SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 29, 2002
Date of Report (Date of earliest event reported)
WESTCOAST HOSPITALITY CORPORATION
(Exact Name of Registrant as Specified in Charter)
Washington 001-13957 91-1032187
(State or Other Jurisdiction (Commission file number) (I.R.S. Employer
of Incorporation) Identification No.)
201 W. North River Drive
Suite 100
Spokane, Washington 99201
(Address of Principal Executive Offices, Zip Code)
(509) 459-6100
(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events and Required FD Disclosure On December 29, 2002, WestCoast
Hospitality Limited Partnership and the lenders under its primary revolving
credit facility amended that credit facility in certain respects. A copy of the
amendment is filed as an exhibit to this Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
The following exhibit is filed herewith:
Exhibit No. Exhibit
----------- --------------------------------------------
10.1 Fifth Amendment to Amended and Restated Credit Agreement
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.
WESTCOAST HOSPITALITY CORPORATION
Dated: January 7, 2003 By: /s/ Arthur M. Coffey
Arthur M. Coffey
Executive Vice President/
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Exhibit
- -------------- --------------------------------------------------------------
10.1 Fifth Amendment to Amended and Restated Credit Agreement
FIFTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
This Fifth Amendment to Amended and Restated Credit Agreement ("Amendment") is
made and entered into as of December 23, 2002, among WESTCOAST HOSPITALITY,
LIMITED PARTNERSHIP, a Delaware limited partnership, formerly known as
Cavanaughs Hospitality Limited Partnership (the "Borrower"), the several
financial institutions that are party to this Amendment (collectively, the
"Lenders"; individually, a "Lender"), and U.S. BANK NATIONAL ASSOCIATION, as
administrative agent for the Lenders (the "Agent").
RECITALS
A. On December 29, 1999, the Borrower, the Lenders and the Agent entered into
that certain Amended and Restated Credit Agreement (together with all
amendments, supplements, exhibits, and modifications thereto, the "Credit
Agreement") whereby the Lenders agreed to extend certain credit facilities to
the Borrower. The Borrower, the Lenders and the Agent have entered into four
amendments to the Credit Agreement.
B. The Borrower has advised the Lenders that it expects to breach certain
Financial Covenants as of the last day of the Borrower's fiscal quarter ending
December 31, 2002, and March 31, 2003. The Borrower has requested the Lenders to
modify these Financial Covenants such that compliance with these Financial
Covenants shall not be required until the Borrower's fiscal quarter ending June
30, 2003.
C. The purpose of this Amendment is to set forth the terms and conditions under
which the Lenders will agree to the Borrower's requests.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, the parties agree as follows:
ARTICLE I. AMENDMENT
The Credit Agreement, as well as all of the other Loan Documents, are hereby
amended as set forth herein. Except as specifically provided for herein, all of
the terms and conditions of the Credit Agreement and each of the other Loan
Documents shall remain in full force and effect throughout the terms of the
Loans, as well as any extensions or renewals thereof.
ARTICLE II. DEFINITIONS
2.1 Defined Terms
As used herein, capitalized terms shall have the meanings given to them in the
Credit Agreement, except as otherwise defined herein or as the context otherwise
requires.
2.2 Amended Defined Terms
(a) Section 1.1 of the Credit Agreement is hereby amended, effective as of the
date of this Amendment, to add or modify (as the case may be) the following
defined terms:
"Commitment" means $58,500,000 less the aggregate amount of mandatory
prepayments made in accordance with the provisions of this Agreement, including,
without limitation, Sections 2.6 and 8.2.
"Disposition" means (a) the sale, lease, conveyance or other disposition of any
property, other than sales or other dispositions expressly permitted under
Section 8.2(a)(i)or (ii), and (b) the sale or transfer by the Borrower, WHC or
any Subsidiary of the Borrower of any equity securities issued by any Subsidiary
of the Borrower and held by such transferor Person for cash or cash equivalents.
