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): February 10, 2010

LODGIAN, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-14537	52-2093696
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer
of incorporation)		Identification No.)

3445 Peachtree Road, N.E., Suite 700

Atlanta, GA 30326
(Address of principal executive offices)

(404) 364-9400
(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)

þ   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))

Item 2.01. Completion of Acquisition or Disposition of Assets.

As has been previously disclosed, Lodgian, Inc. (the “Company”) is a party to mortgage indebtedness which was originated in June 2004 by Merrill Lynch and securitized in the collateralized mortgage-backed securities market. This indebtedness is referred to by the Company as the Merrill Lynch Fixed Rate Pool #3 (“Pool 3”). Pool 3, with a balance of $45.5 million as of December 31, 2009, matured on October 1, 2009 following two short-term extensions. The extensions were intended to provide time for the Company to reach an agreement with the special servicer to modify Pool 3 because the Company believed that the anticipated cash flow from the hotels securing Pool 3 would not be sufficient to meet the related debt service obligations in the near-term. A modification agreement could not been reached and, as has been previously disclosed, Pool 3 is in default. Pool 3 is secured by the following six properties (the “Pool 3 Properties”):

1.	Courtyard by Marriott — Abilene, Texas
2.	Courtyard by Marriott — Bentonville, Arkansas
3.	Courtyard by Marriott — Florence, Kentucky
4.	Holiday Inn Inner Harbor — Baltimore, Maryland
5.	Crowne Plaza — Houston, Texas
6.	Farfield Inn by Marriott — Merrimack, New Hampshire

On February 10, 2010, the United States District Court for the Southern District of Texas approved the transfer of the Pool 3 Properties to a court-appointed receiver. Under the court order, the receiver, Michael George of Crescent Hotels & Resorts, will take exclusive possession of the Pool 3 Properties and will hold, operate, manage and maintain the Pool 3 Properties on behalf of Wells Fargo Bank, N.A., as trustee for the registered holders of Merrill Lynch Mortgage Trust 2005-MKB2, Commercial Mortgage Pass-through Certificates, Series 2005-MKB2 (the “Lender”). The receivership was approved pursuant to a petition filed by the Lender for the appointment of a receiver after the Company did not cure its previously disclosed default.

The indebtedness is non-recourse, except in certain limited circumstances, which the Company believes are remote, and is not cross-collateralized with any other mortgage debt.

Item 8.01. Other Events

On February 16, 2010, the Company distributed to employees the communication attached hereto as Exhibit 99.2, which is incorporated herein by reference.

Additional Information and Where to Find it

In connection with the proposed Merger and required shareholder approval, Lodgian will file a proxy statement with the U.S. Securities and Exchange Commission (the “SEC”). INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT LODGIAN AND THE MERGER. Investors and security holders may obtain free copies of these documents (when they are available) and other documents filed with the SEC at the SEC’s web site at www.sec.gov. In addition, the documents filed by Lodgian with the SEC may be obtained free of charge by contacting Lodgian, Inc., Attn: Investor Relations, 3445 Peachtree Road NE, Suite 700, Atlanta, Georgia 30326, Telephone: 404-364-9400. Our filings with the SEC are also available on our website at www.lodgian.com.

Participants in the Solicitation

Lodgian and its officers and directors may be deemed to be participants in the solicitation of proxies from Lodgian’s shareholders with respect to the Merger. Information about Lodgian’s officers and directors and their ownership of Lodgian’s common shares is set forth in the proxy statement for Lodgian’s 2009 Annual Meeting of Shareholders, which was filed with the SEC on March 20, 2009. Investors and security holders may obtain more detailed information regarding the direct and indirect interests of Lodgian and its respective officers and directors in the Merger by reading the preliminary and definitive proxy statements regarding the Merger, which will be filed with the SEC.

Cautionary Note Regarding Forward-looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical facts, including, among others, statements regarding the anticipated Merger with Purchaser, Lodgian’s expectations regarding returning certain hotels to lenders, anticipated cost reductions, optional maturity extensions, property dispositions, future financial position, business strategy, projected performance and financing needs, are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of Lodgian and members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar

expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that actual results may differ materially from those contemplated by such forward-looking statements. Many of these factors are beyond the Lodgian’s ability to control or predict. Such factors include, but are not limited to, any conditions imposed in connection with the Merger, approval of the Merger Agreement by the stockholders of Lodgian, the satisfaction of various other conditions to the closing of the Merger contemplated by the Merger Agreement, the effects of regional, national and international economic conditions, our ability to refinance or extend maturing mortgage indebtedness, competitive conditions in the lodging industry and increases in room supply, requirements of franchise agreements (including the right of franchisors to immediately terminate their respective agreements if we breach certain provisions), our ability to complete planned hotel dispositions, the ability to realize anticipated cost reductions, the effects of unpredictable weather events such as hurricanes, the financial condition of the airline industry and its impact on air travel, the effect of self-insured claims in excess of our reserves and our ability to obtain adequate insurance at reasonable rates, and other factors discussed under Item 1A (Risk Factors) in Lodgian’s Form 10-K for the year ended December 31, 2008, and as updated in its Forms 10-Q for the quarters ended March 31 and June 30, 2009. Lodgian assumes no duty to update these statements.

Management believes these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to Lodgian or persons acting on its behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and Lodgian undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.

Item 9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

The pro forma financial information required to be filed pursuant to Item 9.01(b) of Form 8-K is attached hereto as Exhibit 99.1.

(d) Exhibits

Exhibit 99.1 Selected Financial Information.

Exhibit 99.2 Memorandum to Employees from Daniel E. Ellis

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	LODGIAN, INC.
Dated: February 16, 2010	By:	/s/ James A. MacLennan
		JAMES A. MACLENNAN
		Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Selected Financial Information.
99.2	Memorandum to Employees from Daniel E. Ellis

EX-99.1

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial information has been prepared assuming that:

1. the following six properties (the “Pool 3 properties”) had been conveyed to the lender (i) at the beginning of the periods presented for the pro forma condensed consolidated statements of operations for the years ended December 31, 2008, 2007 and 2006 as well as for the nine months ended September 30, 2009 and 2008, and (ii) at September 30, 2009 for the pro forma condensed consolidated balance sheet:

• Courtyard by Marriott — Abilene, Texas

• Courtyard by Marriott — Bentonville, Arkansas

• Courtyard by Marriott — Florence, Kentucky

• Holiday Inn Inner Harbor — Baltimore, Maryland

• Crowne Plaza — Houston, Texas

• Farfield Inn by Marriott — Merrimack, New Hampshire

2.

the Crowne Plaza Worcester, MA had been conveyed to the lender (i) at the beginning of the periods presented for the pro forma condensed consolidated statements of operations for the years ended December 31, 2008, 2007 and 2006, as well as for the nine months ended September 30, 2009 and 2008, and (ii) at September 30, 2009 for the pro forma condensed consolidated balance sheet. As disclosed in the Form 8-K dated November 19, 2009, this property was transferred to a receiver appointed pursuant to a court order approved by the United States District Court for the District of Massachusetts.

3.

the Holiday Inn Express Palm Desert, CA had been sold (i) at the beginning of the periods presented for the pro forma condensed consolidated statements of operations for the years ended December 31, 2008, 2007 and 2006, as well as for the nine months ended September 30, 2009 and 2008, and (ii) at September 30, 2009 for the pro forma condensed consolidated balance sheet. Subsequent to September 30, 2009, the Company reclassified this property from held for use to held for sale.

The unaudited pro forma condensed consolidated statements of operations do not include adjustments for the gain on deconsolidation of the Pool 3 Properties as this is a non-recurring transaction directly attributable to the disposition of the Pool 3 Properties.

In accordance with the terms of the franchise agreements associated with the Pool 3 Properties, the Company could be required to pay liquidated damages to the franchisors upon surrender of control of the Pool 3 Properties. The estimated potential liquidated damages totaled $5.9 million as of December 31, 2009. This amount is not reflected in the pro forma condensed consolidated financial statements presented since the recognition criteria for contingencies as established by U.S. GAAP had not been met.

The unaudited pro forma condensed consolidated financial statements have been prepared by management for illustrative purposes only in accordance with Article 11 of SEC Regulation S-X and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had the Properties been conveyed to the lender during the specified periods. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with Lodgian, Inc.’s historical consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2008 and its Form 10-Q for the nine months ended September 30, 2009.

