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RULE NO. 424(B)(5)
REGISTRATION NO. 333-22889
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 12, 1997)
2,750,000 SHARES
BRISTOL
[LOGO]
HOTEL COMPANY
COMMON STOCK
-----------------
All of the 2,750,000 shares of Common Stock of Bristol Hotel Company (the
"Company" or "Bristol") offered hereby are being sold by the Company. The Common
Stock is listed on the New York Stock Exchange (the "NYSE") under the trading
symbol "BH." On May 12, 1997, the last reported sale price of the Common Stock
on the NYSE was $37 per share.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING ON PAGE 4
OF THE ACCOMPANYING PROSPECTUS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
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Per Share.......................................... $36.00 $1.71 $34.29
Total (3).......................................... $99,000,000 $4,702,500 $94,297,500
</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $247,500.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 412,500 additional shares of Common Stock solely to cover
over-allotments, if any. If the Underwriters exercise this option in full,
the total Price to Public, Underwriting Discount and Proceeds to Company
will be $113,850,000, $5,407,875 and $108,442,125, respectively. See
"Underwriting."
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The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares of
Common Stock will be made in New York, New York on or about May 16, 1997.
------------------------
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
LEHMAN BROTHERS
MONTGOMERY SECURITIES
SMITH BARNEY INC.
------------------------
The date of this Prospectus Supplement is May 12, 1997.
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Certain persons participating in this Offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the Common Stock. Such
transactions may include the purchase of shares of Common Stock prior to the
pricing of the Offering for the purpose of maintaining the price of the Common
Stock, the purchase of shares of Common Stock following the pricing of the
Offering to cover a syndicate short position in the Common Stock or for the
purpose of maintaining the price of the Common Stock, and the imposition of
penalty bids. For a description of these activities, see "Underwriting."
<PAGE>
THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS QUALIFIED IN ITS
ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING IN THE ACCOMPANYING
PROSPECTUS OR INCORPORATED THEREIN BY REFERENCE. TERMS USED HEREIN WITH INITIAL
CAPITAL LETTERS WHICH ARE DEFINED IN THE ACCOMPANYING PROSPECTUS ARE USED HEREIN
AS SO DEFINED. UNLESS OTHERWISE INDICATED, THE INFORMATION HEREIN GIVES EFFECT
TO THE ACQUISITION (THE "HOLIDAY ACQUISITION") OF HOLIDAY INNS, INC. ("HOLIDAY
INNS") BY THE COMPANY PURSUANT TO THE MERGER AGREEMENT AMONG THE COMPANY,
HOLIDAY CORPORATION AND HOLIDAY INNS DESCRIBED IN THE ACCOMPANYING PROSPECTUS.
ALL STATISTICS IN THIS PROSPECTUS RELATING TO THE LODGING INDUSTRY GENERALLY
(OTHER THAN COMPANY STATISTICS) ARE FROM, OR HAVE BEEN DERIVED FROM, INFORMATION
PUBLISHED OR PROVIDED BY SMITH TRAVEL RESEARCH, AN INDEPENDENT INDUSTRY RESEARCH
ORGANIZATION. SMITH TRAVEL RESEARCH HAS NOT PROVIDED ANY FORM OF CONSULTATION,
ADVICE OR COUNSEL REGARDING ANY ASPECT OF THE OFFERING, AND SMITH TRAVEL
RESEARCH IS IN NO WAY ASSOCIATED WITH THE OFFERING. UNLESS INDICATED OTHERWISE,
ALL INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT ASSUMES THAT THE
UNDERWRITERS' OVER-ALLOTMENT OPTION WILL NOT BE EXERCISED.
THE COMPANY
Bristol Hotel Company is one of the largest owner/operators of hotels in
North America, currently operating 98 hotels containing approximately 28,000
rooms, including 83 wholly-owned hotels. The Company's properties are
predominantly full-service hotels that operate in the upscale and mid-priced
segments of the lodging industry under franchise agreements primarily with
Holiday Inn. The Company is the largest Holiday Inn franchisee in the world and
also operates hotels under franchise agreements with other national hotel
chains, including Marriott and Promus. The Company's hotels are located in 22
states, the District of Columbia and Canada, with hotels clustered in major
metropolitan areas with concentrations in the South, Southwest and Pacific
regions of the United States. Over the past 16 years, the Company's senior
management team achieved a superior record of operating hotels by applying the
proven operating strategies described below. As a result of substantial
management equity ownership, the Company has a strong entrepreneurial
orientation that emphasizes profitability, talent, innovation and teamwork
throughout the organization.
The Company completed its initial public offering of Common Stock (the
"IPO") in December 1995 which provided capital for the Company's $130 million
redevelopment of 18 hotels acquired from United Inns, Inc. in January 1995 and 2
additional hotels acquired thereafter (the "Initial Redevelopment Program"). The
Company completed the final phase of the Initial Redevelopment Program in
January 1997. As a result of the Holiday Acquisition, the Company added 60
hotels (the "Holiday Hotels") with approximately 18,000 rooms to its existing
portfolio of 38 hotels with approximately 10,000 rooms (the "Existing Hotels")
transforming the Company from a regional to a national market participant and
creating one of the largest hotel owner/operators in North America.
Approximately 75% of the Company's 28,000 rooms are located in metropolitan
areas with populations in excess of one million.
The Company believes that its hotels are well positioned in attractive
markets and will benefit from the favorable conditions now prevailing in the
lodging industry. The Company believes it will be able to continue to generate
substantial growth by replicating the success achieved at the Existing Hotels
through the application to the Holiday Hotels of the Company's proven
redevelopment and repositioning capabilities and operating strategies. The
Company also anticipates continued improvements in the operating performance of
the Existing Hotels, particularly those which underwent substantial
redevelopment and repositioning during 1996. The Company will continue to pursue
an operating strategy focused on controlling all aspects of its hotel
operations, concentrating on Holiday Inn brands, clustering assets within major
metropolitan markets, utilizing aggressive direct, local sales and marketing
techniques and maintaining a distinct management culture. The Company believes
that the Holiday Acquisition will enhance the Company's ability to pursue
additional acquisitions within the 2300-hotel, worldwide Holiday Inn system. The
Company has targeted and will continue to pursue additional acquisition
opportunities in existing and new geographic markets in the full-service sector,
specifically in the upper end of the mid-priced segment and the lower end of the
upscale segment. The Company believes that there will continue to be acquisition
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and redevelopment opportunities for full-service hotels in the near future as a
result of the aging of a significant portion of the nation's hotel supply and
the continued imposition of capital expenditure and other modernization
requirements by many national hotel franchisors on the owners of the franchised
hotels, many of which are small independent hotel companies or private hotel
owners that may be unwilling or unable to satisfy such requirements.
DEVELOPMENTS SINCE THE IPO
HOLIDAY ACQUISITION
In December 1996, the Company agreed to acquire the 60 Holiday Hotels
containing approximately 18,000 rooms from Holiday Inns, a wholly-owned
subsidiary of Bass plc ("Bass"). Of these properties, 45 hotels, containing
approximately 14,000 rooms, are owned and managed by the Company, 12 hotels are
managed by the Company for third parties and 3 hotels are managed by the Company
and are 50% owned by the Company through joint ventures. The 60 Holiday Hotels
are located in 16 states, the District of Columbia and Canada, with
concentrations in the southern and southwestern United States and California.
The Holiday Hotels are primarily clustered in major metropolitan areas,
including Los Angeles, San Francisco, New Orleans, Orlando, San Antonio,
Toronto, Philadelphia and Boston. For the twelve months ended December 27, 1996,
the average daily room rate ("ADR"), the average occupancy percentage and the
revenue per available room ("REVPAR") for the Holiday Hotels were $74.20, 73.8%
and $54.78, respectively.
The Holiday Hotels were acquired for approximately $666 million in cash and
stock (based upon the closing sales price for Bristol Common Stock as reported
on the NYSE on December 13, 1996, the last trading day before the public
announcement of the Holiday Acquisition), representing an investment of
approximately $48,000 for each of the 14,000 wholly-owned rooms acquired. The
Company paid $398 million in cash and issued 9,361,308 shares of Common Stock to
affiliates of Bass. Bristol expects to spend at least $200 million over the next
three years to redevelop a substantial number of the Holiday Hotels, which would
bring the Company's total investment to $62,000 per wholly-owned room (the
"Holiday Redevelopment Program"). However, the final amount will be subject to
change as a result of further review of each of the Holiday Hotels and any
future changes in market conditions. Management estimates that such total
investment represents approximately 65% of the replacement cost for hotels of
similar type and quality under current market and financial conditions. The
purchase price (before redevelopment costs) represents a multiple of 7.1x EBITDA
(as defined below) for the Holiday Hotels for the 12 months ended December 27,
1996.
Management also believes the Holiday Acquisition represents a unique
strategic opportunity for the following reasons:
- INTERNAL GROWTH POTENTIAL. The combined company has substantial growth
potential primarily from expected improvements to the operating
performance of the Holiday Hotels resulting from the Holiday Redevelopment
Program as well as from the application of the Company's proven operating
strategies.
- ASSET DIVERSIFICATION. The Holiday Acquisition transformed Bristol from a
regional to a national market participant and created one of the largest
hotel owner/operators in North America. Though the combined company will
have concentrations in the southern and southwestern United States, as
well as California, the Company will be less sensitive to changes in
economic conditions in any single location. The addition of the Holiday
Hotels will also significantly strengthen the Company's platform for
future expansion in several new metropolitan areas.
- ADDITIONAL ACQUISITION OPPORTUNITIES. In connection with the Holiday
Acquisition, Bristol and Holiday Corporation entered into an agreement
under which, subject to certain limitations, Bristol obtained the right to
pursue hotel acquisition and development opportunities for Holiday Inn and
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Holiday Inn Select hotels presented to Holiday Corporation and affiliated
entities. In addition, the Company believes that its new relationship with
Holiday Corporation will enhance the Company's ability to identify and
access additional acquisition opportunities from a potentially substantial
number of existing Holiday Inn franchisees who are unable or unwilling to
provide the capital required to meet Holiday Inn's core modernization
requirements.
- COMPLEMENTARY STRENGTHS. The Company is the largest Holiday Inn franchisee
in the world. In connection with the Holiday Acquisition, the Company has
committed to affiliate at least 85% of its portfolio (by room count) with
brands franchised by Holiday Inn Worldwide. The Company intends to reflag
nine of its Existing Hotels which are currently operated under Bristol
proprietary brands with a Crowne Plaza or Holiday Inn Select brand.
Franchise fees payable for these converted hotels will equal 0% of room
revenues for the remainder of 1997, increasing to 1% in 1998, 3% in 1999
and 5% in 2000 and beyond. The combination capitalizes on the
complementary strengths of Bristol as a disciplined, bottom-line driven
owner/operator and Holiday Inn as the recognized worldwide industry leader
in hotel brand identity. The Company believes that as a result of the
Company's planned redevelopment of many highly-visible Holiday Inn hotels
and improvements by other franchisees in connection with Holiday Inn
Worldwide's core modernization program, the perception of Holiday Inn
brands will be enhanced.
Upon completion of the Offering, Holdings (as defined in the accompanying
Prospectus), which was organized by The Hampstead Group, L.L.C., and the Holiday
Entities (as defined in the accompanying Prospectus), which are subsidiaries of
Bass, each will own approximately 33% of the outstanding shares of Common Stock.