"Net Proceeds" means, as to any Disposition by a Person, proceeds in cash,
checks or other cash equivalent financial instruments as and when received by
such Person, net of: (a) the direct costs relating to such Disposition excluding
amounts payable to such Person or any Affiliate of such Person, (b) sale, use or
other transaction taxes paid or payable by such Person as a direct result
thereof, and (c) the amount required to be applied to repay principal, interest
and prepayment premiums and penalties on Indebtedness secured by a lien on the
asset which is the subject of such Disposition to the extent such Lien is
permitted hereunder. "Net Proceeds" shall also include proceeds paid on account
of any Event of Loss, net of (x) all money actually applied to repair or
reconstruct the damaged property or property affected by the condemnation or
taking, (y) all of the costs and expenses reasonably incurred in connection with
the collection of such proceeds, award or other payments, and (z) any amounts
retained by or paid to parties having superior rights to such proceeds, awards
or other payments.
"Second Amendment" means that certain Second Amendment to Amended and Restated
Credit Agreement dated as of June 8, 2001, and entered into among the Borrower,
the Lenders and the Agent.
(b) Section 1.1 of the Credit Agreement is hereby amended, effective
January 1, 2003, to modify the following defined term:
"Interest Margin" means the number of basis points per annum determined in
accordance with the following matrix and based upon the quarterly financial
statements of the Borrower provided to the Agent in accordance with the terms of
this Agreement for the preceding fiscal quarter. Adjustments shall be made 45
days after the end of each fiscal quarter (when quarterly financial statements
are required to be delivered to the Agent); provided, however, that if the
Borrower has not delivered its financial statements for the previous fiscal
quarter within 45 days of the end of such fiscal quarter, then the Interest
Margin in effect for the previous fiscal quarter shall continue to apply unless
the Agent exercises its right to impose interest at (a) the default rate as
provided for in this Agreement or (b) the rate otherwise applicable if the
Borrower had timely delivered its financial statements. The Prime Margin and
LIBOR Margin for each Level of the matrix set forth below shall increase, on a
cumulative basis, by an additional 25 basis points on the first day of each
calendar quarter, commencing July 1, 2003 until the Loan and all other
obligations of the Borrower under this Agreement as paid in full and the
Commitment is terminated.
- ----------------------- ----------- ---------------- --------------- ----------------- --------------- ------------
Level Level I Level II Level III Level IV Level V Level VI
- ----------------------- ----------- ---------------- --------------- ----------------- --------------- ------------
Funded Debt Ratio Less than greater than greater than greater than greater than greater than
3.0 or equal to 3.0 or equal to 3.5 or equal to 4.0 or equal to 4.5 or equal to 5.0
less than 3.5 less than 4.0 less than 4.5 less than 5.0
- ----------------------- ----------- ---------------- --------------- ----------------- --------------- ------------
Prime Margin 25 25 50 75 100 125
- ----------------------- ----------- ---------------- --------------- ----------------- --------------- ------------
LIBOR Margin 205 225 250 275 315 350
- ----------------------- ----------- ---------------- --------------- ----------------- --------------- ------------
=> means greater than or equal to
< means less than
The margins set forth above shall apply unless there exists an Event of Default,
in which case the Agent may elect to impose the default rate as provided for in
this Agreement.
ARTICLE III. CONSENTS AND AMENDMENTS
3.1 Disposition of Assets
Section 8.2 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
(a) The Borrower shall not, and shall not suffer or permit WHC or any Subsidiary
to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise
dispose of any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing, except
that so long as there exists no Default or Event of Default and so long as the
proposed disposition would not cause the occurrence of a Default or an Event of
Default there shall be permitted:
(i) dispositions of inventory or used, worn-out or surplus equipment all in the
ordinary course of business;
(ii) the sale of equipment to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied, consistent with
Section 2.6, to the purchase price of such replacement equipment; and
(iii) the sale of assets (including, without limitation, Eligible Real Property)
for cash at a price equal to or greater than the fair market value of such
assets, provided that (A) prior to or concurrently with the completion of any
such sale, the Borrower shall repay the Loans and permanently reduce the
Commitment by an amount equal to the Net Proceeds from such sale of assets and
(B) Agent has approved such sale in writing.
