTAR COMMON STOCK, EXCEPT PAUL W. WHETSELL, AND STEVEN D. JORNS, EACH A DIRECTOR AND/OR EXECUTIVE OFFICER OF MERISTAR, OR BENEFICIALLY OWNED IN EXCESS OF 1% OF INTERSTATE COMMON STOCK, EXCEPT THOMAS F. HEWITT AND J. WILLIAM RICHARDON, KARIM ALIBHAI AND SHERWOOD WEISER, EACH A DIRECTOR AND/OR EXECUTIVE OFFICER OF INTERSTATE.
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