Pursuant to a stockholder's agreement, the Board of Directors of the Company
will be reconstituted to include nine persons, with each of Hampstead and Bass
entitled to designate three members thereof.
OTHER ACQUISITIONS
In May 1996, the Company also acquired the 159 room Holiday Inn in Plano,
Texas for $6 million, and in January 1997, the Company acquired the 382 room
Allerton Hotel and related retail space located on North Michigan Avenue in
Chicago, Illinois for $35 million. The Company completed a $2 million renovation
of the Holiday Inn Plano in January 1997 and anticipates spending approximately
$27 million in a comprehensive redevelopment of The Allerton Hotel, which will
operate as a Crowne Plaza with 420 rooms upon completion (presently scheduled
for mid-1998).
INITIAL REDEVELOPMENT PROGRAM
Following the consummation of the acquisition of United Inns, Inc. in
January 1995, Bristol initiated the Initial Redevelopment Program which included
extensive exterior and interior reconstruction and renovation to 20 of the
Existing Hotels, as well as the strategic repositioning of such hotels within
their local markets. The Initial Redevelopment Program was completed in three
phases. Phase I consisted of the redevelopment of six full-service hotels and
one limited-service hotel and was completed in December 1995. Phase II consisted
of the redevelopment of four full-service hotels and one limited-service hotel
and was completed in May 1996. Phase III consisted of the redevelopment of six
full-service hotels and two limited-service hotels and was completed in January
1997. The Company invested a total of $130 million in the Initial Redevelopment
Program resulting in an aggregate redevelopment cost per room of $24,200. The
following table illustrates the improvements that were achieved for the seven
hotels subject to Phase I
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redevelopment, which had aggregate redevelopment costs of $24,600 per room, by
comparing their 12-month operating results before redevelopment to their
12-month results after redevelopment:
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TWELVE MONTHS ENDED
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FEBRUARY 28,
PERFORMANCE MEASURE MAY 31, 1995 1997
- ------------------------------------------------------------- ------------ ----------------
Occupancy(1)................................................. 54.8% 68.8%
ADR.......................................................... $ 60.70 $ 71.47
REVPAR(2).................................................... $ 33.24 $ 49.20
Total revenue per room ...................................... $16,375 $26,796
EBITDA per room(3) .......................................... $ 3,307 $ 8,314
Food and beverage margin(4) ................................. 19.6% 32.5%
Gross operating margin(5).................................... 27.6% 37.7%
</TABLE>
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(1) Calculated on a per available room per year basis.
(2) Represents revenue per available room, calculated as rooms revenue divided
by average available rooms.
(3) Represents earnings before interest expense, income taxes, depreciation
and amortization. Management believes that EBITDA is an effective measure
of operating performance because it is industry practice to evaluate hotel
properties based on operating income before interest, depreciation and
amortization, which is generally equivalent to EBITDA, and EBITDA is
unaffected by the debt and equity structure of the property owner. EBITDA
does not represent cash flow from operations as defined by generally
accepted accounting principles, is not necessarily indicative of cash
available to fund all cash flow needs and should not be considered as an
alternative to net income for purposes of evaluating the Company's
operating performance.
(4) Represents gross food and beverage operating profit as a percentage of
food and beverage revenue.
(5) Represents total revenues less departmental expenses, administrative and
general expenses, marketing expenses, property operating costs and property
taxes, rent and insurance as a percentage of revenue.
FIRST QUARTER RESULTS OF OPERATIONS
On April 23, 1997, the Company announced total revenues of $58.3 million for
the quarter ended March 31, 1997, a 17% increase over the $49.7 million for the
comparable period in 1996. The Company's reported net income for the first
quarter of 1997 was $4.4 million, or $0.26 per share, compared to $3.9 million,
or $0.23 per share, for the comparable prior period, and its EBITDA for the
first quarter of 1997 was $18.5 million, a 29% increase over the $14.3 million
for the comparable prior period. The Company attributed its increase in EBITDA
primarily to the improvement in the operating results of the hotels redeveloped
in the Initial Redevelopment Program; increased operating income was partially
offset by higher debt service and depreciation charges. On a same hotel basis,
REVPAR increased 15% to $48.58 from $42.22, average occupancy percentage
increased to 70.6% from 61.9% and ADR increased 1% to $68.82 from $68.26. The
Company's first quarter 1997 results do not give effect to the Holiday
Acquisition.
OPERATING AND GROWTH STRATEGIES
OPERATING STRATEGY
The Company's operating strategy has enabled it to achieve strong operating
results during periods of industry weakness, as was experienced during the late
1980's and early 1990's, and in times of strength, as reflected by the current
lodging industry environment. This strategy and the Company's underlying
management culture have enabled the Company to successfully acquire, redevelop
and reposition 28 hotels since January 1995, starting from a base of only ten
hotels. The same fundamental operating strategy will be utilized in the
integration of the Holiday Hotels. The Company's operating strategy is focused
on maximizing the performance of individual assets and encompasses the following
key elements:
EXPERIENCED AND INCENTIVIZED MANAGEMENT TEAM. Since its inception in 1981,
the Company's success has been led by the same Chief Executive Officer and Chief
Operating Officer, who have provided both a
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consistent management philosophy, commitment to quality and focus on sound
business management principles. Five of the top seven Company executives have
been with the organization for more than 15 years and three of four regional
vice presidents of operations have more than ten years experience with the
Company. The executive officers of the Company are among the largest individual
owners of Common Stock prior to the Offering.
CONTROL OVER HOTEL OPERATIONS. The Company's primary business has always
been the ownership and operation of hotels, and it has always managed its
properties from an owner's point of view. The Chief Operating Officer exercises
control over operations through four Regional Vice Presidents and 12 Area
Directors who provide direction to hotel General Managers and coordinate support
services from the Company's headquarters.
FOCUS ON HOLIDAY INN BRANDS. The Holiday Inn brands are widely recognized
as the leading brands in consumer awareness. The Company believes that Holiday
Inn Worldwide has demonstrated a renewed commitment to the quality and
consistency of its hotels through the initiation of its core modernization
program in September 1994, pursuant to which Holiday Inn franchisees have spent
in excess of $1 billion to upgrade the quality of their hotels. The core
modernization program provides franchisees with specific requirements designed
to enhance the appearance of the exteriors, rooms, and public spaces of their
hotels. With the completion of the Holiday Acquisition, the Company has
committed to affiliate at least 85% of its portfolio (by room count) with brands
franchised by Holiday Inn Worldwide, including Crowne Plaza, Holiday Inn Select
and Holiday Inn. Management believes the Holiday Inn Worldwide reservations
systems are the strongest and most productive in the industry. The Company will
also continue to own and operate hotels under license agreements from Marriott,
Promus and HFS, and may own and operate independent hotels when it will maximize
their performance.
DIRECT SALES AND MARKETING. While there are significant benefits from
affiliations with Holiday Inn's and other national reservations systems, the
Company believes that many reservations decisions are made in local markets and
that business can best be attracted through an aggressive local sales effort.
The Company has a proven track record of attracting group business during low
volume periods, enabling its hotels to maintain higher occupancy levels than are
typical of its market areas.
FOCUS ON FULL-SERVICE, MID-MARKET HOTELS. The Company's hotels are
primarily full-service properties targeting the mid-priced and lower upscale
segments of the lodging industry. Supply and demand fundamentals for
full-service hotels with food and beverage service operating in the mid-priced
segment have been favorable. In the period between 1991 and 1996, the room
supply has decreased by 0.2% and demand has increased by 3.9%. While most of the
major lodging companies have focused on upscale full-service hotels or on
economy and mid-market limited service hotels, the Company is the largest owner/
operator of hotels dedicated to providing mid-market consumers with a
first-class, full-service hotel experience.
GEOGRAPHIC DIVERSITY WITH FOCUS ON MAJOR METROPOLITAN MARKETS. The
Company's hotels are located in major metropolitan areas throughout the
continental United States and Eastern Canada. Approximately 53% of the Company's
28,000 rooms are located in Texas, California and Florida, which constitute the
largest state-hotel markets in the U.S. and have the greatest demand for hotel
rooms. An additional 25% of the Company's rooms are located in the remainder of
the South, with large concentrations in Georgia, South Carolina, Tennessee and
Mississippi. Approximately 7% of the Company's rooms are located in the
Northeast (including Boston, Stamford, Hartford, Philadelphia, Pittsburgh and
Washington, D.C.) and the Midwest, Mountain States and Canada each account for
about 5% of the Company's rooms. The Company operates hotels in 17 of the 25
largest U.S. metropolitan areas and has concentrations of at least 600 rooms in
12 of such metropolitan areas.
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GROWTH STRATEGY
The Company expects to generate substantial future growth through continued
improvement in the operation of its Existing Hotels, including those
repositioned in the Initial Redevelopment Program and those added with the
Holiday Acquisition, as well as the pursuit of other acquisition opportunities
which currently are or could be affiliated with various Holiday Inn brands.
CONTINUED IMPROVEMENT OF REDEVELOPED HOTELS. Many of the hotels included in
the Initial Redevelopment Program were under construction during 1996 and the
Company does not expect those hotels to achieve stabilized operating results
until 1998. As a result, the Company anticipates significant improvements in the
operating performance of those hotels in addition to any favorable impact from
overall industry conditions.
THE HOLIDAY ACQUISITION. As discussed above, the Company believes there are
significant opportunities to redevelop and reposition the hotels added through
the Holiday Acquisition, providing substantial growth opportunities over the
next three to four years.
FUTURE ACQUISITION OPPORTUNITIES. Management believes that there continues
to be substantial acquisition opportunities, particularly with older
full-service facilities in superior locations that have not been maintained to a
standard which can compete effectively with new limited service competition. The
existing ownership of the approximately 2300 hotels (390,000 rooms) in the
Holiday Inn system is highly fragmented as the typical franchisee owns only one
or two hotels. In connection with the Holiday Acquisition, Holiday Corporation
agreed, with minor exceptions, to refer to all of its acquisitions and
management opportunities for Holiday Inn and Holiday Select hotels to the
Company.
REPOSITIONING STRATEGIES. The Company is the world's largest Holiday Inn
franchisee and intends to focus its acquisition and redevelopment efforts on
hotels which will further expand its position in the Holiday Inn system. It is
anticipated that most opportunities will follow one of three basic redevelopment
strategies: (i) large-scale full-service hotels (over 250 rooms and substantial
meeting space) located in major metropolitan areas branded as Crowne Plazas,
Holiday Inn Selects or Holiday Inns, (ii) smaller full-service Holiday Inn
hotels (less than 250 rooms with small high-quality restaurants) located in
suburban areas and smaller cities and (iii) mid-market full-service resort
hotels for middle-income families.
CAPITALIZE ON IMPROVING INDUSTRY FUNDAMENTALS. The Company expects the
overall industry performance to improve in most of the metropolitan areas where
its hotels are located. While occupancy has leveled off, the industry still has
pricing power which should favorably impact financial results even at the
Company's stabilized hotels.
The Company expects that the net proceeds of the Offering combined with the
leverage thereon permitted by the New Credit Facility (as defined in the
accompanying prospectus) should be sufficient to enable it to purchase
approximately $100 million of additional hotel assets in the future. The Company
expects to continue to pursue appropriate acquisition opportunities, some of
which may be significant. Such acquisitions may be financed with additional
borrowings, cash from operations or through the issuance of additional shares of
Common Stock.
