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Exchange Act No. 1-14236
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 425
Pursuant to Rule 425 of
The Securities Act of 1933
FelCor Lodging Trust Incorporated
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(Exact name of registrant as specified in its charter)
Maryland 1-14236 75-2541756
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
454 E. John Carpenter Freeway, Suite 1300, Irving, Texas 75062
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 444-4900
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(Former name or former address, if changed from last report)
Set forth below is the text of the Press Release dated May 10, 2001.
[GRAPHIC OMITTED] FelCor Lodging Trust Incorporated
545 E. John Carpenter Freeway, Suite 1300
Irving, Texas 75062-3933
P 972.444.4900 F 972.444.4949
www.felcor.com NYSE: FCH
For Immediate Release:
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CONTACT:
For FelCor Lodging Trust: For MeriStar Hospitality Corporation:
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Thomas J. Corcoran, Jr. Bruce Riggins
President and CEO Director of Finance
Andrew J. Welch Melissa Thompson
Senior Vice President & Treasurer Director of Corporate Communications
Monica L. Hildebrand 202-295-2228
Vice President of Communications
Stephen A. Schafer
Director of Investor Relations
(972) 444-4900
Spector Public Relations: Daly Gray Public Relations:
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Shelley Spector or Ed Furey Jerry Daly or Carol McCune
(212) 943-5858 (703) 435-6293
FelCor Lodging Trust to Acquire MeriStar Hospitality in $2.7 Billion Merger
Largest Owner of Crowne Plaza(R), Doubletree(R), Embassy Suites(R), Hilton(R),
Holiday Inn(R), Radisson(R), Sheraton(R), and Westin(R)Hotels
IRVING, Texas and WASHINGTON, D.C., May 10, 2001 - FelCor Lodging Trust
Incorporated (NYSE:FCH) and MeriStar Hospitality Corporation (NYSE:MHX)
announced today an agreement to merge. The $2.7 billion transaction will result
in a pro forma market capitalization of $6.3 billion for the combined company
and will bring the number of hotels owned by FelCor to 299, with approximately
78,000 rooms. As a result of the combination, FelCor will own more hotels and
rooms than any other U.S. lodging real estate investment trust (REIT). MeriStar
shares were valued at a 9% premium based on MeriStar's average closing price for
the past 20 trading days. After the merger of MeriStar Hospitality and FelCor,
MeriStar Hotels & Resorts (NYSE:MMH) will continue to manage the newly added
hotel assets.
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FelCor and MeriStar to Merge
May 10, 2001
Page 2
Under the terms of the merger plan, which was approved by the boards of
both companies, holders of MeriStar shares (or common operating partnership
units) will receive $4.60 per share in cash and 0.784 shares (or units) of
FelCor, for a total value (based on the closing price of FelCor common stock on
May 9) of approximately $1.1 billion. FelCor also will either assume or
refinance $1.6 billion in MeriStar debt. The consideration paid to MeriStar
represents a cost per room of approximately $94,500, a 11.3% net operating
income capitalization rate and an EBITDA multiple of 8.0x based on results as of
March 31, 2001. The merger is expected to be accretive to FelCor's funds from
operations ("FFO") for pro forma 2001 and 2002. FelCor's dividend is presently
expected to remain at its current annualized level of $2.20 per share.
The merger will add diversity to FelCor's portfolio with 113 additional
hotels and 28,897 rooms, and will enhance concentration in the upscale and
resort segments. FelCor will be the largest independent owner of Crowne
Plaza(R), Doubletree(R), Embassy Suites(R), Hilton(R), Holiday Inn(R),
Radisson(R), Sheraton(R), and Westin(R) hotels.
"We are very similar companies and have had very similar strategies for
value creation," said Thomas J. Corcoran, Jr., President and CEO of FelCor.
"While we have both enjoyed some size-related efficiencies over the years, I
expect the combined company to enjoy better access to capital, cost savings,
improved diversity and brand distribution, and enhanced buying power in dealings
with third parties. Moreover, the scale and diversity of the new FelCor
portfolio is unmatched in the industry which, I believe, will make it a
benchmark for hotel real estate."
