EXHIBIT 99.1
[ARLINGTON HOSPITALITY, INC. LOGO]
For Immediate Release
CONTACT: MEDIA CONTACT:
James B. Dale, Chief Financial Officer Jerry Daly or Carol McCune
847-228-5401 x361 703-435-6293
jimdale@arlingtonhospitality.com jerry@dalygray.com
ARLINGTON HOSPITALITY, INC. ANNOUNCES DISCUSSIONS WITH LANDLORD FOR 21 HOTELS;
PROVIDES UPDATE ON CORPORATE LINE-OF-CREDIT
SEEKS TO FURTHER STRATEGIC BUSINESS PLAN INITIATIVES
ARLINGTON HEIGHTS, Ill., February 26, 2004--Arlington Hospitality, Inc.
(Nasdaq/NM: HOST), a hotel development and management company, today announced
discussions with its landlord to restructure leases for 21 hotels, provided an
update on the status of its operating line-of-credit facility and other
strategic matters.
DISCUSSIONS WITH LANDLORD OF LEASED HOTELS
The company has entered into discussions with PMC Commercial Trust
(PMC) (AMEX: PCC), regarding the 21 AmeriHost Inn hotels PMC owns, which are
leased and operated by Arlington Hospitality. These hotels were part of sale and
lease-back transactions between the company and PMC, consummated in 1998 and
1999.
Due to numerous economic and market-driven factors relating to these 21
hotels, the company has entered into discussions with PMC with the objective to
restructure the lease agreements. The objective of such restructuring is to
improve Arlington's profitability and cash flow with respect to these hotels,
and to agree on a plan that would transfer these hotels to
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other operators through the sale of the properties. The sale of these hotels is
consistent with Arlington's strategic objectives, as discussed in the company's
most recent annual report, press releases and SEC filings.
The company has engaged Gerbsman Partners to assist in its discussions
with PMC and the contemplated lease restructuring. Gerbsman Partners helps
companies in developing and executing their strategic, operating, financial, and
financing strategies with a focus on maximizing enterprise value for all parties
of interest. Gerbsman Partners also has assisted numerous companies and
investors in restructuring/terminating their real estate and equipment lease
arrangements. To date, Gerbsman Partners has restructured/terminated in excess
of $500 million of real estate, sub-debt and equipment lease executory
contracts.
There can be no assurance that the company will be successful in
restructuring its lease arrangement with PMC, or that such restructuring will
improve operations and cash flow, or provide for the sale of the hotels to
third-party operators.
CORPORATE LINE-OF-CREDIT
The company's operating line-of-credit has historically been a one-year
facility requiring annual renewals or replacement. In April 2003, the company
renewed its operating line-of-credit facility with a maximum availability of
$6.5 million, with scheduled reductions tied to the company's strategic plan to
sell hotels, and expiring April 30, 2004. The maximum availability on this
facility is scheduled to step-down from its current $6.0 million level to $5.5
million on February 27, 2004, and as of February 25, 2004, the company had drawn
approximately $5.5 million under the line-of-credit. The company is currently
discussing a renewal of its line-of-
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credit with the current lender, which would include a waiver of any covenant
violations that may currently exist. The company has received a preliminary
proposal from the lender, and the company is evaluating all aspects of this
proposal, as well as exploring other short-term and long-term alternatives, as
discussed below.
There can be no assurance that the existing line-of-credit will be
renewed or expanded with appropriate covenant waivers, or that a replacement
facility will be obtained. Failure to renew or replace the existing
line-of-credit facility prior to its maturity with satisfactory covenant
violation waivers, or obtain alternative short-term financing would have a
material adverse effect on the company's business and financial condition.
ADDRESSING STRATEGIC CAPITAL AND BUSINESS PLAN INITIATIVES
The company has been discussing strategic initiatives with a number of
investment bankers and financial advisors with the intent of engaging one or
more advisors 1) to assist the company in replacing its existing one-year
revolving line-of-credit with multi-year corporate financing that more closely
matches the company's business plan associated with the longer-term nature of
development and sale of hotels, and 2) to assist the company in obtaining growth
capital for new development projects and other strategic objectives of its
business plan. The company believes that these initiatives, along with the
existing plan of hotel disposition as previously disclosed, if successful, will
significantly enhance the financial position of the company.
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ABOUT ARLINGTON HOSPITALITY
Arlington Hospitality, Inc. is a hotel development and management
company that builds, operates and sells mid-market hotels. Arlington is the
nation's largest owner and franchisee of AmeriHost Inn hotels, a 103-property
mid-market, limited-service hotel brand owned and presently franchised in 22
states and Canada by Cendant Corporation (NYSE: CD). Currently, Arlington
Hospitality, Inc. owns or manages 64 properties in 17 states, including 57
AmeriHost Inn hotels, for a total of 4,655 rooms, with additional AmeriHost Inn
& Suites hotels under development.
This press release may contain forward-looking statements.
Forward-looking statements are statements that are not historical, including
statements regarding management's intentions, beliefs, expectations,
representations, plans or predictions of the future, and are typically
identified by words such as "believe," "expect," "anticipate," "intend,"
"estimate," "may," "will," "should," and "could." There are numerous risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. For a discussion of these factors,
see the Company's report on Form 10-Q for the quarter ended September 30, 2003
under the section headed "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Factors Affecting Future Performance."