EXHIBIT 99.1
For Immediate Release
Contact:
MeriStar Hospitality Corporation
John Emery
Chief Financial Officer
202/295-1000
or
MeriStar Hotels & Resorts, Inc.
James Calder
Chief Financial Officer
202/965-4455
or
Daly Gray Public Relations
Jerry Daly or Carol McCune (Media)
609/383-1414
CAPSTAR HOTEL COMPANY AND AMERICAN GENERAL HOSPITALITY CORPORATION COMPLETE
MERGER
NEW MERISTAR COMPANIES BEGIN TRADING ON NYSE
WASHINGTON--Aug. 3, 1998-- CapStar Hotel Company (NYSE:CHO), a hotel ownership
and management firm, and American General Hospitality Corporation (NYSE:AGT), a
hotel real estate investment trust (REIT), completed their previously announced
merger today. With the completion of the merger, MeriStar Hospitality
Corporation (a hotel REIT) (NYSE:MHX) and MeriStar Hotels & Resorts, Inc. (a
hotel management company) (NYSE:MMH) begin trading today on the New York Stock
Exchange. Stockholders of CapStar Hotel Company and American General Hospitality
Corporation approved the merger on July 28 at stockholder meetings held in
Washington, D.C.
In accordance with the merger agreement, CapStar shareholders received one share
of MeriStar Hospitality Corporation for each CapStar share owned. Immediately
prior to the merger, CapStar shareholders received as a spin-off one share of
MeriStar Hotels & Resorts, Inc., for each CapStar share owned. American General
Hospitality Corporation shareholders received 0.8475 shares of MeriStar
Hospitality for each American General Hospitality Corporation share owned. The
exchange of CapStar and American General Hospitality Corporation shares for
MeriStar Hospitality shares is nontaxable. The spin-off of MeriStar Hotels &
Resorts is taxable to CapStar shareholders.
Initial shareholders of MeriStar Hospitality (CapStar and American General
Hospitality Corporation shareholders of record at the close of business on July
31, 1998) will receive rights to buy shares in MeriStar Hotels & Resorts. Each
shareholder of MeriStar Hospitality will receive a non-transferable right to
purchase one share of MeriStar Hotels & Resorts for each six shares owned of
MeriStar Hospitality. The subscription price for the rights will equal 95
percent of the average daily high and low prices on the NYSE of MeriStar Hotels
& Resorts from August 6 to August 12.
As part of the merger and spin-off, MeriStar Hotels & Resorts acquired
privately-held American General Hospitality, Inc. and AGH Leasing, L.P., which
together operated and/or leased 46 of American General Hospitality Corporation's
54 owned hotels and managed 15 additional properties for third party owners.
MeriStar Hospitality and MeriStar Hotels & Resorts will operate as two separate,
independent companies linked through an Intercompany Agreement. The companies
will share certain officers and board members. Paul W. Whetsell, former chairman
and CEO of CapStar, will be chairman and CEO of both companies, and Steven D.
Jorns, the previous chairman and CEO of American General Hospitality
Corporation, will be
vice chairman and COO of both companies. Six independent directors will sit on
each board. In addition, the Intercompany Agreement gives MeriStar Hospitality
the right of first refusal to acquire hotels presented to the operating company
and MeriStar Hotels & Resorts the right of first refusal to lease and manage all
future hotels acquired by the REIT.
"The new REIT combines two upscale, full-service hotel portfolios in major
market locations with high barriers to entry,'' said Whetsell. ``MeriStar
Hospitality is well-positioned with strong internal growth expectations and a
prudent capital structure. The new operating company brings together two teams
which have consistently produced revenue per available room growth in excess of
industry averages and exceeded earnings expectations. As the country's largest
independent operator with over 200 hotels leased or managed, MeriStar Hotels &
Resorts has multiple avenues to increase earnings through top-line growth and
cost reduction."
"The geographic diversity and size that this combination creates already has
resulted in improved debt ratings for the REIT and corresponding cost
reductions,'' added Jorns. ``Our differentiating advantage is our ability to
produce consistent results coupled with communicating accurate expectations."
The board of directors of CapStar Hotel Company, for purposes of adjusting the
conversion price of CapStar's convertible subordinated notes and valuing the
spin-off for tax purposes, has determined that the fair market value of the
assets spun off is $3.28 per share.
As previously announced, former American General Hospitality Corporation holders
of record on July 31, 1998 will receive a pro-rated dividend from the period
July 1, 1998 through August 3, 1998 at a rate of $0.15972527 per share of common
stock, which will be paid on September 2, 1998. MeriStar Hospitality Corporation
is the nation's fifth largest hotel REIT. The REIT owns 117 principally first
class, full service hotels (including eight under contract) with 29,337 rooms in
27 states, the District of Columbia and Canada. The company owns upscale, full-
service hotels under such internationally known brands as Hilton, Sheraton,
Marriott, Westin and Doubletree.
MeriStar Hotels & Resorts, Inc. is the nation's largest independent, non-branded
hotel management company. MeriStar Hotels & Resorts leases or manages 214 hotels
(including eight under contract) with 45,087 rooms in 34 states, the District of
Columbia and Canada.
The matters in this press release include ``forward looking statements'' within
the meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and are qualified by cautionary statements contained herein
and in MeriStar Hospitality's and MeriStar Hotels & Resorts' filings with the
Securities and Exchange Commission.