"Combining MeriStar and FelCor solidifies the Company's position as a
preeminent owner of institutional quality lodging assets, providing immediate
benefits to our MeriStar shareholders and creating a powerful platform for
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FelCor and MeriStar to Merge
May 10, 2001
Page 3
continued growth and value enhancement," said Paul W. Whetsell, Chairman and CEO
of MeriStar Hospitality. "We have a great deal of confidence in Tom Corcoran and
his management team. This will give me the opportunity to focus on the strategic
activities of MeriStar Hotels & Resorts, which will continue to operate 111
hotels for FelCor."
Tom Corcoran will continue as President and CEO of FelCor. Paul W.
Whetsell and Stephen D. Jorns have agreed to join the FelCor Board of Directors.
FelCor will continue to be headquartered in Irving, Texas.
FelCor and MeriStar senior management will host a joint conference call
to discuss the merger at 12:00 noon Central Time, Thursday, May 10, 2001. The
phone number is 1-888-739-6043. The call will be simultaneously webcast on
www.felcor.com and www.meristar.com. A replay will be available from Thursday,
May 10, 2001 at 2:00 p.m. (Central Time) through Friday, June 1, 2001, at 7:00
p.m. (Central Time) by dialing 888-509-0081 or on FelCor's website. In addition,
a presentation summarizing the merger will be available by 8:00 a.m. Central
Time on FelCor's website under the "Presentations" tab of the "Investor
Relations" page.
The equity portion of the transaction is structured to qualify as a
tax-free merger. The merger is subject to the approval of shareholders of both
companies and is expected to close in August 2001.
Deutsche Banc Alex.Brown and J.P. Morgan Securities Inc. served as
financial advisors to FelCor in connection with the transaction and Salomon
Smith Barney advised MeriStar.
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FelCor and MeriStar to Merge
May 10, 2001
Page 4
About MeriStar Hospitality Corporation
Washington, D.C.-based MeriStar Hospitality Corporation owns 113
principally upscale, full-service hotels in major markets and resort locations
with 28,897 rooms in 27 states, the District of Columbia and Canada. The company
owns hotels under such internationally known brands as Hilton, Sheraton,
Marriott, Westin, Radisson and Doubletree. For more information about MeriStar
Hospitality Corporation, visit the company's Web site: www.meristar.com.
About FelCor Lodging Trust Incorporated
FelCor's hotel portfolio consists of 186 hotels with nearly 50,000
rooms and suites and is concentrated primarily in the upscale and full-service
segments. FelCor is the owner of the largest number of Embassy Suites, Crowne
Plaza, Holiday Inn and independently owned Doubletree-branded hotels. Other
leading hotel brands under which FelCor's hotels are operated include Sheraton
Suites, Sheraton and Westin. FelCor has a current market capitalization of
approximately $3.5 billion. Additional information can be found on the Company's
website at www.felcor.com.
This press release shall not constitute 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. FelCor 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 FelCor
and MeriStar at which time the proposed transaction will be considered. FelCor
and MeriStar plan to mail the proxy statement and prospectus contained in the
Form S-4 to their respective stockholders. The Form S-4, proxy statement and
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FelCor and MeriStar to Merge
May 10, 2001
Page 5
prospectus will contain important information about MeriStar, FelCor, the merger
and related matters. Investors and stockholders should read the Form S-4, proxy
statement and prospectus and the other documents filed with the SEC in
connection with the merger carefully before they make any decision with respect
to the merger. A copy of the merger agreement with respect to the merger will be
filed with the SEC by both MeriStar and FelCor as an exhibit to a current report
on Form 8-K. 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 web site, at www.sec.gov. In
addition, the proxy statement and prospectus, and all other documents filed with
the SEC in connection with the merger will be made available to investors free
of charge by writing to the MeriStar and FelCor contact addresses set forth in
this press release.