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THE OFFERING
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Common Stock Offered......................... 2,750,000 shares (1)
Common Stock to be Outstanding after the 28,677,148 shares (1)(2)
Offering...................................
Use of Proceeds.............................. The Company expects to use the net proceeds
of the Offering for general corporate
purposes, including debt repayment and hotel
renovations and acquisitions.
New York Stock Exchange symbol............... "BH"
</TABLE>
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(1) Does not include up to 412,500 shares of Common Stock subject to an
over-allotment option granted to the Underwriters. See "Underwriting."
(2) Does not include 1,400,000 shares of Common Stock reserved for issuance
under stock option plans, including 1,139,075 shares of Common Stock
issuable upon exercise of options outstanding as of the date of this
Prospectus Supplement.
USE OF PROCEEDS
The net proceeds to the Company from the Offering are estimated to be
approximately $94,050,000 million (approximately $108,194,625 million if the
over-allotment option is exercised in full) after giving effect to estimated
underwriting discounts and offering expenses payable by the Company. The Company
expects to use the net proceeds from the Offering for general corporate
purposes, including to fund hotel redevelopment costs and acquisitions. Pending
such uses, the Company intends to use the net proceeds to repay borrowings under
the New Credit Facility, which will bear interest at varying rates based on
LIBOR.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock has been listed on the NYSE since December 13, 1995 under
the symbol "BH." The following table sets forth the high and low sale prices for
the periods indicated as reported in the NYSE Composite Transactions Report.
<TABLE>
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HIGH LOW
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1995
December 13 to December 31, 1995.............................................. $ 24 1/2 $ 22 1/2
1996
First Quarter................................................................. 28 5/8 24 3/8
Second Quarter................................................................ 32 1/2 27 3/8
Third Quarter................................................................. 32 1/8 26 1/4
Fourth Quarter................................................................ 31 3/4 25
1997
First Quarter................................................................. 44 1/2 31 5/8
Second Quarter (through May 12, 1997)......................................... 42 36 5/8
</TABLE>
On May 12, 1997, the last reported sale price per share of Common Stock on
the NYSE Composite Transactions Report was $37.
The Company has not paid any cash dividends on the Common Stock and does not
anticipate that it will do so in the foreseeable future. The Company intends to
retain earnings to provide funds for the continued growth and development of the
Company's business. The terms governing the Company's long-term debt restrict
the payment of dividends on the Common Stock. Any determination to pay cash
dividends in the future will be at the discretion of the Board of Directors of
the Company and will be
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dependent upon the Company's results of operations, financial condition,
contractual restrictions and other factors.
PRO FORMA FINANCIAL DATA
The following pro forma financial data give effect to (i) the Holiday
Acquisition, (ii) the refinancing of the outstanding indebtedness in connection
therewith, (iii) the sale of the Common Stock in the Offering and (iv) certain
other transactions described in the notes to the pro forma balance sheet and pro
forma income statement as if the transactions referred to in (i) through (iv)
(collectively, the "Pro Forma Transactions") had occurred on December 31, 1996,
in the case of the pro forma balance sheet data, and on January 1, 1996, in the
case of the pro forma income statement data. Historical financial data for the
Acquired Business (as defined below) is presented as of December 27, 1996 and
for the year ended December 27, 1996. The pro forma financial statements below
have been prepared based on various assumptions set forth in the notes thereto
and do not give effect to the $35 million acquisition of The Allerton Hotel in
January 1997. The Holiday Acquisition is being accounted for under the purchase
method of accounting. In connection therewith, the purchase price will be
allocated to the assets and liabilities acquired as of the time of consummation
of the Holiday Acquisition (the "Effective Time"), including joint venture
interests, and the results of operations of the business acquired in the Holiday
Acquisition (the "Acquired Business") will be included within the Company's
results of operations from and after the Effective Time. The purchase price has
been allocated in the pro forma financial statements that follow to identifiable
assets and liabilities based on management's best estimates available as of the
date of this Prospectus Supplement. Following the date hereof, such allocation
will be in accordance with appraisals and other information then available to
the Company, which could be materially different from the estimates reflected
herein. For purposes of purchase price determination, the value of Common Stock
issued in the Holiday Acquisition is $28 5/8 per share. The Merger Agreement was
entered into and publicly announced on December 15, 1996. On December 13, 1996,
the last trading day before the announcement of the Merger Agreement, the
closing sale price per share for Common Stock as reported in the NYSE Composite
Transactions Report was $28 5/8.
The pro forma income statement data do not give effect to severance and
other one-time costs relating to such transactions, inasmuch as such costs are
nonrecurring, or synergies and other benefits expected to be achieved in
connection with the Holiday Acquisition.
The pro forma financial data set forth below should be read in conjunction
with the historical financial statements of the Company and for the Acquired
Business, including the notes thereto, incorporated by reference in this
Prospectus Supplement. The pro forma financial data are not necessarily
indicative of the results that actually would have occurred had the Pro Forma
Transactions been consummated on the dates indicated or that may occur in the
future.
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<PAGE>
BRISTOL HOTEL COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY ACQUIRED BUSINESS PRO FORMA THE COMPANY
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 4,666 $ 3,544 $ 4,734(A) $ 12,944
Marketable securities........................ 116 -- -- 116
Accounts receivable (net).................... 10,501 18,125 -- 28,626
Inventory.................................... 3,320 1,809 -- 5,129
Deposits and other current assets............ 6,354 330 -- 6,684
------------- -------- ----------- -------------
Total current assets..................... 24,957 23,808 4,734 53,499
Property and equipment......................... 552,564 643,176 866,878(A) 1,419,442
(643,176)(B)
Investments in joint ventures.................. -- 443 11,955(A) 11,955
(443)(B)
Other assets:
Restricted cash.............................. 3,069 -- -- 3,069
Deferred charges and other noncurrent
assets..................................... 12,198 4,065 4,432(A) 23,109
8,469(A)
(4,065)(B)
(1,990)(C)
------------- -------- ----------- -------------
Total assets............................. $ 592,788 $ 671,492 $ 246,794 $ 1,511,074
------------- -------- ----------- -------------
------------- -------- ----------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............ $ 15,769 $ 75 $ (9,945)(D) $ 5,899
Accounts payable............................. 10,626 10,488 5,252(B) 26,366
Accrued property, sales and use tax.......... 7,346 7,925 -- 15,271
Accrued insurance............................ 6,920 -- -- 6,920
Other accrued expenses....................... 5,075 -- -- 5,075
------------- -------- ----------- -------------
Total current liabilities................ 45,736 18,488 (4,693) 59,531
Long-term debt, excluding current portion...... 216,925 68 519,407(D) 559,510
(176,890)(E)
Deferred income taxes.......................... 75,619 107,934 202,779(A) 278,398
(107,934)(B)
Other liabilities.............................. 2,351 1,412 (1,412)(B) 2,351
------------- -------- ----------- -------------
Total liabilities........................ 340,631 127,902 431,257 899,790
------------- -------- ----------- -------------
Common stock................................... 166 -- 94(F) 288
28(E)
Additional paid-in-capital..................... 231,181 -- 267,873(F) 593,076
94,022(E)
Retained earnings (deficit).................... 20,810 -- (2,890)(G) 17,920
Net assets..................................... -- 543,590 (543,590)(B) --
------------- -------- ----------- -------------
Total equity............................. 252,157 543,590 (184,463) 611,284
------------- -------- ----------- -------------
Total liabilities and equity............. $ 592,788 $ 671,492 $ 246,794 $ 1,511,074
------------- -------- ----------- -------------
------------- -------- ----------- -------------
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
consolidated balance sheet.
S-9
<PAGE>
BRISTOL HOTEL COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(A) Reflects the allocation of the purchase price to the assets and
liabilities acquired in the Holiday Acquisition and the deferred financing costs
related to the New Credit Facility, as follows:
<TABLE>
<S> <C>
Assets:
Cash............................................................ $ 4,734
Property and equipment.......................................... 866,878
Investment in joint ventures.................................... 11,955
Deferred charges and other noncurrent assets:
Management contracts.......................................... 4,432
Deferred financing costs...................................... 8,469
Liabilities:
Deferred income taxes........................................... 202,779
</TABLE>
Cash represents the amount of deferred financing costs incurred prior to
December 31, 1995.
(B) The following reflects the removal of the Acquired Business's basis in
the non-current assets being acquired and the liabilities being assumed. The
Company's allocation of the purchase price attributable to these assets and
liabilities is reflected in Note (A). In addition, the $5,252 adjustment in
accounts payable reflects the recording of the payable to Holiday Hospitality
Corp., a subsidiary of Holiday Inns, for the positive working capital assumed
pursuant to the Merger Agreement.
<TABLE>
<S> <C>
Property and equipment........................................... $(643,176)
Investment in joint ventures..................................... (443)
Deferred charges and other noncurrent assets..................... (4,065)
Accounts payable................................................. (5,252)
Deferred income taxes............................................ 107,934
Other liabilities................................................ 1,412
---------
Net assets....................................................... $(543,590)
---------
---------
</TABLE>
(C) Reflects a write-off of $1,990 of deferred financing costs related to
the 1995 Credit Facility.
(D) Reflects borrowings under the New Credit Facility to pay the portion of
the Holiday Inns Intercompany Debt not satisfied by the issuance of Common Stock
in the Holiday Acquisition, transaction costs and decrease in current portion of
refinanced mortgage debt as follows:
<TABLE>
<S> <C>
Cash at closing.................................................. $ 397,622
Acquisition costs................................................ 29,000
Decrease in long-term debt refinanced............................ 82,840
Decrease in current portion of long-term debt for refinanced
mortgage debt.................................................. 9,945
---------
$ 519,407
---------
---------
</TABLE>
(E) Reflects repayment of debt as follows:
<TABLE>
<S> <C>
Long-term debt refinanced with new credit facility............. $ (82,840)
Debt repaid from proceeds of the Offering...................... (94,050)
---------
$(176,890)
---------
---------
</TABLE>
(F) Reflects the issuance of 9,361,308 shares of Common Stock related to the
Holiday Acquisition.
(G) Reflects the write-off of $1,990 in deferred financing costs related to
the 1995 Credit Facility and $900 in indirect costs related to the Holiday
Acquisition, the principal components of which are travel expense ($500) and
certain accounting expenses ($385).
