EXHIBIT 99.1
For Immediate Release
CONTACT MEDIA CONTACT:
James B. Dale, Chief Financial Officer Jerry Daly or Carol McCune
847-228-5401 x 361 703-435-6293
jimdale@arlingtonhospitality.com jerry@dalygray.com
ARLINGTON HOSPITALITY RECEIVES COURT APPROVAL FOR SALE OF
SUBSTANTIALLY ALL ASSETS
ARLINGTON HEIGHTS, Ill., December 12, 2005 -- Arlington Hospitality,
Inc. and subsidiaries (HOST.PK) today announced that, on December 7, 2005, the
U.S. Bankruptcy Court for the Northern District of Illinois approved the sale of
substantially all of the company's assets. Sunburst Hotel Holding, Inc. and its
affiliates ("Sunburst"), and SJB Equities, Inc. and its affiliates ("SJB"), both
of which are unaffiliated with one another and with Arlington Hospitality, Inc.,
have agreed to purchase substantially all of the assets, pursuant to separate
asset purchase agreements. In addition, Cendant Corporation (NYSE: CD) has
consented to Sunburst's assignment and assumption of the development agreement,
royalty-sharing agreement, and individual hotel franchise agreements between
Arlington and affiliates of Cendant (the "Cendant Agreements"). The total
consideration for the sale of the assets, and the assumption of the Cendant
Agreements, is approximately $32.4 million, comprised of $9.6 million in cash
and the assumption of mortgage debt of approximately $22.8 million on the hotel
assets to be purchased.
The auction for the sale of the assets commenced on November 14, 2005
and was extended through November 28, 2005. Chanin Capital Partners served as
Arlington's exclusive financial advisor in connection with the sale of
substantially all of Arlington's assets. Consummation of the transactions
contemplated by each purchase agreement is subject to certain
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closing conditions as set forth in the purchase agreements, and is expected to
occur within the next 30 days.
Sunburst agreed to purchase substantially all the assets of the
company, and assume certain contracts and agreements, except the company's
corporate headquarters office building and those assets being purchased and
contracts assumed by SJB. SJB agreed to purchase ownership interests in four
hotel joint ventures, and the assumption of certain contracts and agreements,
including the construction contracts for an AmeriHost Inn hotel being built in
Columbus, Ohio. A copy of the purchase agreements will be included as exhibits
to a Form 8-K to be filed on December 13, 2005 with the Securities and Exchange
Commission.
The auction and sale process conducted by the company's management and
Chanin Capital Partners was the culmination of strategic efforts to maximize and
realize the value of the company's assets that began in mid-2005. The auction
resulted in cash proceeds that are approximately 54 percent higher than
contemplated by the stalking horse asset purchase agreement executed by Sunburst
in October. Arlington is in the process of evaluating claims, and attempting to
sell its corporate headquarters office building, so that it may propose a
liquidation plan to the bankruptcy court as soon as practicable after the
closing of the purchase agreements. It is unlikely that shareholders of
Arlington will receive a cash distribution pursuant to any liquidation plan
since any remaining cash will be used to settle creditors' claims and pay
administrative costs of the bankruptcy proceeding.
Having fulfilled his duties, with the successful conclusion of the
auction for the company's assets, Stephen K. Miller will be stepping down as
interim chief executive officer,
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effective December 16, 2005. "It has been a pleasure working with Steve through
a very difficult and complicated process," commented Kenneth M. Fell,
Arlington's chairman of the board. "Steve was instrumental in identifying and
attracting bidders for the company's assets, including Sunburst, in an effort to
maximize value for all stakeholders. We appreciate all of his efforts, and wish
him well in his future endeavors." Effective upon Miller's departure, the board
has appointed James B. Dale, the company's chief financial officer who has been
actively involved in the sales process, to serve as acting chief executive
officer to wind-down the affairs of the company. Miller has agreed to remain in
an advisory role to the company as needed, at no expense to the company.
The company's corporate headquarters office building was not included
in the purchase agreements. The corporate office building continues to be
marketed for sale by Cohen Financial, as approved by the Court. Parties
interested in purchasing the office building should contact Richard Tannenbaum,
managing director for Cohen, at (312) 803-5689, rtannenbaum@cohenfinancial.com;
or Jon Simon, managing director, at (312) 803-5107, jsimon@cohenfinancial.com.
Sunburst Hospitality, based in Silver Spring, Md., is a diversified
real estate owner and operator, with interests in hotels, golf course and
residential developments, multi-family communities and self-storage properties.
Currently, Sunburst Hospitality's hotel portfolio includes 30 hotels aggregating
approximately 4,500 rooms in 16 states.
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Arlington Hospitality, Inc. is a hotel development and management
company that builds, operates and sells mid-market hotels, primarily AmeriHost
Inn hotels. The AmeriHost Inn brand is a mid-market, limited-service hotel brand
owned and presently franchised in 20 states and Canada by Cendant Corporation,
with over 100 properties.
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-K for the year ended December 31, 2004 and
report on Form 10-Q for the three months ended March 31, 2005 under the section
headed "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Risk Factors." Additional factors that could cause actual
results to differ materially from these forward-looking statements include, but
are not limited to, the following: the company's ability to consummate the sale
of its assets; the ability of the company to obtain court approval with respect
to motions in the Chapter 11 proceeding; risks associated with the Chapter 11
trustee or third parties seeking to convert the case to a Chapter 7 case; the
company's ability to obtain additional debtor-in-possession financing if needed;
and the company's ability to maintain contracts that are critical to its
operations.