UNITED STATES
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): March 15, 1998
CAPSTAR HOTEL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-12017 52-1979383
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
1010 Wisconsin Avenue, N.W.,
Suite 650,
Washington, D.C. 20007
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (202) 965-4455
Not applicable
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
On March 15, 1998, CapStar Hotel Company ("CapStar") and American
General Hospitality Corporation ("American General") signed a definitive
agreement to merge as equals (the "Merger") whereby CapStar will be merged
with and into American General and form the first hotel industry
"paper clip" real estate investment trust ("REIT").
Under the terms of the agreement, CapStar will spin off (the
"Spin-Off"), in a taxable transaction, its hotel operations and management
business to its current stockholders as a new C Corporation to be called
MeriStar Hotels & Resorts, Inc. (the "New C Corp."). CapStar then will merge
with and into American General and American General will be renamed MeriStar
Hospitality Corporation (the "New REIT"). It is intended that the Merger
shall qualify as a reorganization under section 368 of the Internal Revenue
Code of 1986, as amended. The New REIT and the New C Corp. will sign an
intercompany agreement providing certain reciprocal rights of first refusal
and the New REIT will lease CapStar's hotels to the New C Corp.
CapStar stockholders will receive one share each in the New REIT and
the New C Corp. for each CapStar share owned. American General shareholders
will receive 0.8475 shares of the New REIT for each American General share
owned. The exchange ratios are fixed.
Immediately following the Spin-Off, the New C Corp. will acquire
privately held American General Hospitality, Inc. and AGH Leasing L.P. for
$95 million, consisting of $84 million in cash and $11 million in units of
limited partnership interest exchangeable for New C Corp. common stock.
Consummation of the transactions, which is expected in June 1998, is
subject to various conditions, including approval of the Merger by the
stockholders of each of CapStar and American General. The Merger will be
submitted for approval at separate meetings of the stockholders of CapStar and
American General. Prior to such stockholders meetings, American General will
file a registration statement with the Securities and Exchange Commission
registering under the Securities Act of 1933, as amended, the shares of the New
REIT common stock to be issued in exchange for the outstanding shares of CapStar
common stock. Such shares of the New REIT common stock will be offered to the
CapStar stockholders only pursuant to a prospectus that will also serve as a
joint proxy statement for the separate meetings of stockholders of CapStar and
American General.
A copy of the joint press release (the "Press Release") relating to
the various transactions described above (the "Transactions") is being filed as
exhibit 99.1 to this report and is incorporated herein by reference.
A copy of the joint press release describing a paper clip REIT is
being filed as exhibit 99.2 to this report and is incorporated herein by
reference.
Executives of CapStar and American General intend to communicate with
analysts and others with respect to the Transactions. In such communications,
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certain financial and other information relating to the Transactions is to be
presented (the "Presentation Materials"). The Press Release and certain of
the Presentation Materials contain, among other things, certain
forward-looking statements regarding each of CapStar, American General, the
New REIT and the New C Corp., including statements relating to cost savings,
enhanced revenues, lower cost of capital, and accretion to reported funds
from operations and earnings that may be realized from the Merger and future
growth opportunities for the New REIT and the New C Corp. following the
Transactions. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause actual results,
performances or achievements of CapStar, American General, the New REIT and
the New C Corp. to be materially different from any anticipated results,
performances or achievements expressed or implied by such forward-looking
statements. Such factors include, among other things, the following: (i)
expected cost savings from the Merger may not be fully realized or may not be
realized within the expected time frames; (ii) costs or difficulties may
arise relating to the integration of the businesses of CapStar and American
General; (iii) legislative changes may adversely affect the structure of the
Transactions; (iv) CapStar, American General, the New REIT and the New C
Corp. may not be able to successfully implement their acquisition and
operating strategies; (v) CapStar, American General, the New REIT and the New
C Corp. may not be able to manage rapid expansion; (vi) changes in economic
cycles may affect the performances of CapStar, American General, the New REIT
and the New C Corp.; and (vii) competition from other hospitality companies
may adversely affect results.
A copy of the visual portion of the Presentation Materials is being
filed as Exhibit 99.3 to this report, and such materials are incorporated herein
by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
Exhibit Number Description of Exhibit
99.1 Text of Press Release, dated March 16, 1998,
issued by CapStar Hotel Company and American
General Hospitality Corporation.
99.2 Text of press release describing a paper clip
REIT, dated March 16, 1998, issued by CapStar
Hotel Company and American General Hospitality
Corporation.
99.3 Presentation Materials.
99.4 Agreement and Plan of Merger among American
General Hospitality Corporation and American
General Hospitality Operating Partnership,
L.P., on the one hand, and CapStar Hotel
Company, CapStar Management Company, L.P., and
CapStar Management Company II, L.P., on the
other hand, dated as of March 15, 1998.
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SIGNATURES
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, thereunto duly authorized.
Date: March 17, 1998
CAPSTAR HOTEL COMPANY
By: /s/ JOHN EMERY
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John Emery
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description of Exhibit
99.1 Text of Press Release, dated March 16, 1998,
issued by CapStar Hotel Company and American
General Hospitality Corporation.
99.2 Text of press release describing a paper clip
REIT, dated March 16, 1998, issued by CapStar
Hotel Company and American General Hospitality
Corporation.
99.3 Presentation Materials.
99.4 Agreement and Plan of Merger among American
General Hospitality Corporation and American
General Hospitality Operating Partnership,
L.P., on the one hand, and CapStar Hotel
Company, CapStar Management Company, L.P., and
CapStar Management Company II, L.P., on the
other hand, dated as of March 15, 1998.