S-10
<PAGE>
BRISTOL HOTEL COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THE COMPANY ACQUIRED BUSINESS PRO FORMA THE COMPANY
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
----------------- -------------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenue:
Rooms................................. $ 149,794 $ 269,264 $ 2,220(B) $ 421,278
Food and beverage..................... 44,344 57,739 483(B) 102,566
Other................................. 15,689 25,213 251(B) 41,153
Management fees....................... 2,013 4,866 -- 6,879
----------------- ----------- -------------- ---------------
Total revenue....................... 211,840 357,082 2,954 571,876
Operating costs and expenses:
Departmental expenses:
Rooms............................... 37,706 70,675 728(B) 119,655
10,546(C)
Food and beverage................... 31,282 47,767 497(B) 79,546
Other operating departments......... 4,528 11,584 121(B) 16,233
Undistributed operating expenses:
Administrative and general.......... 18,266 36,939 512(B) 55,717
Marketing........................... 15,555 22,949 236(B) 40,278
1,538(D)
Property occupancy costs............ 17,499 33,948 353(B) 51,800
Property taxes, rent and
insurance......................... 10,903 22,172 240(B) 33,315
Depreciation and amortization....... 18,377 40,495 (8,660)(E) 50,212
Corporate expense................... 10,958 10,454 -- 21,412
----------------- ----------- -------------- ---------------
Operating income.................. 46,766 60,099 (3,157) 103,708
Other (income) expense:
Interest expense...................... 18,616 916 28,040(F) 47,572
Equity in income of joint ventures.... -- (1,469) 218(G) (1,251)
----------------- ----------- -------------- ---------------
Income before income taxes and
extraordinary item.................... 28,150 60,652 (31,415) 57,387
Income taxes............................ 10,401 24,226 (12,440)(H) 22,187
----------------- ----------- -------------- ---------------
Income before extraordinary item........ $ 17,749 $ 36,426 $ (18,975) $ 35,200
----------------- ----------- -------------- ---------------
----------------- ----------- -------------- ---------------
Income per common share................. $ 1.21
---------------
Common shares (I)....................... 29,135,313
---------------
---------------
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
consolidated statement of income.
S-11
<PAGE>
BRISTOL HOTEL COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
(A) Derived from the historical combined statement of operations for the
Acquired Business for the twelve months ended September 27, 1996 and from
the unaudited statements of operations for the three months ended December
27, 1996 and December 29, 1995. Certain reclassifications to the historical
financial statements for the Acquired Business have been made to conform to
the Company's presentation.
(B) Gives effect to the results of operations (unaudited) for the Holiday Inns
Additions (Holiday Inns' acquisition of the Stamford, Connecticut hotel) as
of January 1, 1996:
<TABLE>
<CAPTION>
HOLIDAY INNS
ADDITIONS
------------
<S> <C>
Revenue:
Rooms......................................................................... $ 2,200
Food and beverage............................................................. 483
Other operating departments................................................... 251
Departmental expenses:
Rooms......................................................................... 728
Food and beverage............................................................. 497
Other operating departments................................................... 121
Administrative and general...................................................... 512
Marketing....................................................................... 236
Property operating.............................................................. 353
Property taxes, rent and insurance.............................................. 240
</TABLE>
(C) Reflects the franchise fee payments to Holiday Corporation with respect to
the Holiday Hotel Assets (based on 5% of historical room revenues) and the
Company's hotels assumed to be converted to Holiday flags (the "Conversion
Properties") (based on 1% of room revenues), reduced by the reversal of
franchise fees on 21 of the Holiday Hotel Assets:
<TABLE>
<S> <C>
Pro forma franchise fee payments................................ $ 14,505
Actual franchise fee payments................................... (3,959)
-----------
$ 10,546
-----------
-----------
</TABLE>
Franchise fees (calculated as a percentage of room revenues) due to Holiday
Corporation for the Conversion Properties are scheduled to be 0% from
closing to December 31, 1997, 1% in 1998, 3% in 1999 and 5% in 2000.
(D) Reflects the pro forma advertising fee payments (based on 2% of room
revenues) to Holiday Corporation with respect to the Conversion Properties
of $1.5 million.
(E) Pro forma depreciation and amortization expense has been adjusted to reflect
the impact of purchase accounting as a result of the Holiday Acquisition
(net increase in depreciable assets of $786,994 million in property and
equipment and $4,432 intangible assets-management contracts) offset by
adjustments to depreciation expense resulting from the reversal of the
Holiday Inns' depreciation expense.
Depreciation for the Holiday Inns Additions is calculated based on a 35-year
useful life for buildings and useful lives ranging from five to 15 years for
furniture, fixtures and equipment ("FF&E").
S-12
<PAGE>
BRISTOL HOTEL COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS) (CONTINUED)
The weighted average useful life for FF&E is eight years as a result of the
majority of the FF&E assets being longer term assets such as kitchen
equipment and walk-in coolers. In addition, the total value assigned to FF&E
in the Holiday Acquisition was significantly less than that recorded by
Holiday Inns. The Company assigned FF&E values based on the age and
condition of the property and the anticipated renovations. As a result, pro
forma depreciation is less than combined historical depreciation.
The capitalized value of management contracts is being amortized over the
respective estimated remaining lives of the management contracts, which
range from two months to 23 years.
The adjustment for pro forma depreciation and amortization expense consists
of the following:
<TABLE>
<S> <C>
Net decrease in property and equipment depreciation resulting
from purchase accounting related to the Holiday Acquisition... $ (8,857)
Net increase in amortization resulting from the purchase
accounting adjustments to management contracts................ 197
-----------
Total pro forma depreciation and amortization adjustment...... $ (8,660)
-----------
-----------
</TABLE>
(F) Pro forma interest expense is calculated as follows:
<TABLE>
<S> <C>
Pro forma interest expense is:
Interest expense on New Credit Facility....................... $ 32,562
Amortization of financing costs on New Credit Facility........ 2,641
Interest expense on senior notes, including amortization of
discount and deferred financing costs....................... 9,321
Interest expense on debt not retired.......................... 3,048
-----------
Total pro forma interest expense............................ $ 47,572
-----------
-----------
Pro forma adjustments consists of:
Pro forma interest expense.................................... $ 47,572
Less historical total combined interest....................... (19,532)
-----------
Net increase................................................ $ 28,040
-----------
-----------
</TABLE>
Pro forma interest on the New Credit Facility is calculated using the
one-month LIBOR as of the beginning of each month plus 2.0%. One-month LIBOR
averaged 5.4% in 1996. Financing costs of $13,203, which are expected to be
incurred in connection with the New Credit Facility, have been amortized to
interest expense over five years.
(G) Reflects an increase in amortization of investments in joint ventures
resulting from purchase accounting. The value attributed to joint ventures
has been assigned to specific fixed asset categories based on estimated
market values. The difference between the assigned value and the book value
per joint venture is amortized over the useful life of the fixed asset
(buildings-35 years; FF&E-8 years).
(H) Reflects an effective tax rate of 38.7%.
(I) Includes 28,677,148 shares expected to be outstanding after the Holiday
Acquisition and the Offering, plus an additional number of shares to reflect
the dilutive effect of outstanding options.
S-13
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a terms agreement and
related underwriting agreement (the "Underwriting Agreement"), the Company has
agreed to sell to each of the underwriters named below (the "Underwriters"), for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Alex.
Brown & Sons Incorporated, Lehman Brothers Inc., Montgomery Securities and Smith
Barney Inc. are acting as representatives (the "Representatives"), and each of
the Underwriters severally has agreed, subject to the terms and conditions set
forth therein, to purchase from the Company the respective number of shares of
Common Stock set forth below opposite their respective names. In the
Underwriting Agreement, the Underwriters have agreed, subject to the terms and
conditions set forth therein, to purchase all of the shares of Common Stock
being sold pursuant to the Underwriting Agreement if any of such shares of
Common Stock are purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................... 412,000
Alex. Brown & Sons Incorporated.................................................. 412,000
Lehman Brothers Inc. ............................................................ 412,000
Montgomery Securities............................................................ 412,000
Smith Barney Inc. ............................................................... 412,000
Credit Lyonnais Securities (USA) Inc. ........................................... 60,000
Credit Suisse First Boston Corporation........................................... 60,000
Deutsche Morgan Grenfell Inc. ................................................... 60,000
Donaldson, Lufkin & Jenrette Securities Corporation.............................. 60,000
Goldman, Sachs & Co. ............................................................ 60,000
Oppenheimer & Co., Inc. ......................................................... 60,000
PaineWebber Incorporated......................................................... 60,000
Salomon Brothers Inc ............................................................ 60,000
Schroder Wertheim & Co. Incorporated............................................. 60,000
Friedman, Billings, Ramsey & Co., Inc. .......................................... 30,000
Legg Mason Wood Walker, Incorporated............................................. 30,000
Rauscher Pierce Refsnes, Inc. ................................................... 30,000
Raymond James & Associates, Inc. ................................................ 30,000
Southwest Securities, Inc. ...................................................... 30,000
----------
Total................................................................. 2,750,000
----------
----------
</TABLE>
The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public at the public offering price
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $1.00 per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $.10 per share to certain other dealers. After the date of this Prospectus
Supplement, the public offering price, concession and discount may be changed.
The Company has granted to the Underwriters an option, exercisable for 30
days after the date of this Prospectus Supplement, to purchase up to an
aggregate of 412,500 additional shares of Common Stock to cover over-allotments,
if any, at the public offering price, less the underwriting discount set forth
on the cover page of this Prospectus Supplement. If the Underwriters exercise
this option, each Underwriter will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage thereof which the
number of shares of Common Stock to be purchased by it shown in the foregoing
table bears to the shares of Common Stock initially offered hereby.
In the Underwriting Agreement, the Company has agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Securities Act"), or to contribute
to payments the Underwriters may be required to make in respect thereof.
S-14
<PAGE>
The Company, its directors and executive officers, Hampstead and the Holiday
Entities have agreed that for a period of 90 days after the date of this
Prospectus Supplement they will not offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock without the prior written consent of
Merrill Lynch.
Bankers Trust New York Corporation, the parent of Bankers Trust, and Alex.
Brown Incorporated, the parent of Alex. Brown & Sons Incorporated, one of the
Representatives, have announced that they have signed a definitive agreement to
merge. Bankers Trust acts as agent and lender under the New Credit Facility for
which it has received and will receive customary compensation. An affiliate of
Bankers Trust also owns $30 million principal amount of the Company's Senior
Notes due 2000. Bankers Trust may from time to time lend funds to or provide
services to the Company and its affiliates in the future.
Merrill Lynch has, in the past, provided financial advisory and financing
services to the Company, including acting as underwriter in connection with the
IPO, and has received customary fees for the rendering of such services. In
addition, in the ordinary course of business, Merrill Lynch may actively trade
Common Stock for Merrill Lynch's own account and for the accounts of customers
and, accordingly, may at any time hold a long or short position in such
securities.
For its financial advisory services in connection with the Holiday
Acquisition, the Company paid Merrill Lynch a fee of $3.0 million, reimbursed
Merrill Lynch for its out-of-pocket expenses and agreed to indemnify Merrill
Lynch and certain related persons against certain liabilities in connection with
its engagement, including certain liabilities under the federal securities laws.
Until the distribution of the Common Stock is completed, the rules of the
Securities and Exchange Commission (the "Commission") may limit the ability of
the Underwriters and certain selling group members to bid for the purchase of
shares of Common Stock. As an exception to these rules, the Representatives are
permitted to engage in certain transactions that stabilize the price of the
Common Stock. Such transactions may consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offering, (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus Supplement), the
Representatives may reduce the short position by purchasing Common Stock in the
open market. The Representatives may also elect to reduce any short position by
exercising all or part of the over-allotment option described above.
The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, the Representatives may
reclaim the amount of the selling concession from the Underwriters and selling
group members who sold those shares as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might otherwise be in the absence of such purchases. The imposition of a
penalty bid might also have an effect on the price of a security to the extent
that it were to discourage resales of the security by purchasers in the
Offering.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
LEGAL MATTERS
The validity of the Common Stock will be passed upon for the Company by
Jones, Day, Reavis & Pogue, New York, New York. Certain legal matters will be
passed upon for the Underwriters by Rogers & Wells, New York, New York.
