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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
January 1, 2001
(Date of earliest event reported)
COMMISSION FILE NUMBER 34-0-22164
RFS HOTEL INVESTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TENNESSEE 62-1534743
(State or other Jurisdiction of (I.R.S. employer
Incorporation or Organization) identification no.)
850 Ridge Lake Boulevard, Suite 220, (901) 767-7005
Memphis, TN 38120 (Registrant's Telephone Number
(Address of Principal Executive Offices) Including Area Code)
(Zip Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 1, 2001, RFS Hotel Investors, Inc., a Tennessee corporation, (the
"Company") terminated its operating lease and management contract relationships
with Hilton Hotels Corporation ("Hilton") for approximately $60 million. In
connection with the termination of the leases, the Company purchased 973,684
shares of the Company's convertible preferred stock (Series A Preferred Stock)
owned by Hilton for approximately $13 million.
The $73 million in payments to Hilton were financed as follows:
- Sale of two hotels during 2000 for proceeds of $25 million;
- Placement, with Banc of America Mortgage Capital Corporation,
of a new issue of $25 million of non-convertible, preferred
stock with a 12.5% dividend; and
- Approximately $23 million borrowed under the Company's line of
credit
Under the REIT Modernization Act, which became effective January 1, 2001, the
Company is permitted to lease its hotels to wholly-owned subsidiaries, provided
that the subsidiary lessees engage a third-party management company to manage
the hotels. The Company announced, on November 29, 2000, that simultaneous with
entering into the new leases, the newly-formed lessee subsidiaries of RFS would
enter into new management contracts with Flagstone Hospitality Management
Company (Flagstone). Flagstone is a newly-formed company jointly owned by Angie
Mock, its CEO and formerly Executive Vice President of the Company, and MeriStar
Hotels and Resorts, the nation's largest hotel management company. Flagstone has
employed substantially all of the former employees of the subsidiary of Hilton,
which previously managed the hotels. Effective January 1, 2001, Flagstone will
manage 53 of the Company's 60 hotels and the remaining seven hotels will be
managed by four other third-party management companies. Only five of the
Company's hotels will be operated under long-term leases with third parties.
The $60 million payment represents the cancellation of an executory contract and
has been expensed on January 1, 2001. The Company recognized as income
approximately $5 million on the re-purchase of the Series A Preferred Stock.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Even though the $60 million payment will be expensed, pursuant to Rules 3-05 and
11-01(d) of Regulation S-X, the transaction constitutes an acquisition of a
business subject to the reporting requirements of Item 2, Acquisition or
Disposition of Assets. Financial statements of the acquired business required by
this item are not included in this initial report on Form 8-K. Such financial
statements will be filed by amendment to this report on Form 8-K as soon as they
are available, but in no event later than sixty (60) days after the date of this
initial report.
(b) Pro Forma Financial Information
Pro forma financial information of the acquired business required by this item
is not included in this initial report on Form 8-K. Such pro forma financial
information will be filed by amendment to this report on Form 8-K as soon as
they are available, but in no event later than sixty (60) days after the date of
this initial report.
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(c) Exhibits
3.1 Articles of Amendment to the Second Amended and Restated Charter of RFS
Hotel Investors, Inc. Designating and Fixing the Rights and Preferences
of a Series of Shares of Preferred Stock.
10.1 Form of Percentage Lease between RFS Partnership, L.P. and RFS Leasing
II-VII, Inc., as applicable.
10.2 Form of Management Agreement between Flagstone Hospitality Management
LLC and RFS Leasing II-VII, Inc., as applicable.
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, thereto duly authorized.
RFS HOTEL INVESTORS, INC.
Dated as of January 16, 2001
By: Kevin M. Luebbers
/s/ Kevin M. Luebbers
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Its: Executive Vice President &
Chief Financial Officer