3.2 Loans and Investments
Section 8.4 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
The Borrower shall not purchase or acquire, or suffer or permit WHC or any
Subsidiary to purchase or acquire, or make any commitment therefor, any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or make or commit to make any Acquisitions, or make or
commit to make any advance, loan, extension of credit or capital contribution to
or any other investment in, any Person including any Affiliate of the Borrower,
except for:
(a) investments in Cash Equivalents;
(b) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(c) extensions of credit by the Borrower, WHC or any Subsidiary to any direct or
indirect wholly-owned Subsidiaries of Borrower or WHC; and
(d) investments made in connection with and constituting part of the
consideration paid for Acquisitions to the extent that (i) any such Acquisition
is not prohibited under Section 8.7, and (ii) any such Acquisition is approved
in writing by the Required Lenders; provided that no Acquisition shall be
consummated by the Borrower, WHC or any Subsidiary unless the Borrower has
demonstrated to the reasonable satisfaction of the Required Lenders with pro
forma financial statements prepared to reflect such Acquisition that the
Borrower will be in compliance with the Financial Covenants; and provided
further that Acquisitions described in Section 8.7(f) shall not require the
written approval by the Required Lenders.
3.3 Use of Proceeds
Section 8.7 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
The Borrower shall not, and shall not suffer or permit WHC or any Subsidiary to,
use any portion of the Loan proceeds, directly or indirectly, (a) to purchase or
carry Margin Stock, (b) to purchase or redeem any stock, partnership units or
other equity interest of the Borrower or WHC; provided that Loan proceeds may be
used to redeem Preferred Stock to the extent that WHC is not precluded from
redeeming Preferred Stock by the provisions of this Agreement (including,
without limitation, Section 8.10), (c) to repay or otherwise refinance
indebtedness of the Borrower or others incurred to purchase or carry Margin
Stock, (d) to extend credit for the purpose of purchasing or carrying any Margin
Stock, (e) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act, or (f) to finance or refinance the
acquisition of any interest in real property that is not used primarily in the
hospitality business or the acquisition of any Person whose primary business is
not the hospitality business except as otherwise approved by the Required
Lenders and confirmed in writing by the Agent.
3.4 Restricted Payments
Section 8.10 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
The Borrower shall not, and shall not suffer or permit WHC or any Subsidiary to,
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any shares of
any class of its capital stock, partnership units or other ownership interests
(as the case may be), or purchase, redeem or otherwise acquire for value any
shares of its capital stock partnership units or other ownership interests (as
the case may be) or any warrants, rights or options to acquire such shares or
partnership units, now or hereafter outstanding; except that (a) WHC or the
Borrower may declare and make dividend payments or other distributions payable
solely in its common stock or partnership units (as the case may be), (b) the
Borrower may make distributions to its partners in an amount necessary to allow
WHC to pay income and gross receipts taxes on the taxable income of the Borrower
that is recognized by its partners for tax purposes, provided that (i) at the
time of making the distribution there exists no Event of Default and (ii) after
giving effect to any proposed distribution, there would not exist any Event of
Default, (c) WHC and the Borrower may pay dividends and distributions to their
shareholders or partners (as the case may be) or purchase or redeem shares of
capital stock or partnership units (as the case may be), provided that (i) at
the time of making the dividend, distribution, purchase or redemption payment
there exists no Event of Default, (ii) after giving effect to the proposed
payment, there would not exist an Event of Default, (iii) with respect to the
payment of dividends on the common stock of WHC only, (A) as of the end of the
fiscal quarter of WHC immediately prior to the date of the proposed payment for
the four fiscal quarters then ended and as of the end of the fiscal quarter of
WHC in which the date of the proposed payment is to be made for the four fiscal
quarters then ended, the Funded Debt Ratio shall be less than 3.50:1.00, and
(B) after giving effect to the proposed payment, the Capitalization Ratio would
not exceed 0.50:1.00, (iv) without the prior written approval of the Required
Lenders, WHC shall not pay any dividends or distributions on the Preferred Stock
other than those payable on January 1, 2003, and (v) purchases and redemptions
of the common stock of WHC on and after June 30, 2002, shall not exceed
$5,000,000 in the aggregate, (d) WHC may issue stock to partners of the Borrower
in exchange for partnership units of the Borrower, and (e) any Subsidiary other
than the Borrower may pay dividends and make distributions to WHC or to any
Subsidiary that owns and controls more than 50% of the voting stock, membership
interests or other equity interests of the Person paying the dividend or making
the distribution.