S-15
<PAGE>
APPENDIX A
THE COMPANY'S HOTELS
<TABLE>
<CAPTION>
NUMBER OWNED OR
HOTEL LOCATION OF ROOMS MANAGED
- -------------------------------------------- -------------------------------------------- ------------- -----------
<S> <C> <C> <C>
*Holiday Inn--East Montgomery, AL 213 Owned
*Holiday Inn--Texarkana (I-30) (1) Texarkana, AR 210 Owned
Days Inn--Flagstaff Flagstaff, AZ 157 Owned
Fairfield Inn (1) Scottsdale, AZ 218 Owned
*Holiday Inn--Hollywood Hollywood, CA 471 Managed
*Holiday Inn Select--Orange County Airport Irvine, CA 334 Owned
*Holiday Inn--Los Angeles City Center Los Angeles, CA 195 Managed
*Holiday Inn--Woodland Hills Los Angeles, CA 124 Managed
*Holiday Inn Select--Pleasanton Pleasanton, CA 244 Owned
*Holiday Inn--San Diego on the Bay (1) San Diego, CA 600 Owned
*Holiday Inn--San Francisco Civic Center San Francisco, CA 391 Managed
*Holiday Inn--San Francisco Financial
District (1) San Francisco, CA 566 Owned
*Holiday Inn--San Francisco Fisherman's
Wharf (1) San Francisco, CA 584 Owned
*Holiday Inn Select--San Francisco Union
Square San Francisco, CA 400 Owned
*Holiday Inn--Milpitas (2) San Jose, CA 305 Managed
*Holiday Inn--Santa Barbara Santa Barbara, CA 160 Owned
*Holiday Inn--Torrance Gateway Torrance, CA 329 Managed
Ramada Inn--Colorado Springs Colorado Springs, CO 220 Owned
Holiday Inn Express--Colorado Springs Colorado Springs, CO 207 Owned
*Holiday Inn--Hartford Downtown Hartford, CT 342 Owned
*Holiday Inn Select--Stamford (1) Stamford, CT 385 Owned
*Holiday Inn--Cocoa Beach Cocoa Beach, FL 501 Owned
*Holiday Inn Select--Miami International
Airport (1) Miami, FL 304 Owned
*Holiday Inn--Orlando Disney Main Gate (1) Orlando, FL 529 Owned
*Holiday Inn--Orlando International Drive Orlando, FL 652 Owned
*Holiday Inn--Orlando Winter Park Orlando, FL 200 Owned
*Holiday Inn Select--Orlando International
Airport Orlando, FL 289 Owned
*Holiday Inn--Tampa Busch Gardens (1) Tampa, FL 396 Owned
Courtyard by Marriott Atlanta, GA 211 Owned
Crowne Plaza--Atlanta Airport Atlanta, GA 377 Owned
Holiday Inn--Airport North Atlanta, GA 493 Owned
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
NUMBER OWNED OR
HOTEL LOCATION OF ROOMS MANAGED
- -------------------------------------------- -------------------------------------------- ------------- -----------
<S> <C> <C> <C>
Harvey Hotel--Powers Ferry Atlanta, GA 296 Owned
Holiday Inn--Perimeter Atlanta, GA 250 Owned
Holiday Inn--Jonesboro Atlanta, GA 180 Owned
Fairfield Inn Atlanta, GA 242 Owned
Hampton Inn--Marietta Atlanta, GA 140 Owned
Holiday Inn Express--I-20 East Atlanta, GA 167 Owned
Holiday Inn Express--Northeast Atlanta, GA 198 Owned
*Holiday Inn--Columbus Airport (I-185) (1) Columbus, GA 223 Owned
Allerton Hotel Chicago, IL 382 Owned
*Holiday Inn--South Bend University Area (3) South Bend, IN 228 Managed
*Holiday Inn--Lexington North (3) Lexington, KY 303 Managed
*Holiday Inn--New Orleans French Quarter (1) New Orleans, LA 276 Owned
*Holiday Inn Select--New Orleans Chateau
LeMoyne (2) New Orleans, LA 171 Managed
*Holiday Inn Select--Boston Government
Center (1) Boston, MA 303 Owned
Harvey Hotel--Downtown Jackson, MS 354 Owned
Harvey Hotel--North Jackson, MS 224 Owned
Holiday Inn--Southwest Jackson, MS 289 Owned
Hampton Inn--Briarwood Jackson, MS 119 Owned
*Holiday Inn Executive Conference Center Olive Branch, MS (Memphis) 181 Owned
*Holiday Inn--Kansas City Northeast (I-435
North) Kansas City, MO 167 Owned
*Holiday Inn--Albuquerque Mountainview
(Midtown) Albuquerque, NM 363 Owned
*Holiday Inn--Cincinnati North (3) Cincinnati, OH 409 Managed
*Holiday Inn Select--Philadelphia Center
City Philadelphia, PA 445 Owned
*Holiday Inn Select--Pittsburgh University
Center Pittsburgh, PA 251 Managed
*Holiday Inn--Charleston Mills House Charleston, SC 214 Owned
*Holiday Inn--Columbia Airport Columbia, SC 148 Owned
*Holiday Inn Select--Greenville (I-35 &
Roper Mtn. Rd.) Greenville, SC 208 Owned
*Holiday Inn--Spartanburg West Spartanburg, SC 224 Owned
*Holiday Inn--Chattanooga Southeast (I-75) Chattanooga, TN 231 Owned
*Holiday Inn--Knoxville West (1) Knoxville, TN 242 Owned
*Holiday Inn--Memphis East (3) Memphis, TN 243 Managed
*Holiday Inn Select--Nashville Briley
Parkway (1) Nashville, TN 384 Owned
*Holiday Inn--Nashville Vanderbilt Nashville, TN 300 Managed
*Holiday Inn--Amarillo (I-40) (1) Amarillo, TX 248 Owned
*Holiday Inn--Austin Town Lake Austin, TX 321 Owned
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OWNED OR
HOTEL LOCATION OF ROOMS MANAGED
- -------------------------------------------- -------------------------------------------- ------------- -----------
<S> <C> <C> <C>
*Holiday Inn--Beaumont Midtown (I-10) Beaumont, TX 190 Owned
Harvey Hotel--Brookhollow Dallas, TX 354 Owned
Bristol Suites Dallas, TX 295 Owned
Harvey Hotel--Addison Dallas, TX 429 Owned
Harvey Hotel--Dallas Dallas, TX 313 Owned
Harvey Hotel--DFW Airport Dallas, TX 506 Owned
Harvey Hotel--Plano Dallas, TX 279 Owned
Holiday Inn--Plano Dallas, TX 159 Owned
Harvey Suites--DFW Airport Dallas, TX 164 Owned
Fairfield Inn--Regal Row Dallas, TX 204 Owned
Hampton Inn--Downtown Dallas, TX 311 Owned
*Holiday Inn Select--Houston West Houston, TX 345 Owned
Harvey Suites--Medical Center (1) Houston TX 285 Owned
*Holiday Inn Select--Greenway Plaza Houston, TX 355 Owned
Courtyard by Marriott Houston, TX 209 Owned
Holiday Inn--Intercontinental Airport Houston, TX 401 Owned
Holiday Inn--Medical Center Houston, TX 297 Owned
Fairfield Inn--I-10 East Houston, TX 160 Owned
Hampton Inn--I-10 East Houston, TX 90 Owned
Fairfield Inn Houston, TX 107 Owned
*Holiday Inn--San Antonio Downtown (1) San Antonio, TX 316 Owned
*Holiday Inn Select--San Antonio Airport San Antonio, TX 397 Owned
*Holiday Inn--San Antonio Riverwalk (3) San Antonio, TX 313 Managed
*Holiday Inn--Waco (I-35) Waco, TX 171 Owned
*Holiday Inn--Salt Lake City
Airport (1) Salt Lake City, UT 191 Owned
*Holiday Inn--Washington Franklin Square (2) Washington, DC 208 Managed
*Holiday Inn--Cambridge Cambridge, Ontario (Canada) 139 Owned
*Holiday Inn--Kitchener Kitchener, Ontario (Canada) 182 Owned
*Holiday Inn--Peterborough Peterborough, Ontario (Canada) 155 Owned
*Holiday Inn--Sarnia Sarnia, Ontario (Canada) 151 Owned
*Holiday Inn--Toronto Airport Toronto, Ontario (Canada) 444 Owned
*Holiday Inn--Toronto Yorkdale Toronto, Ontario (Canada) 370 Owned
</TABLE>
- ------------------------
* These hotels were acquired pursuant to the Holiday Acquisition.
(1) This hotel is subject to a ground lease. The Holiday Inn--San Francisco
Financial District and the Holiday Inn--San Francisco Fisherman's Wharf
hotels are also subject to building leases.
(2) The Company owns a 50% equity interest in the owner of each of these hotels
and manages each of them pursuant to management agreements.
(3) Holiday Hospitality Corporation is the general partner of and owns a 12.7%
equity interest in the owner of this hotel. This equity interest was not
acquired by Bristol pursuant to the Holiday Acquisition.
A-3
<PAGE>
PROSPECTUS
$500,000,000
BRISTOL HOTEL COMPANY
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS
Bristol Hotel Company (the "Company") may offer from time to time, together
or separately, (i) debt securities ("Debt Securities") consisting of notes,
debentures or other evidences of indebtedness in one or more series, (ii) shares
of its Common Stock (the "Common Stock"), (iii) shares of its Preferred Stock
(the "Preferred Stock") and (iv) warrants or other rights to purchase Debt
Securities, Common Stock or Preferred Stock, or any combination thereof, as may
be designated by the Company at the time of the offering ("Warrants") in
amounts, at prices and on terms to be determined at the time of the offering.
The Debt Securities, Common Stock, Preferred Stock and Warrants are collectively
called the "Securities."
The Securities may be offered in separate series or issuances at an
aggregate initial public offering price not to exceed $500,000,000 or, if
applicable, the equivalent thereof in other currencies, at prices and on terms
to be determined at the time or times of offering.
The specific terms of the Securities with respect to which this Prospectus
is being delivered are set forth in the accompanying Prospectus Supplement and
include, where applicable, (i) in the case of Debt Securities, the specific
designation, aggregate principal amount, ranking as senior debt ("Senior
Securities") or subordinated debt ("Subordinated Securities"), purchase price,
maturity, rate (or method of calculation thereof) and time of payment of
interest, if any, any conversion or exchange provisions, any redemption
provisions, any subordination provisions and any other specific terms of the
Debt Securities offered hereby not set forth herein under the caption
"Description of Debt Securities" in this Prospectus, and any listing thereof on
a securities exchange; (ii) in the case of Common Stock, the number of shares
and any initial public offering price; (iii) in the case of Preferred Stock, the
number of shares, the specific title, the aggregate amount, any dividend
(including the method of calculating payment of dividends), seniority,
liquidation, redemption, voting and other rights, any terms for any conversion
or exchange into other Securities, any listing on a securities exchange, the
initial public offering price and any other terms; and (iv) in the case of
Warrants, the designation and number, the exercise price, any listing of the
Warrants or the underlying Securities on a securities exchange and any other
terms in connection with the offering, sale and exercise of the Warrants.