Lodgian, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2008

							Pro Forma			Pro Forma
				Pro Forma			adjustments			adjustments
	Lodgian, Inc.			adjustments			related to the			related to the
	For the Year			related to the			Crowne			Holiday Inn
	Ended			Pool 3			Plaza			Express Palm
	December 31, 2008			Properties			Worcester, MA			Desert, CA			Pro Forma
				(unaudited in thousands, except per share data)
Revenues:
Rooms	$	178,623		$	(28,381	)	$	(5,192	)	$	(2,678	)	$	142,372
Food and beverage		53,543			(5,223	)		(3,801	)		(1	)		44,518
Other		8,262			(1,392	)		(517	)		(44	)		6,309
Total revenues		240,428			(34,996	)		(9,510	)		(2,723	)		193,199
Direct operating expenses:
Rooms		46,588			(7,044	)		(1,456	)		(802	)		37,286
Food and beverage		36,755			(3,648	)		(2,435	)		(27	)		30,645
Other		5,806			(1,053	)		(281	)		(58	)		4,414
Total direct operating expenses		89,149			(11,745	)		(4,172	)		(887	)		72,345
		151,279			(23,251	)		(5,338	)		(1,836	)		120,854
Other operating expenses:
Other hotel operating costs		69,960			(10,050	)		(2,762	)		(978	)		56,170
Property and other taxes, insurance, and leases		16,561			(3,313	)		(656	)		(137	)		12,455
Corporate and other		16,805			316			(888	)		(8	)		16,225
Casualty losses, net		1,095			(1,057	)		—			—			38
Depreciation and amortization		31,930			(3,952	)		(237	)		(387	)		27,354
Impairment of long-lived assets		9,468			(718	)		(4,875	)		(81	)		3,794
Total other operating expenses		145,819			(18,774	)		(9,418	)		(1,591	)		116,036
Operating income		5,460			(4,477	)		4,080			(245	)		4,818
Other income (expenses):
Interest income and other		1,054			(2	)		—			—			1,052
Interest expense		(19,345	)		3,456			1,063			379			(14,447	)
Loss before income taxes		(12,831	)		(1,023	)		5,143			134			(8,577	)
Provision for income taxes — continuing operations		(80	)		—			—			—			(80	)
Loss from continuing operations		(12,911	)		(1,023	)		5,143			134			(8,657	)
Basic and diluted net loss per share from continuing operations	$	(0.59	)	$	(0.05	)	$	0.24		$	0.01		$	(0.40	)
Basic and diluted weighted average shares from continuing operations		21,774			—			—			—			21,774

Lodgian, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2007

							Pro Forma			Pro Forma
				Pro Forma			adjustments			adjustments
	Lodgian, Inc.			adjustments			related to the			related to the
	For the Year			related to the			Crowne			Holiday Inn
	Ended			Pool 3			Plaza			Express Palm
	December 31, 2007			Properties			Worcester, MA			Desert, CA			Pro Forma
				(unaudited in thousands, except per share data)
Revenues:
Rooms	$	179,716		$	(28,723	)	$	(5,351	)	$	(2,969	)	$	142,673
Food and beverage		55,089			(5,731	)		(3,857	)		—			45,501
Other		7,753			(1,311	)		(460	)		(45	)		5,937
Total revenues		242,558			(35,765	)		(9,668	)		(3,014	)		194,111
Direct operating expenses:
Rooms		44,833			(6,786	)		(1,474	)		(794	)		35,779
Food and beverage		37,239			(3,838	)		(2,477	)		—			30,924
Other		5,503			(979	)		(238	)		(50	)		4,236
Total direct operating expenses		87,575			(11,603	)		(4,189	)		(844	)		70,939
		154,983			(24,162	)		(5,479	)		(2,170	)		123,172
Other operating expenses:
Other hotel operating costs		68,623			(10,093	)		(2,879	)		(924	)		54,727
Property and other taxes, insurance, and leases		17,662			(3,143	)		(710	)		(182	)		13,627
Corporate and other		21,391			324			(392	)		—			21,323
Casualty gains, net		(1,867	)		—			—			—			(1,867	)
Restructuring		1,232			—			—			—			1,232
Depreciation and amortization		28,765			(3,525	)		(647	)		(383	)		24,210
Impairment of long-lived assets		1,622			(229	)		(462	)		(6	)		925
Total other operating expenses		137,428			(16,666	)		(5,090	)		(1,495	)		114,177
Operating income		17,555			(7,496	)		(389	)		(675	)		8,995
Other income (expenses):
Interest income and other		3,944			—			—			—			3,944
Interest expense		(23,172	)		3,586			1,078			384			(18,124	)
Loss on debt extinguishment		(3,330	)		—			—			—			(3,330	)
Loss before income taxes		(5,003	)		(3,910	)		689			(291	)		(8,515	)
Provision for income taxes — continuing operations		(157	)		—			—			—			(157	)
Loss from continuing operations		(5,160	)		(3,910	)		689			(291	)		(8,672	)
Basic and diluted net loss per share from continuing operations	$	(0.21	)	$	(0.16	)	$	0.03		$	(0.01	)	$	(0.36	)
Basic and diluted weighted average shares from continuing operations		24,292			—			—			—			24,292