3.5 Financial Covenants
Sections 8.14(a), (b) and (d) of the Credit Agreement are hereby deleted in
their entirety and replaced with the following:
(a) Funded Debt Ratio As of the end of each fiscal quarter for the four fiscal
quarters then ended, commencing with the fiscal quarter ending June 30, 2003,
the Funded Debt Ratio shall not exceed 4.50:1.00.
(b) Recourse Funded Debt Ratio As of the end of each fiscal quarter for the four
fiscal quarters then ended, commencing with the fiscal quarter ending June 30,
2003, the Recourse Funded Debt Ratio shall not exceed 3.75:1.00.
* * *
(d) Fixed Charge Coverage Ratio As of the end of each fiscal quarter for the
four fiscal quarters then ended, commencing with the fiscal quarter ending
June 30, 2003, the Fixed Charge Coverage Ratio shall not be less than 1.50:1.00.
3.6 Refinancing of Eligible Real Property
The Lenders hereby approve the refinancing by the Borrower of one or more
parcels of the Eligible Real Property and the concurrent or subsequent
reconveyance of the Eligible Real Property refinanced from the lien of the
respective Deed of Trust, provided that (a) the Agent shall have approved all
terms and conditions of each such refinancing in writing, (b) concurrently with
the completion of any such refinancing, the Borrower apply to the outstanding
principal balance of the Loans and permanently reduce the Commitment by an
amount equal to all proceeds from each such refinancing net of the direct
out-of-pocket costs to the Borrower relating to each such refinancing, and
(c) after giving effect to each proposed refinancing, the Borrower shall be in
compliance with the Borrowing Base. The Lenders recognize that the structure of
the anticipated refinancings may resemble the structure of the Morgan
Refinancing and the Subsequent Refinancings as described in the Second
Amendment. The parties agree that in connection with any such refinancing, the
limited liability companies formed shall constitute Tier I LLCs or Tier II LLCs
(as the case may be) for all purposes under the Credit Agreement.
3.7 Pro Rata Share Schedule
Schedule 2.1 to the Credit Agreement is hereby replaced and superceded by
Schedule 2.1 attached to this Amendment.
ARTICLE IV. CONDITIONS PRECEDENT
This Amendment shall be effective as of the date hereof, subject to the
satisfaction of the following conditions:
(a) Amendment to Credit Agreement
The Agent shall have received this Amendment duly executed by the Borrower, WHC,
the Subsidiaries that are a party hereto, the Agent and the Required Lenders.
(b) Resolutions; Incumbency
The Agent shall have received, in a form acceptable to the Agent, copies of the
resolutions of the board of directors or other governing body of the Borrower
and WHC authorizing the transactions contemplated hereby, certified by the
Secretary or an Assistant Secretary of such Person.
(c) Loan Fee
The Borrower shall have paid the Agent, for distribution to the Lenders in
accordance with the Pro Rata Share of each Lender, an amendment fee in the
amount of $125,000.