The Company's Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the trading symbol "BH." Any Common Stock sold pursuant to a
Prospectus Supplement will be listed on the NYSE, subject to official notice of
issuance.
Any statement contained in this Prospectus will be deemed to be modified or
superseded by any inconsistent statement contained in the accompanying
Prospectus Supplement.
SEE "RISK FACTORS" BEGINNING AT PAGE 4 HEREOF FOR A DESCRIPTION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
SECURITIES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The Securities will be sold either through underwriters, dealers or agents
or directly by the Company. The accompanying Prospectus Supplement sets forth
the names of any underwriters, dealers or agents involved in the sale of the
Securities in respect of which this Prospectus is being delivered, the proposed
amounts, if any, to be purchased by underwriters, and the compensation, if any,
of such underwriters, dealers or agents.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
------------------------
THE DATE OF THIS PROSPECTUS IS MAY 12, 1997.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED HEREIN OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IF UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices
located at 7 World Trade Center, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission and that is located at
http://www.sec.gov. The Common Stock is listed on the NYSE. Reports and other
information concerning the Company may also be inspected and copied at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does
not contain all information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement, which may be inspected and copied at, or obtained from,
the Commission or the NYSE in the manner described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 (File No. 1-14062), the Company's Current Report on Form 8-K dated
March 14, 1997, the Company's Amended Current Report on Form 8-K/A dated March
14, 1997 and filed with the Commission on April 10, 1997, the Company's
definitive Proxy Statement dated April 7, 1997, the Company's Current Report on
Form 8-K dated April 28, 1997, the description of the Common Stock set forth in
the Company's Registration Statement on Form 8-A dated November 7, 1995 and any
amendment or report filed for purposes of updating that description, and all
reports and other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities
pursuant hereto are incorporated herein by reference.
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified will not be deemed to
constitute a part of this Prospectus, except as so modified, and any statement
so superseded will not be deemed to constitute a part of this Prospectus.
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The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Bristol Hotel Company, 14285 Midway Road, Suite 300, Dallas, Texas 75244,
Attention: Investor Relations (telephone: (972) 391-3910).
THE COMPANY
Bristol Hotel Company (together with its subsidiaries, the "Company") is one
of the largest owner/ operators of hotels in North America, currently operating
98 hotels containing approximately 28,000 rooms, including 83 wholly-owned
hotels. The Company's properties are predominantly full-service hotels that
operate in the upscale and mid-priced segments of the lodging industry under
franchise agreements primarily with Holiday Inn. The Company is the largest
Holiday Inn franchisee in the world and also operates hotels under franchise
agreements with other national hotel chains, including Marriott and Promus. The
Company's hotels are located in 22 states, the District of Columbia and Canada,
with hotels clustered in major metropolitan areas with concentrations in the
South, Southwest and Pacific regions of the United States.
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated
as of December 15, 1996 and amended as of April 1, 1997, among the Company,
Holiday Corporation ("Holiday Corporation") and Holiday Inns, Inc. ("Holiday
Inns"), and certain related agreements, effective as of April 28, 1997, the
Company acquired, or acquired Holiday Inns' or its affiliates' interests in, as
the case may be, 60 hotels (the "Acquired Holiday Hotels") owned or operated by
Holiday Inns (or affiliates thereof) containing a total of over 18,000 rooms
(together with the other transactions contemplated by the Merger Agreement and
related agreements, the "Holiday Acquisition"). Of these properties, 45 hotels
were owned by Holiday Inns (or affiliates thereof), 12 hotels were managed (but
not owned) by Holiday Inns and three hotels were managed by Holiday Inns and
owned by joint ventures in which Holiday Inns held a 50% equity interest. These
60 mid-scale hotels are located in 16 states, the District of Columbia and
Canada, with concentrations in the southern and southwestern United States and
California, and operate under Holiday Inns' brands. The Holiday Acquisition was
effected (i) by the issuance of 2,391,286 shares of Common Stock to Holiday
Corporation, (ii) the issuance of 6,970,022 shares of Common Stock to Bass
America Inc. ("BAI") in satisfaction of $200 million of the $500 million
outstanding indebtedness of Holiday Inns to BAI and the payment in cash of the
remaining $300 million of such indebtedness, and (iii) the payment of $91
million in cash for seven of the Acquired Holiday Hotels that are owned by
affiliates of Holiday Inns. The cash consideration payable in connection with
the Holiday Acquisition was funded by the Company with a new $560 million
secured senior credit facility ("New Credit Facility") which replaced the
Company's previous $120 million secured senior credit facility.
The Company's principal executive offices are located at 14285 Midway Road,
Suite 300, Dallas, Texas 75244, and its telephone number is (972) 391-3910.
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RISK FACTORS
The Securities are subject to a number of material risks, including those
enumerated below. Investors should carefully consider the risk factors
enumerated below together with all of the information set forth or incorporated
by reference in this Prospectus or the accompanying Prospectus Supplement in
determining whether to purchase any of the Securities. Each of the following
factors may have a material adverse effect on the Company's operations,
financial results, financial condition, liquidity, market valuation or market
liquidity in future periods.
FAILURE TO SUCCESSFULLY INTEGRATE ACQUIRED HOTELS
To implement its growth strategy successfully, the Company must integrate
the Acquired Holiday Hotels and any other subsequently acquired hotels into its
existing operations. Immediately following consummation of the Holiday
Acquisition, the total number of hotels operated by the Company increased from
38 to 98, the total number of rooms in such hotels increased from approximately
10,000 to over 28,000 and the total number of the Company's employees increased
from approximately 4,000 to approximately 13,000. As a result of the Holiday
Acquisition, the Company also entered geographic markets where it previously did
not have any properties. Accordingly, the consolidation of functions and
integration of departments, systems and procedures of the Acquired Holiday
Hotels or other subsequently acquired hotels will present a significant
management challenge. There can be no assurance that the Company will be able to
effectively integrate the Acquired Holiday Hotels or other subsequently acquired
hotels or achieve operating results in the Acquired Holiday Hotels or other
subsequently acquired hotels comparable to the historical performance of its
existing hotels. In addition, as a result of the Holiday Acquisition, the
financial condition and results of operations of the Company following the
Holiday Acquisition will not be comparable to the financial condition and
results of operations of the Company for periods prior to the Holiday
Acquisition.
HOTEL REDEVELOPMENT AND RENOVATION RISKS
The Company's present business plan contemplates the expenditure of at least
$200 million to redevelop or renovate a substantial number of the Acquired
Holiday Hotels over a three-year period. The Company expects to finance the
redevelopment and renovation of such Acquired Holiday Hotels from cash from
operations and borrowings under the New Credit Facility or other credit
facilities. The redevelopment or renovation of the Acquired Holiday Hotels and
any other subsequently acquired hotels involves risks associated with
construction and renovation of real property, including the possibility of
construction costs overruns and delays due to various factors (including receipt
of regulatory approvals, inclement weather and labor or material shortages and
the continued availability of construction and permanent financing) and market
or site deterioration after acquisition or renovation. The Company expects that
the redevelopment of any particular hotel could take a substantial period of
time to complete. Many of the hotels under redevelopment will be closed, or
operations at the hotels substantially curtailed, during portions of
redevelopment activity. Any unanticipated delays, expenses or disturbances of
hotels being redeveloped could have an adverse effect on the results of
operations and financial condition of the Company.
RISK OF SUBSTANTIAL LEVERAGE; RESTRICTIVE COVENANTS
As of December 31, 1996, the Company's long-term consolidated debt
(including current portion) was $232.7 million and its stockholders' equity was
$252.2 million. In connection with the Holiday Acquisition, the Company incurred
approximately $427.0 million of additional indebtedness which increased the
ratio of its long-term debt (including current portion) to its total
capitalization (including current portion of long-term debt and shares issued
pursuant to the Holiday Acquisition) from 48.0% to 57.5% and increased the
variable rate debt as a percent of total debt from 36.4% to 80.0%. Subject to
limitations in its debt instruments, the Company may incur additional debt in
the future to finance, among other things, the redevelopment of the Acquired
Holiday Hotels and future acquisitions. Among other consequences, the Company's
continuing substantial indebtedness could increase the Company's vulnerability
to adverse
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general economic and lodging industry conditions (including increases in
interest rates) and could impair the Company's ability to obtain additional
financing in the future and to take advantage of significant business
opportunities that may arise.
Certain of the debt instruments to which the Company is a party, including
the New Credit Facility, contain a number of restrictive covenants and events of
default, that, among other things, restrict the ability of the Company and its
subsidiaries to: acquire or dispose of assets or businesses, incur additional
indebtedness and contingent obligations, make capital expenditures, pay
dividends, create liens on assets, enter into leases, investments or
acquisitions, engage in mergers or consolidations or engage in certain
transactions with subsidiaries and affiliates, and otherwise restrict corporate
activities of the Company, including its ability to acquire additional hotels,
hotel businesses or assets, and to engage in certain changes of control and
asset sale transactions. In addition, the Company is required to maintain
specified financial ratios and comply with financial tests, including minimum
interest coverage ratios, maximum leverage ratios, minimum net worth and maximum
total indebtedness requirements. The ability of the Company to comply with such
covenants may be affected by events beyond its control, including prevailing
economic, financial and industry conditions. The breach of any of such covenants
or restrictions could permit acceleration of the debt thereunder and
acceleration of debt under other instruments of the Company that contain
cross-acceleration or cross-default provisions. If the Company were unable to
repay its indebtedness, its lenders could proceed against the collateral
securing such indebtedness. Substantially all of the Company's hotels are
pledged to secure indebtedness of the Company's subsidiaries, and the capital
stock of certain of its subsidiaries is pledged to secure certain indebtedness
of the Company.
Among other consequences, the leverage of the Company and such restrictive
covenants and other terms of the Company's debt instruments could impair the
Company's ability to obtain additional financing in the future, to make
acquisitions and to take advantage of significant business opportunities that
may arise. In addition, the Company's leverage may increase its vulnerability to
adverse general economic and lodging industry conditions and to increased
competitive pressures.
HOLDING COMPANY STRUCTURE
The Company is a holding company and, as such, conducts its business
operations principally through its subsidiaries. As indebtedness of a holding
company, the Debt Securities will be effectively subordinated to all existing
and future obligations of the Company's subsidiaries. At December 31, 1996, the
Company's subsidiaries had an aggregate of $164.4 million of indebtedness
outstanding (exclusive of unused commitments of $53.0 million available under a
$120.0 million secured senior credit facility).
As a holding company, the Company's ability to service its indebtedness,
including the Debt Securities, is dependent upon the operating cash flow of its
subsidiaries and the payment of funds by such subsidiaries to the Company in the
form of loans, dividends or otherwise. The ability of the Company's subsidiaries
to make such disbursements is subject to applicable law and, under certain
circumstances, restrictions contained in agreements entered into, or debt
instruments issued, by the Company and its subsidiaries, possibly including any
Supplemental Indenture (as defined in "Description of Debt Securities") or the
Debt Securities.
