UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 25, 2005
(Date of earliest event reported)
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ARLINGTON HOSPITALITY, INC.
(Exact name of registrant as specified in its charter)
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Delaware 0-15291 36-3312434
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File No.) Identification No.)
2355 South Arlington Heights Road
Suite 400
Arlington Heights, Illinois 60005
(Address of Principal Executive Offices)
(847) 228-5400
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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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):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A DEFINITIVE MATERIAL AGREEMENT.
As previously reported, on June 22, 2005, Arlington Inns, Inc.
("Arlington Inns") filed a voluntary petition for reorganization under Chapter
11 of the U.S. Bankruptcy Code (the "Code") in the U.S. Bankruptcy Court for the
Northern District of Illinois (the "Court"). On August 31, 2005, Arlington
Hospitality, Inc. ("Arlington") and 20 of its subsidiaries and affiliates
(collectively, with Arlington Inns and Arlington, the "Debtors") also filed with
the Court a voluntary petition for reorganization under Chapter 11. Subsequent
to such filing, the two petitions became jointly administered, In re Arlington
Hospitality, Inc., et al., No. 05 B 34885.
On October 25, 2005, the Debtors entered into a definitive Asset
Purchase Agreement (the "Agreement") with Sunburst Hospitality Development, Inc.
and certain of its affiliates (collectively, the "Sunburst Group") for the
Debtors to sell substantially all of their assets (the "Purchased Assets") for
approximately $21.3 million (subject to certain adjustments), including the
assumption of the mortgage debt on the hotel assets to be purchased, cash of
approximately $6.25 million, and all liabilities and obligations arising under
the contracts assumed in connection with the Purchased Assets. The Agreement is
subject to the bidding procedures of the Chapter 11 proceeding pending in the
Court. As part of the Agreement, the Sunburst Group agrees to purchase
Arlington's rights in certain contracts, leases and agreements including the
development agreement, royalty sharing agreement and the individual hotel
franchise agreements between certain Debtors and affiliates of the Cendant
Corporation (collectively, the "Cendant Agreements"). The Agreement contemplates
the purchase of 10 wholly-owned hotels, ownership interests in four hotel
joint-ventures, the Cendant Agreements, and certain other assets. Certain
Arlington assets have been excluded from the Agreement including four
wholly-owned hotels, the Debtors' corporate headquarters office building, and
certain hotel joint venture ownership interests, all of which remain offered for
sale. The purchase price assumes that the Cendant development agreement is
assumed by the Sunburst Group. The purchase price is subject to increase
dollar-for-dollar by an amount equal to the aggregate sum of all amounts in
house banks, petty cash and cash registers at the hotels acquired by the
Sunburst Group at the effective time of the closing of the sale, and is subject
to certain other adjustments.
The Agreement contemplates Debtors' auction of the assets pursuant to
Section 363 of the U.S. Bankruptcy Code and the Bidding Procedures Order (the
"Order") entered by the Court on October 12, 2005, with the Sunburst Group being
the "stalking horse" for substantially all the assets at the auction. The
agreement calls for the payment of a break up fee to the Sunburst Group of 2% of
the purchase price in certain circumstances if a sale to another purchaser is
consummated.
Bids can also be qualified and accepted for the assets excluded from
the Sunburst Agreement, including certain individual hotel assets, the office
building, and certain joint venture ownership interests.
As previously disclosed, pursuant to the Order, qualified, competing
bids are due by 11:00 a.m. Central Time on November 10, 2005, and the Court has
scheduled November 14, 2005 at 11:00 a.m. Central Time as the date and time for
the auction to sell the assets to the qualified bidder(s) submitting the highest
and best bid(s) for the assets. Additionally, the Court has scheduled the sale
approval hearing for November 17, 2005 at 9:30 a.m. Central Time. The bidding
procedures Order was filed as an attachment to an 8-K filed October 12, 2005.
Consummation of the transactions contemplated by the Agreement is
subject to higher and better offers, approval of the Court and customary closing
conditions. There can be no assurance of consummation of the transactions
contemplated by the Agreement. The Agreement is attached to this Report as
Exhibit 2.1.
Furthermore, on October 26, 2005, the Court approved and entered a
Stipulation and Order between certain Debtors and Cendant Finance Holding
Corporation ("Cendant") and AmeriHost Franchise Systems, Inc. ("AFS"). Pursuant
to the Stipulation and Order, Cendant and AFS agree not to object to the
Debtors' assumption and assignment of the Cendant Agreements on the basis that
such assignment and assumption is barred by applicable non-bankruptcy law.
Cendant also agrees to provide Debtors with potential modifications to the
Development Agreement that, if acceptable to Debtors, could be presented to
potential bidders in an effort to maximize the value to the Debtors. Pursuant to
the Stipulation and Order, the parties agree that through the earlier of the
date on which the Section 363 sale is closed or January 31, 2006, the Debtors'
investment banker, Chanin Capital Partners, must coordinate all meetings between
Cendant and any bidders for Debtors' assets, including some or all of the
Cendant Agreements. The parties further agree to communicate with one another
any interests or proposals received from bidders with respect to some or all of
the Cendant Agreements.
ITEM 1.03 BANKRUPTCY OR RECEIVERSHIP.
On October 28, 2005, the following wholly-owned
subsidiaries/partnerships of Arlington also filed voluntary petitions for relief
under Chapter 11 of the U.S. Bankruptcy Code: Athens Motel Associates Limited
Partnership II, Batesville MS 595 Limited Partnership, APA/Hammond, IN, Inc.,
and AP Hotels of Missouri, Inc. (the "Subsidiaries"). The Subsidiaries filed a
motion requesting that the Chapter 11 filing be consolidated and administered
jointly together with the Chapter 11 filings of the Debtors. The Subsidiaries'
Chapter 11 filings were filed as part of, and to facilitate the consummation of,
the transactions contemplated by the Asset Purchase Agreement (described above
under Item 1.01 of this Report).
ITEM 8.01. OTHER MATTERS
Arlington issued a press release announcing the execution of the Asset
Purchase Agreement and the entry of the Stipulation and Order. A copy of the
press release is attached hereto as Exhibit 99.1.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT DESCRIPTION
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2.1 Asset Purchase Agreement by and among Arlington Hospitality Inc. and
certain affiliates and Sunburst Hotel Holding, Inc. and certain
affiliates dated as of October 25, 2005.
99.1 Press Release of Arlington Hospitality, Inc. dated October 31, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATE: October 31, 2005
Arlington Hospitality, Inc.
(Registrant)
By: /s/ Stephen K. Miller
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Stephen K. Miller
Interim Chief Executive Officer
By: /s/ James B. Dale
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James B. Dale
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
2.1 Asset Purchase Agreement by and among Arlington Hospitality Inc. and
certain affiliates and Sunburst Hotel Holding, Inc. and certain
affiliates dated as of October 25, 2005.
99.1 Press Release of Arlington Hospitality, Inc. dated October 28, 2005.