Lodgian, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2006

							Pro Forma			Pro Forma
	Lodgian, Inc.			Pro Forma			adjustments			adjustments
	For the Year			adjustments			related to the			related to the
	Ended			related to the			Crowne			Holiday Inn
	December 31,			Pool 3			Plaza Worcester,			Express Palm
	2006			Properties			MA			Desert, CA			Pro Forma
				(unaudited in thousands, except per share data)
Revenues:
Rooms	$	170,764		$	(27,305	)	$	(5,929	)	$	(2,952	)	$	134,578
Food and beverage		49,807			(5,248	)		(3,539	)		—			41,020
Other		7,064			(1,184	)		(337	)		(47	)		5,496
Total revenues		227,635			(33,737	)		(9,805	)		(2,999	)		181,094
Direct operating expenses:
Rooms		43,329			(6,603	)		(1,517	)		(832	)		34,377
Food and beverage		34,861			(3,685	)		(2,260	)		—			28,916
Other		5,402			(931	)		(180	)		(54	)		4,237
Total direct operating expenses		83,592			(11,219	)		(3,957	)		(886	)		67,530
		144,043			(22,518	)		(5,848	)		(2,113	)		113,564
Other operating expenses:
Other hotel operating costs		63,467			(9,467	)		(2,821	)		(939	)		50,240
Property and other taxes, insurance, and leases		17,383			(3,127	)		(633	)		(169	)		13,454
Corporate and other		20,693			364			(391	)		—			20,666
Casualty gains, net		(2,985	)		—			—			—			(2,985	)
Depreciation and amortization		27,414			(3,532	)		(715	)		(366	)		22,801
Impairment of long-lived assets		632			(5	)		—			—			627
Total other operating expenses		126,604			(15,767	)		(4,560	)		(1,474	)		104,803
Operating income		17,439			(6,751	)		(1,288	)		(639	)		8,761
Other income (expenses):
Business interruption proceeds		3,094			—			—			—			3,094
Interest income and other		2,558			1			—			—			2,559
Interest expense		(21,970	)		3,686			1,465			362			(16,457	)
Income before income taxes		1,121			(3,064	)		177			(277	)		(2,043	)
Provision for income taxes — continuing operations		(11,854	)		—			—			—			(11,854	)
Loss from continuing operations		(10,733	)		(3,064	)		177			(277	)		(13,897	)
Basic and diluted net loss per share from continuing operations	$	(0.44	)	$	(0.12	)	$	0.01		$	(0.01	)	$	(0.56	)
Basic and diluted weighted average shares from continuing operations		24,617			—			—			—			24,617

Lodgian, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2009

	Lodgian, Inc.				Pro Forma adjustments			Pro Forma adjustments			Pro Forma adjustments
	For the Nine Months				related to the Pool 3			related to the Crowne			related to the Holiday Inn
	Ended September 30, 2009				Properties			Plaza Worcester, MA			Express Palm Desert, CA			Pro Forma
				(unaudited in thousands, except per share data)
Revenues:
Rooms	$	114,415			$	(15,737	)	$	(3,073	)	$	(1,706	)	$	93,899
Food and beverage		33,852				(2,875	)		(2,088	)		(2	)		28,887
Other		5,689				(980	)		(335	)		(24	)		4,350
Total revenues		153,956				(19,592	)		(5,496	)		(1,732	)		127,136
Direct operating expenses:
Rooms		31,818				(4,511	)		(996	)		(614	)		25,697
Food and beverage		23,706				(2,159	)		(1,485	)		—			20,062
Other		3,881				(687	)		(163	)		(36	)		2,995
Total direct operating expenses		59,405				(7,357	)		(2,644	)		(650	)		48,754
		94,551				(12,235	)		(2,852	)		(1,082	)		78,382
Other operating expenses:
Other hotel operating costs		46,229				(6,607	)		(1,768	)		(660	)		37,194
Property and other taxes, insurance, and leases		12,829				(2,608	)		(505	)		(108	)		9,608
Corporate and other		11,458				49			(228	)		(3	)		11,276
Casualty losses, net		133				(12	)		(15	)		—			106
Depreciation and amortization		26,067				(3,497	)		(594	)		(325	)		21,651
Impairment of long-lived assets		35,349				(29,495	)		(4,996	)		(5	)		853
Total other operating expenses		132,065				(42,170	)		(8,106	)		(1,101	)		80,688
Operating loss		(37,514	)			29,935			5,254			19			(2,306	)
Other income (expenses):
Interest income and other		98				1			—			—			99
Interest expense		(10,598	)			2,442			768			279			(7,109	)
Loss before income taxes and noncontrolling interest		(48,014	)			32,378			6,022			298			(9,316	)
Provision for income taxes — continuing operations		(29	)			—			—			—			(29	)
Loss from continuing operations		(48,043	)			32,378			6,022			298			(9,345	)
Basic and diluted net loss per share from continuing operations	$	(2.25	)		$	1.52		$	0.28		$	0.01		$	(0.44	)
Basic and diluted weighted average shares from continuing operations		21,313				—			—			—			21,313