RISKS ASSOCIATED WITH THE LODGING INDUSTRY
OPERATING RISKS. The Company's business is subject to all of the operating
risks inherent in the lodging industry. These risks include changes in general
and local economic conditions, cyclical overbuilding in the lodging industry,
varying levels of demand for rooms and related services, competition from other
hotels, motels and recreational properties, changes in travel patterns, the
recurring need for renovations, refurbishment and improvements of hotel
properties, changes in governmental regulations that influence or determine
wages, prices and construction and maintenance costs and changes in interest
rates and the availability of credit. In addition, due to the level of fixed
costs required to operate full-service hotels, certain significant expenditures
necessary for the operation of hotels generally can not be reduced when
circumstances cause a reduction in revenue.
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COMPETITION IN THE LODGING INDUSTRY. The lodging industry is highly
competitive. There is no single competitor or small number of competitors of the
Company that are dominant in the industry. The Company's hotels operate in areas
that contain numerous competitors, many of which have substantially greater
resources than the Company. Competition in the lodging industry is based
generally on convenience of location, room rates and range and quality of
services and guest amenities offered. The Company considers the location of its
hotels and the services and guest amenities provided by it to be among the most
important factors in its business. Demographic, geographic or other changes in
one or more of the Company's markets could impact the convenience or
desirability of the sites of certain hotels, which would in turn affect the
operations of those hotels. In addition, new or existing competitors could
significantly lower rates or offer greater conveniences, services or amenities
or significantly expand, improve or introduce new facilities in markets in which
the Company's hotels compete.
SEASONALITY. The lodging industry is seasonal in nature. Generally, hotel
revenues are greater in the second and third quarters than in the first and
fourth quarters. This seasonality can be expected to cause quarterly
fluctuations in the revenues of the Company. Quarterly earnings also may be
adversely affected by events beyond the Company's control, such as extreme
weather conditions, economic factors and other considerations affecting travel.
COMPETITION FOR EXPANSION OPPORTUNITIES. The Company may compete for the
acquisition of hotels with entities that have substantially greater financial
resources than the Company. In addition, the Company believes that, as a result
of the downturn experienced by the lodging industry from the late 1980's through
the early 1990's and the significant number of foreclosures and bankruptcies
created thereby, the prices for many hotels recently have been at historically
low levels and often well below the cost to build new hotels. Accordingly, the
recent economic recovery in the lodging industry and the resulting increase in
funds available for hotel acquisitions may cause additional investors to enter
the hotel acquisition market, which may in turn cause hotel acquisition costs to
increase and the number of attractive hotel acquisition opportunities to
decrease.
RISKS ASSOCIATED WITH OWNING REAL ESTATE
The Company wholly owns 83 of its 98 existing hotels and holds a 50% equity
interest in another three of them. Accordingly, the Company will be subject to
varying degrees of risk generally incident to the ownership of real estate.
These risks include, among others, changes in national, regional and local
economic conditions, local real estate market conditions, changes in interest
rates and in the availability, cost and terms of financing, the potential for
uninsured casualty and other losses, the impact of present or future
environmental legislation and compliance with environmental laws and adverse
changes in zoning laws and other regulations, many of which are beyond the
control of the Company. In addition, real estate investments are relatively
illiquid, which means that the ability of the Company to vary its portfolio of
hotels in response to changes in economic and other conditions may be limited.
SHARES AVAILABLE FOR FUTURE SALE
No prediction can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of the Common Stock prevailing from time to time. Sales of substantial
amounts of Common Stock (including shares issuable upon the exercise of stock
options), or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock. Immediately following
consummation of the Holiday Acquisition, the Company had outstanding 25,927,148
shares of Common Stock. Except for the 4,887,500 shares of Common Stock sold in
the Company's initial public offering, substantially all of the outstanding
shares are "restricted securities" under Rule 144 under the Securities Act.
Immediately following consummation of the Holiday Acquisition, 9,361,308 shares
of Common Stock were beneficially owned by Holiday Corporation, BAI or
affiliates thereof (the "Holiday Entities") and 9,373,118 shares of Common Stock
continued to be beneficially owned by United/Harvey Holdings, L.P. ("Holdings").
In connection with the Holiday Acquisition, the
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Company granted certain demand and incidental registration rights to the Holiday
Entities and Holdings with respect to all of the Common Stock beneficially owned
by them.
PRINCIPAL STOCKHOLDERS
Immediately following consummation of the Holiday Acquisition, Holdings,
which was organized by The Hampstead Group, L.L.C. ("Hampstead"), a private
investment firm, and the Holiday Entities each beneficially owned approximately
36% of the issued and outstanding shares of Common Stock. In connection with the
Holiday Acquisition, the Company, Holdings and the Holiday Entities entered into
a Stockholders' Agreement (the "Stockholders' Agreement") pursuant to which
Holdings and the Holiday Entities agreed to vote their shares of Common Stock in
order to ensure that the Company's reconstituted Board of Directors (the
"Board") consists of nine directors comprised of, subject to adjustment upon
certain changes in beneficial ownership, the Company's present chief executive
officer and present chief operating officer, three directors designated by the
Holiday Entities (of which one must be an outside director), three directors
designated by Holdings (of which one must be an outside director) and one
outside director designated by the Company's chief executive officer and chief
operating officer, collectively. In addition, the Stockholders' Agreement also
restricts the ability of Holdings and the Holiday Entities to purchase or
transfer shares of Common Stock. Accordingly, Holdings and the Holiday Entities
together have the ability to elect or remove members of the Board, and thereby
control the management and affairs of the Company, and have the power to approve
or block most actions requiring approval of the stockholders of the Company.
POTENTIAL FOR CONFLICTS OF INTEREST INVOLVING CERTAIN BOARD MEMBERS
Certain members of the Board are employed by, or are principals of,
Hampstead or the Holiday Entities, each of which has interests in hotel
companies that in the past have competed, and in the future may compete, with
the Company for both guests and hotel acquisitions. In addition, the Company has
franchise and other material relationships with the Holiday Entities as a result
of the Holiday Acquisition. The members of the Board who are employed by or
principals of Hampstead or the Holiday Entities may have conflicts of interest
with respect to certain matters potentially or actually involving or affecting
the Company and such other hotel-related investments, such as acquisition,
development, financing and other corporate opportunities that may be suitable
for the Company and such other hotel companies. In addition, such directors may
also have conflicts of interests with respect to corporate opportunities
suitable for the Company, Hampstead and the Holiday Entities. To the extent such
opportunities arise, such directors will consult with independent financial and
legal advisors and make a determination after consideration of a number of
factors, including whether such opportunity is presented to any such director in
his capacity as a director of the Company or as an affiliate of such other hotel
company or of Hampstead or the Holiday Entities, whether such opportunity is
within the Company's line of business or consistent with its strategic
objectives and whether the Company will be able to undertake or benefit from
such opportunity. It is expected that Hampstead and the Holiday Entities will
follow similar procedures to the extent that Hampstead or the Holiday Entities
or any principal or affiliate of Hampstead or the Holiday Entities that is not a
director of the Company is presented with such an opportunity. In addition,
determinations will be made by the Board when appropriate by the vote of the
disinterested directors only. Notwithstanding the foregoing, no assurance can be
given that all conflicts will be resolved in favor of the Company and its
stockholders.
ENVIRONMENTAL RISKS
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws often impose liability whether or not
the owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. In addition, the presence of contamination from
hazardous or toxic substances, or the failure to remediate such contaminated
property properly, may adversely affect the owner's ability to sell or rent
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such real property or to borrow using such real property as collateral. Persons
who arrange for the disposal or treatment of hazardous or toxic substances may
also be liable for the costs of removal or remediation of such substances at the
disposal or treatment facility, whether or not such facility is or ever was
owned or operated by such person. The operation and removal of certain
underground storage tanks also are regulated by federal and state laws. In
connection with the ownership and operation of its hotels and other properties,
the Company could be held liable for the costs of remedial action with respect
to such regulated substances and storage tanks and claims related thereto.
Remediation activities have been undertaken to address potential contamination
from storage tanks located on certain properties currently and previously owned
by the Company. Federal, state and local environmental laws, ordinances and
regulations also require abatement or removal of certain asbestos-containing
materials ("ACMs") and govern emissions of and exposure to asbestos fibers in
the air. Limited quantities of ACMs are present in various building materials
such as sprayed on ceiling treatments, roofing materials or floor tiles at
certain of the Company's hotels. Operations and maintenance programs for
maintaining ACMs have been, or are in the process of being, designed and
implemented at several of the Company's hotels.
DIVIDEND POLICIES; RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company does not anticipate that it will pay any dividends on its Common
Stock in the foreseeable future. The Company's indebtedness includes covenants
restricting the Company's ability to pay dividends or make certain other
distributions to stockholders. In connection with the offering of any
dividend-paying Preferred Stock hereby, the applicable Prospectus Supplement
will set forth the amount available for distribution as of the end of the most
recent fiscal period under the Company's loan arrangements.
ABSENCE OF PUBLIC MARKET FOR THE DEBT SECURITIES AND WARRANTS
All Securities will be a new issue of securities with no established trading
market, other than the Common Stock, which is listed on the NYSE. Any Common
Stock sold pursuant to a Prospectus Supplement will be listed on the NYSE,
subject to official notice of issuance. Any underwriters to whom Securities are
sold by the Company for public offering and sale may make a market in such
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the secondary market for any Securities.
CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
The Company's Amended and Restated Certificate of Incorporation
("Certificate of Incorporation") and Amended and Restated Bylaws ("Bylaws")
contain provisions that may have the effect of delaying, deferring or preventing
a change in control of the Company. See "Description of Capital Stock." In
addition, the Certificate of Incorporation presently authorizes the issuance of
up to 150,000,000 shares of Common Stock and 50,000,000 shares of Preferred
Stock. The Board has the power to determine the price and terms under which any
additional capital stock may be issued and to fix the terms of such Preferred
Stock.
USE OF PROCEEDS
Except as may be set forth in the accompanying Prospectus Supplement, the
net proceeds from the sale of Securities will be applied by the Company for
general corporate purposes, which may include the repayment of indebtedness
outstanding from time to time, acquisitions and other general corporate
purposes.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
the Company and its consolidated subsidiaries for each of the periods indicated.
To date, the Company has not issued any Preferred Stock; therefore, the ratios
of earnings to combined fixed charges and preferred stock dividends are the same
as the ratios of earnings to fixed charges set forth below.
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED ELEVEN MONTHS ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995(B)
------------------- ---------------------
<S> <C> <C>
Consolidated ratio of earnings to fixed charges
(unaudited)(a)..................................... 2.20x 1.40x
</TABLE>
- ------------------------
(a) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes and extraordinary items plus fixed
charges (excluding capitalized interest). Fixed charges represent interest
incurred, amortization of debt expense and that portion of rental expense on
operating leases deemed to be the equivalent of interest.
(b) The Company was formed on January 31, 1995.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Senior Securities are to be issued under an indenture dated as of a date
prior to the first issuance of Senior Securities, as supplemented from time to
time (the "Senior Indenture"), between the Company and a trustee to be named in
the applicable Prospectus Supplement (the "Senior Trustee"), and the
Subordinated Securities are to be issued under an indenture to be dated as of a
date prior to the first issuance of Subordinated Securities, as supplemented
from time to time (the "Subordinated Indenture"), between the Company and a
trustee to be named in the applicable Prospectus Supplement (the "Subordinated
Trustee"). The term "Trustee" as used herein shall refer to either the Senior
Trustee or the Subordinated Trustee, as appropriate, for Senior Securities or
Subordinated Securities. The form of the Senior Indenture and the form of the
Subordinated Indenture (being referred to herein collectively as the
"Indentures" and individually as an "Indenture") are filed as exhibits to the
Registration Statement. The Indentures are subject to and governed by the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The statements
made under this heading relating to the Debt Securities and the Indentures are
summaries of the provisions thereof, do not purport to be complete, and are
qualified in their entirety by reference to the Indentures, including the
definitions of certain terms therein. Certain capitalized terms used below but
not defined herein have the meanings ascribed to them in the Indentures.
