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
(Date of earliest event reported)
November 1, 1996
CHOICE HOTELS INTERNATIONAL, INC.
(formerly Choice Hotels Holdings, Inc.)
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-11915 1985619
(Commission File Number) (IRS Employer Identification No.)
10750 Columbia Pike, Silver Spring, Maryland 20901
(Address of principal executive offices) (Zip code)
Registrant's telephone number,
including area code (301) 979-5000
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Item 5. Other Events.
On November 1, 1996 (the "Distribution Date"), Choice Hotels
International, Inc. (formerly Choice Hotels Holdings, Inc.) (the "Company")
commenced operations of the lodging business (the "Lodging Business") formerly
conducted by Manor Care, Inc. ("Manor Care"). On the Distribution Date, Manor
Care distributed (the "Distribution") to the holders of its common stock, par
value $0.10 (the "Manor Care Common Stock"), one share of common stock, par
value $0.01 (the "Company Common Stock"), of the Company for every share of
Manor Care Common Stock held on October 10, 1996. The Company Common Stock is
now listed on the New York Stock Exchange and trades under the symbol "CHH."
For purposes of governing the ongoing relationships between the Company and
Manor Care after the Distribution, and in order to provide for an orderly
transfer of the Lodging Business to Choice and facilitate the transition to
two separate publicly-traded companies, the Company and Manor Care have
entered into various agreements that set forth the Company's and Manor
Care's on-going responsibilities regarding various matters. The agreements
are included as exhibits hereto.
In connection with the Distribution, the Company and Manor Care
entered into a Loan Agreement dated as of November 1, 1996 (attached hereto
as Exhibit 2.6), which restricts among other things, the Company's and its
subsidiaries' ability to make certain investments, incur debt, change its
line of business, dispose of assets, create liens, enter into transactions
with affiliates and pay dividends. Interest on the amount of the loan will
be payable semiannually at a rate of 9% per annum. The loan will mature on
November 1, 1999 and may be prepaid in whole or in part, together with
accrued interest, at the Companys' option. If the loan is prepaid prior to
November 1, 1997, the Company will be required to reimburse Manor Care on
demand for any actual loss incurred or to be incurred by Manor Care (for
the period up to and including November 1, 1997) in the reemployment of the
funds released by any prepayment of the loan. The final terms of the Loan
Agreement were agreed upon immediately prior to the Distribution.
In addition, the Company has entered into a revolving credit
facility (the "Credit Facility") dated as of October 30, 1996 (attached hereto
as Exhibit 10.2) with The Chase Manhattan Bank as agent for a syndicate of
banks in an aggregate principal amount of $100.0 million. The Credit
Facility will have a maturity of three years, subject to extension, at the
request of the Company with the approval of the requisite lenders, for up
to two additional periods of one year each.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
2.1 Distribution Agreement dated as of October 31,
1996 between Manor Care, Inc. and Choice Hotels
Holdings, Inc. (to be renamed Choice Hotels
International, Inc.)
2.2 Corporate Services Agreement dated as of
November 1, 1996 between Choice Hotels
International, Inc. and Manor Care, Inc.
2.3 Employee Benefits Administration Agreement dated
as of November 1, 1996 between Choice Hotels
International, Inc. and Manor Care, Inc.
2.4 Employee Benefits & Other Employment Matters
Allocation Agreement dated as of November 1,
1996 between Choice Hotels International, Inc.
and Manor Care, Inc.
2.5 Gaithersburg Lease Agreement dated as of
November 1, 1996 between Choice Hotels
International, Inc. and Manor Care, Inc.
2.6 Loan Agreement dated as of November 1, 1996
between Choice Hotels International, Inc. and
Manor Care, Inc.
2.7 Procurement Services Agreement dated as of
November 1, 1996 between Choice Hotels
International, Inc. and Manor Care, Inc.
2.8 Risk Management Consulting Services Agreement
dated as of November 1, 1996 between Choice
Hotels International, Inc. and Manor Care, Inc.
2.9 Silver Spring Lease Agreement dated as of
November 1, 1996 between Choice Hotels
International, Inc. and Manor Care, Inc.
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2.10 Tax Administration Agreement dated as of
November 1, 1996 between Choice Hotels
International, Inc. and Manor Care, Inc.
2.11 Tax Sharing Agreement dated as of November 1,
1996 between Choice Hotels International, Inc.
and Manor Care, Inc.
2.12 Time Sharing Agreement dated as of November 1,
1996 between Choice Hotels International, Inc.
and Manor Care, Inc.
2.13 Trademark Agreement dated as of November 1, 1996
between Choice Hotels International, Inc. and
Manor Care, Inc.
2.14 Pilot Services Agreement dated November 1, 1996
between Choice Hotels International, Inc. and
Manor Care, Inc.
2.15 Vehicle Lease Agreement dated November 1, 1996
between Choice Hotels International, Inc. and
Manor Care, Inc.
10.1 Revolving Credit Facility Agreement
between Choice Hotels Holdings, Inc. and The
Chase Manhattan Bank (formerly Chemical Bank),
as Agent, and the other Lenders named therein.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
CHOICE HOTELS INTERNATIONAL, INC.
(Registrant)
By: /s/ James A. MacCutcheon
Name: James A. MacCutcheon
Title: Executive Vice President
Date: November 5, 1996