Lodgian, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2008

	Lodgian, Inc.			Pro Forma adjustments			Pro Forma adjustments			Pro Forma adjustments
	For the Nine Months			related to the Pool 3			related to the Crowne			related to the Holiday Inn
	Ended September 30, 2008			Properties			Plaza Worcester, MA			Express Palm Desert, CA			Pro Forma
				(unaudited in thousands, except per share data)
Revenues:
Rooms	$	139,891		$	(22,125	)	$	(3,842	)	$	(2,154	)	$	111,770
Food and beverage		40,011			(3,893	)		(2,776	)		(1	)		33,341
Other		6,376			(1,097	)		(392	)		(34	)		4,853
Total revenues		186,278			(27,115	)		(7,010	)		(2,189	)		149,964
Direct operating expenses:
Rooms		35,562			(5,405	)		(1,088	)		(614	)		28,455
Food and beverage		27,740			(2,766	)		(1,792	)		(19	)		23,163
Other		4,473			(836	)		(215	)		(43	)		3,379
Total direct operating expenses		67,775			(9,007	)		(3,095	)		(676	)		54,997
		118,503			(18,108	)		(3,915	)		(1,513	)		94,967
Other operating expenses:
Other hotel operating costs		53,885			(7,664	)		(2,038	)		(773	)		43,410
Property and other taxes, insurance, and leases		12,338			(2,493	)		(496	)		(102	)		9,247
Corporate and other		13,742			249			(788	)		(2	)		13,201
Casualty gains, net		(57	)		(106	)		—			—			(163	)
Depreciation and amortization		23,578			(2,910	)		(94	)		(296	)		20,278
Impairment of long-lived assets		9,114			(636	)		(4,849	)		(12	)		3,617
Total other operating expenses		112,600			(13,560	)		(8,265	)		(1,185	)		89,590
Operating income		5,903			(4,548	)		4,350			(328	)		5,377
Other income (expenses):
Interest income and other		907			(1	)		—			—			906
Interest expense		(14,768	)		2,629			797			285			(11,057	)
Loss before income taxes and noncontrolling interest		(7,958	)		(1,920	)		5,147			(43	)		(4,774	)
Provision for income taxes — continuing operations		(6	)		—			—			—			(6	)
Loss from continuing operations		(7,964	)		(1,920	)		5,147			(43	)		(4,780	)
Basic and diluted net loss per share from continuing operations	$	(0.36	)	$	(0.09	)	$	0.23		$	—		$	(0.22	)
Basic and diluted weighted average shares from continuing operations		21,944			—			—			—			21,944