(d) Collateral Documents
The Agent shall have received the following Collateral Documents, duly executed
by the Borrower, WHC and the Subsidiaries (as the case may be), in forms
designated by the Agent:
(i) amendments to all Deeds of Trust heretofore executed and delivered to the
Agent, which amendments shall be substantially in the form designated by the
Agent;
(ii) the issuance of such endorsements to each Title Insurance Policy heretofore
issued in connection with the Deeds of Trust as the Agent deems necessary in its
sole discretion, issued by a title insurance company reasonably acceptable to
the Agent, dated as of the date of the recording of the amendment to each Deed
of Trust, and in a form acceptable to the Agent; and
(iii) evidence that all other actions necessary or, in the opinion of the Agent
or the Lenders, desirable, to perfect and protect the first priority security
interest created by the Collateral Documents and to enhance the Agent's ability
to preserve and protect its interests in and access to the Collateral, have been
taken.
(e) Other Documents
The Agent shall have received such other approvals, opinions, documents or
materials as the Agent or any Lender may request.
ARTICLE V. GENERAL PROVISIONS
5.1 Representations and Warranties
The Borrower hereby represents and warrants to the Lenders that as of the date
of this Amendment, there exists no Default or Event of Default. All
representations and warranties of the Borrower contained in the Credit Agreement
and the other Loan Documents, or otherwise made in writing in connection
therewith, are true and correct as of the date of this Amendment. The Borrower
acknowledges and agrees that all of the Borrower's Indebtedness to the Lenders
under the Credit Agreement is payable without offset, defense or counterclaim.
5.2 Security
All Loan Documents evidencing the Agent's security interest in the Collateral on
behalf of the Lenders shall remain in full force and effect, and shall continue
to secure, without change in priority, the payment and performance of the Loans
and all other secured obligations of the Borrower to the Agent on behalf of the
Lenders.
5.3 Survival of Loan Documents
The terms and conditions of the Credit Agreement and each of the other Loan
Documents shall survive until all of the Borrower's obligations under the Credit
Agreement have been satisfied in full.
5.4 Payment of Fees
Within five Business Days of demand by the Agent, the Borrower shall pay
directly or reimburse the Agent (as the case may be) for all Attorney Costs and
other expenses in accordance with the provisions of Section 12.4 of the Credit
Agreement.
5.5 Consent of Guarantors
By execution of this Amendment, each of WHC and the Subsidiaries that have
executed and delivered to the Agent guaranties, security agreements and other
loan documents consents to this Amendment and reaffirms its obligations under
its respective guaranty, security agreement and each of the other Loan Documents
to which it is a party.
5.6 Counterparts
This Amendment may be executed in one or more counterparts, each of which shall
constitute an original agreement, but all of which together shall constitute one
and the same agreement.
5.7 Statutory Notice
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the Borrower, the Agent, and the Lenders have caused this
Amendment to be duly executed by the respective, duly authorized signatories as
of the date first above written.
WESTCOAST HOSPITALITY, LIMITED PARTNERSHIP
By: WestCoast Hospitality Corporation,
General Partner
By
Title
U.S. BANK NATIONAL ASSOCIATION,
as Agent
By
Title
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By
Title
BANK OF SCOTLAND
By
Title
BANK LEUMI USA
By
Title
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By
Title
COLUMBIA STATE BANK
By
Title
PACIFIC NORTHWEST BANK
By
Title
Each of the undersigned (a) acknowledges that it has reviewed and approved this
Amendment and (b) reaffirms its obligations under its respective guaranty and
the other Loan Documents to which it is a party.
WESTCOAST HOSPITALITY CORPORATION
By
Title
WESTCOAST HOTELS, INC.
By
Title
TICKETSWEST.COM, INC.
By
Title
RED LION HOTELS, INC.
By
Title
RED LION PROPERTIES, INC.
By
Title
Schedule 2.1
Pro Rata Share of Each Lender
Lender Commitment Amount Pro Rata Share
U.S. Bank $ 30.23110949%
Bank of Scotland $ 21.10712409%
Columbia State Bank $ 17.51824817%
Pacific Northwest Bank $ 14.59854015%
Wells Fargo Bank $ 8.51578102%
Bank Leumi $ 8.02919708%
Total $58,500,000.00 100.00%