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
FelCor are obligated to file annual, quarterly and special reports, 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 rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the
other public reference rooms in New York, New York and Chicago, Illinois. Please
call the SEC at 1-800-SEC-0330 for further information on public reference
rooms. 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 FelCor, MeriStar, their respective directors, and
may include certain executive officers of each. Information concerning the
FelCor directors and executive officers and their direct and indirect interests
in FelCor is contained in its proxy statement for its annual meeting of
shareholders dated April 6, 2001. The identity of the people who, under SEC
rules, may be considered participants in the solicitation of 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 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,
John Emery, Bruce G. Wiles and Steven D. Jorns, each a director and/or executive
officer of MeriStar, or beneficially owned in excess of 1% of FelCor Common
Stock, except Thomas J. Corcoran, Jr., Donald J. McNamara and Charles N.
Mathewson, each a director and/or executive officer of FelCor.
This press release contains "forward-looking statements," within the
meaning of the federal securities laws, regarding FelCor Lodging Trust
Incorporated and MeriStar Hospitality Corporation. Although both companies
believe that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, they can give no assurance that their
expectations will be achieved. Factors that could cause actual results to differ
materially from current expectations include: changes in macro-economic
conditions and in the demand for (and supply of) hotel rooms; FelCor's ability
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FelCor and MeriStar to Merge
May 10, 2001
Page 6
to merge successfully the operations of Meristar into FelCor's organization and
realize the anticipated synergies and economies of scale; and other risks, which
are contained herein and in each company's filings with the Securities and
Exchange Commission.
FelCor and MeriStar to Merge
May 10, 2001
Page 7
Summary Fact Sheet
MeriStar FelCor Pro forma
Hospitality Lodging Trust Combined (2)
Equity market capitalization (1) $1,093 $1,374 $2,229
Total market capitalization 2,731 3,493 6,291
Properties 113 186 299
Rooms 28,878 48,838 77,716
Number of states 28 35 39
Top 3 Brands Hilton Embassy Suites Embassy Suites
Radisson Holiday Inn Holiday Inn
Sheraton Crowne Plaza Crowne Plaza
Pro forma Debt / EBITDA (TTM) (3) 4.9x 3.8x 4.5x
EBITDA / Pro forma interest (TTM) (3) 2.9x 3.0x 2.7x
<FN>
(1) Equity valued at transaction value.
(2) Combined financials reflect adjustments for the transaction.
(3) Trailing 12 months as of 3/31/01.
</FN>
FelCor and MeriStar to Merge
May 10, 2001
Page 8
Geographic Diversification
(2000 EBITDA by State)
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FelCor MeriStar Combined
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California 20.7% 19.5% 20.2%
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Florida 11.3% 21.5% 15.4
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Texas 18.5% 8.0% 14.2%
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Georgia 7.7% 3.3% 5.9%
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New Jersey 2.6% 9.1% 5.3%
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Illinois 3.6% 4.6% 4.0%
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Pennsylvania 3.5% 2.9% 3.3%
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Louisiana 3.3% 2.0% 2.8%
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Virginia 0.9% 4.6% 2.4%
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Arizona 3.2% 1.2% 2.4%
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Total Top 10 States 75.3% 76.6% 75.8%
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Brand Diversification
(2000 EBITDA Contribution by Brand)
FelCor MeriStar Combined
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Embassy Suites 40.9% 2.7% 25.4%
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Holiday Inn 24.6% 8.8% 18.2%
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Crowne Plaza 12.9% 4.9% 9.7%
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Sheraton 7.7% 12.1% 9.5%
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Hilton 0.5% 21.0% 8.8%
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Doubletree 5.7% 3.7% 4.9%
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Radisson 0.0% 9.9% 4.0%
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Westin 1.3% 4.5% 2.6%
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Courtyard by Marriott 1.0% 4.5% 2.5%
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Marriott 0.0% 5.7% 2.3%
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Wyndham 0.0% 4.3% 1.7%
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Ramada 0.0% 3.1% 1.2%
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Fairfield Inn 0.8% 0.0% 0.5%
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Hampton Inn 0.8% 0.0% 0.5%
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Other 3.7% 14.9% 8.3%
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