Lodgian, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2009

				Pro Forma adjustments			Pro Forma adjustments			Pro Forma adjustments
	Lodgian, Inc. as of			related to the Pool 3			related to the Crowne			related to the Holiday
	September 30, 2009			Properties			Plaza Worcester, MA			Inn Palm Desert, CA			Pro Forma
			(Unaudited in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	24,647		$	(320	)	$	(205	)		(3	)	$	24,119
Cash, restricted		9,419			(2,127	)		—			—			7,292
Accounts receivable (net of allowances)		7,035			(746	)		(225	)		(23	)		6,041
Inventories		3,100			(399	)		(129	)		(19	)		2,553
Prepaid expenses and other current assets		15,342			(2,467	)		(352	)		(503	)		12,020
Assets held for sale		4,554			—			—			—			4,554
Total current assets		64,097			(6,059	)		(911	)		(548	)		56,579
Property and equipment, net		403,815			(46,408	)		(9,627	)		(5,404	)		342,376
Deposits for capital expenditures		5,586			(1,032	)		(103	)		(32	)		4,419
Other assets		4,893			(362	)		(153	)		(82	)		4,296
	$	478,391		$	(53,861	)	$	(10,794	)	$	(6,066	)	$	407,670
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,152		$	(621	)	$	(177	)	$	(39	)	$	4,315
Other accrued liabilities		23,674			(2,089	)		(380	)		(100	)		21,105
Advance deposits		1,619			(184	)		(98	)		(34	)		1,303
Current portion of long-term liabilities		102,614			(45,513	)		(16,270	)		(130	)		40,701
Liabilities related to assets held for sale		607			—			—			—			607
Total current liabilities		133,666			(48,407	)		(16,925	)		(303	)		68,031
Long-term liabilities		208,935			(7	)		—			(5,550	)		203,378
Total liabilities		342,601			(48,414	)		(16,925	)		(5,853	)		271,409
Commitments and contingencies
Stockholders’ equity:
Common stock, $.01 par value, 60,000,000 shares authorized; 25,148,819 issued at September 30, 2009		252			—			—			—			252
Additional paid-in capital		331,601			—			—			—			331,601
Accumulated deficit		(155,344	)		(5,447	)		6,131			(213	)		(154,873	)
Accumulated other comprehensive income		64			—			—			—			64
Treasury stock, at cost, 3,827,603 at September 30, 2009		(39,692	)		—			—			—			(39,692	)
Total stockholders’ equity attributable to common stock		136,881			(5,447	)		6,131			(213	)		137,352
Noncontrolling interest		(1,091	)		—			—			—			(1,091	)
Total equity		135,790			(5,447	)		6,131			(213	)		136,261
	$	478,391		$	(53,861	)	$	(10,794	)	$	(6,066	)	$	407,670

EX-99.2

Exhibit 99.2

MEMORANDUM

TO:	All Lodgian Employees
FROM:	Daniel E. Ellis, President & Chief Executive Officer
RE:	Company Update
DATE:	February 16, 2010

I wanted to take this opportunity to update you with regard to the potential acquisition of Lodgian by the Lone Star Funds as well as the completion of our negotiations to voluntarily turn over six hotels to a receiver appointed by one of the Company’s lenders.

Since announcing the intention of the Lone Star Funds to acquire Lodgian on January 22, 2010, we have been working to prepare the required materials that must be filed with the Securities and Exchange Commission and ultimately delivered to our shareholders. These materials are commonly called a “Proxy Statement” and describe the negotiations that led up to the agreement as well as the reasons why Lodgian’s Board voted unanimously to approve this transaction. The Proxy Statement asks that each of Lodgian’s shareholders vote to approve the acquisition at a special meeting of shareholders, which we expect to have during the second quarter of 2010. Holders of a majority (more than 50%) of our common stock must vote in favor of the transaction for it to move forward. The preliminary Proxy Statement was filed today. You may access this filing by visiting www.lodgian.com, clicking on Investor Relations and then SEC filings.

There are also other contingencies that must be satisfied in order to finalize this acquisition. During this period, it is extremely important that we continue to operate our business as usual. I ask each of you for your continued hard work and dedication as this process moves forward.

You may have seen some reports in the media about two lawsuits that have been filed against the Company and our directors concerning the potential acquisition. It should be noted that these types of lawsuits are very common and not unexpected. We believe these lawsuits to be without merit and intend to defend them vigorously.

Additionally, we recently reached a resolution with the lender for six of our hotels to turn these properties over to a court–appointed receiver. The hotels are listed below:

• Holiday Inn-Inner Harbor, MD

• Crowne Plaza-Houston, TX

• Fairfield Inn-Merrimack, NH

• Marriott Courtyard-Bentonville, AR

• Marriott Courtyard-Florence, KY

• Marriott Courtyard-Abilene, TX

The surrender of these hotels was a very difficult business decision. These properties have been in the Lodgian family for many years and all have hardworking and dedicated employees. However, the economic crisis that we have experienced over the last couple of years made the continued ownership and operation of these properties virtually impossible. We worked extremely hard to negotiate with the lender to restructure the debt associated with these hotels, but we ultimately were not successful in doing so. The new operator of these hotels will be Crescent Hotels & Resorts. Crescent is a well respected hotel management company, and I am confident that they will do a great job running these properties going forward. We have already begun working with Crescent to finalize the transition.

I appreciate your continued support. I am always available to answer your questions. I can be reached at [*] and my email is [*].