The Debt Securities will be direct, unsecured obligations of the Company.
The indebtedness represented by the Senior Securities will rank equally with all
other unsecured and unsubordinated indebtedness of the Company. The indebtedness
represented by the Subordinated Securities will be subordinated in right of
payment to the prior payment in full of the Senior Indebtedness of the Company
as described under "--Subordination" below. The Indentures do not limit the
aggregate amount of Debt Securities which may be issued thereunder. The Debt
Securities may be issued from time to time in one or more series. A supplemental
indenture to the applicable Indenture (the "Supplemental Indenture") will be
entered into by the Company and the applicable Trustee with respect to the
issuance of each series of Debt Securities, which will set forth the terms and
provisions of such series of Debt Securities. Reference is made to the
accompanying Prospectus Supplement for a description of the following terms and
other information with respect to the Debt Securities being offered hereby: (i)
the title of such Debt Securities and whether they are Senior Securities or
Subordinated Securities; (ii) any limit on the aggregate principal
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amount of such Debt Securities; (iii) the persons to whom any interest on such
Debt Securities will be payable, if other than the registered holders thereof on
the Regular Record Date therefor; (iv) the date or dates (or manner of
determining the same) on which the principal of such Debt Securities will be
payable; (v) the rate or rates (or manner of determining the same) at which such
Debt Securities will bear interest, if any, and the date or dates from which
such interest will accrue; (vi) the dates (or manner of determining the same) on
which such interest will be payable and the Regular Record Dates for such
Interest Payment Dates; (vii) the place or places where the principal of and any
premium and interest on such Debt Securities will be payable; (viii) the period
or periods, if any, within which, and the price or prices at which, such Debt
Securities may be redeemed, in whole or in part, at the option of the Company;
(ix) any mandatory or optional sinking fund or analogous provisions; (x) the
denominations in which any Debt Securities will be issuable if other than
denominations of $1,000 and any integral multiple thereof; (xi) the currency or
currencies or currency units, if other than currency of the United States of
America, in which payment of the principal of and any premium or interest on
such Debt Securities will be payable, and the terms and conditions of any
elections that may be made available with respect thereto; (xii) any index or
formula used to determine the amount of payments of principal of and any premium
or interest on such Debt Securities; (xiii) whether the Debt Securities are to
be issued in whole or in part in the form of one or more global securities
("Global Securities"), and, if so, the identity of the depositary, if any, for
such Global Security or Securities; (xiv) the terms and conditions, if any,
pursuant to which such Debt Securities are convertible into or exchangeable for
Common Stock or other securities; (xv) the applicability of the provisions
described in "--Defeasance" below; (xvi) any subordination provisions applicable
to such Debt Securities in addition to or different than those described under
"--Subordination" below; (xvii) any addition to, or modification or deletion of,
any Events of Default or covenants with respect to such Debt Securities,
including, without limitation, the amount to be specified in connection with
clause (v) under "-- Events of Default" below; and (xviii) any other terms of
the Debt Securities.
Debt Securities may be issued at a discount from their stated principal
amount. Certain federal income tax considerations and other special
considerations applicable to any Debt Security issued with original issue
discount (an "Original Issue Discount Security") may be described in an
applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be set forth in an
applicable Prospectus Supplement.
Unless otherwise indicated in an applicable Prospectus Supplement, (i) the
Debt Securities will be issued only in fully registered form in denominations of
$1,000 or integral multiples thereof and (ii) payment of principal, premium (if
any), and interest on the Debt Securities will be payable, and the exchange,
conversion and transfer of Debt Securities will be registerable, at the office
or agency of the Company maintained for such purposes and at any other office or
agency maintained for such purpose. No service charge will be made for any
registration of transfer or exchange of the Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (a "Depositary") or its nominee identified in an applicable
Prospectus Supplement. In such a case, one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of Debt Securities of the series to be represented by
such Global Security or Securities. Unless and
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until it is exchanged in whole or in part for Debt Securities in registered
form, a Global Security may not be registered for transfer or exchange except as
a whole by the Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any nominee to a successor
Depositary or a nominee of such successor Depositary and except in any other
circumstances described in an applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in an applicable Prospectus Supplement. The Company expects that the
following provisions will apply to depositary arrangements.
Unless otherwise specified in an applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such depositary or its nominee
("Participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in such Global Securities will be limited to Participants or Persons
that may hold interests through Participants. Ownership of beneficial interests
by Participants in such Global Security will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of beneficial
interests in such Global Security by Persons that hold through Participants will
be shown on, and the transfer of that ownership interest within such Participant
will be effected only through, records maintained by such Participants. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Unless otherwise specified in an applicable Prospectus
Supplement, owners of beneficial interests in such Global Securities will not be
entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in certificated form and
will not be considered the owners or Holders thereof for any purpose under the
applicable Indenture. Accordingly, each Person owning a beneficial interest in
such Global Security must rely on the procedures of the Depositary and, if such
Person is not a Participant, on the procedures of the Participant through which
such Person owns its interest, to exercise any rights of a Holder under the
applicable Indenture. The Company understands that, under existing industry
practices, if the Company requests any action of Holders or an owner of a
beneficial interest in such Global Security desires to give any notice or take
any action a Holder is entitled to give or take under the applicable Indenture,
the Depositary would authorize the Participants to give such notice or take such
action, and the Participants would authorize beneficial owners owning through
such Participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in an applicable Prospectus Supplement. Payment
of principal of, and any premium or interest on, Debt Securities registered in
the name of or held by a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner or the
holder of the Global Security representing such Debt Securities. None of the
Company, the applicable Trustee, any Paying Agent or the Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
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CERTAIN COVENANTS IN THE INDENTURES
MAINTENANCE OF OFFICE OR AGENCY. The Company will be required to maintain
an office or agency in each place of payment for each series of Debt Securities
for notice and demand purposes and for the purposes of presenting or
surrendering Debt Securities for payment, registration of transfer or exchange.
PAYING AGENTS, ETC. If the Company acts as its own paying agent with
respect to any series of Debt Securities, on or before each due date of the
principal of, or interest on any of the Debt Securities of that series, it will
be required to segregate and hold in trust for the benefit of the persons
entitled thereto a sum sufficient to pay such amount due and to notify the
applicable Trustee promptly of its action or failure so to act. If the Company
has one or more paying agents for any series of Debt Securities, prior to each
due date of the principal of or interest on any Debt Securities of that series,
it will deposit with a paying agent a sum sufficient to pay such amount, and the
Company will promptly notify the applicable Trustee of its action or failure so
to act (unless such paying agent is such Trustee). All moneys paid by the
Company to a paying agent for the payment of principal of and interest on any
Debt Securities that remain unclaimed for two years after such principal or
interest has become due and payable may be repaid to the Company, and thereafter
the holder of such Debt Securities may look only to the Company for payment
thereof.
PAYMENT OF TAXES AND OTHER CLAIMS. The Company will be required to pay and
discharge, before the same become delinquent, (i) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary of the
Company or their properties and (ii) all claims that if unpaid would result in a
lien on their property and have a material adverse effect on the business,
assets, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole (a "Material Adverse Effect"), unless the same is
being contested by proper proceedings.
MAINTENANCE OF PROPERTIES. The Company will be required to cause all
properties used in the business of the Company or any subsidiary of the Company
to be maintained and kept in good condition, repair and working order, except to
the extent that the failure to do so would not have a Material Adverse Effect.
EXISTENCE. The Company will be required to, and also will be required to
cause its Subsidiaries to, preserve and keep in full force their existence,
charter rights, statutory rights and franchises, except to the extent that
failure to do so would not have a Material Adverse Effect.
COMPLIANCE WITH LAWS. The Company will be required to and to cause its
Subsidiaries to comply with all applicable laws to the extent the failure to do
so would have a Material Adverse Effect.
RESTRICTIVE COVENANTS. Any restrictive covenants applicable to any series
of Debt Securities will be described in an applicable Prospectus Supplement.
EVENTS OF DEFAULT
The following are Events of Default under each Indenture with respect to
Debt Securities of any series: (i) default in the payment of the principal of
(or premium, if any, on) any Debt Security of that series when it becomes due
and payable; (ii) default in the payment of any interest on any Debt Security of
that series when it becomes due and payable, and continuance of such default for
a period of 30 calendar days; (iii) default in the making of any sinking fund
payment as and when due by the terms of any Debt Security of that series; (iv)
default in the performance, or breach, of any other covenant or warranty of the
Company in such Indenture (other than a covenant included in such Indenture
solely for the benefit of a series of Debt Securities other than that series)
and continuance of such default for a period of 60 calendar days after written
notice thereof has been given to the Company as provided in such Indenture; (v)
any nonpayment at maturity or other default (beyond any applicable grace period)
under any agreement or instrument relating to any other indebtedness of the
Company the principal amount of which is not less than the amount specified in
the applicable Supplemental Indenture, which default results in such
indebtedness becoming due prior to its stated maturity or occurs at the final
maturity thereof; (vi) certain events of bankruptcy, insolvency or
reorganization involving the Company; and (vii) any other Event of
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Default provided with respect to Debt Securities of that series. Pursuant to the
Trust Indenture Act, the applicable Trustee is required, within 90 calendar days
after the occurrence of a default under the applicable Indenture in respect of
any series of Debt Securities, to give to the Holders of the Debt Securities of
such series notice of all such uncured defaults known to it (except that, in the
case of a default in the performance of any covenant of the character
contemplated in clause (iv) of the preceding sentence, no such notice to Holders
of the Debt Securities of such Series will be given until at least 30 calendar
days after the occurrence thereof), except that, other than in the case of a
default of the character contemplated in clause (i), (ii) or (iii) of the
preceding sentence, the applicable Trustee may withhold such notice if and so
long as it in good faith determines that the withholding of such notice is in
the interests of the Holders of the Debt Securities of such series.
If an Event of Default with respect to Debt Securities occurs and is
continuing, either the applicable Trustee or the Holders of at least 25% in
principal amount of the Debt Securities of that series by notice as provided in
the applicable Indenture may declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
Debt Securities of that series to be due and payable immediately. However, at
any time after a declaration of acceleration with respect to Debt Securities of
any series has been made, but before a judgment or decree based on such
acceleration has been obtained, the Holders of a majority in principal amount of
the Debt Securities of that series may, under certain circumstances, rescind and
annul such acceleration. See "--Modification and Waiver" below. If an Event of
Default under clause (vi) of the immediately preceding paragraph occurs, then
the principal of, premium on, if any, and accrued interest on the Debt
Securities of that series will become immediately due and payable without any
declaration or other act on the part of the applicable Trustee of any holder of
the Debt Securities of that series.
Each Indenture provides that, subject to the duty of the applicable Trustee
thereunder during an Event of Default to act with the required standard of care,
such Trustee will be under no obligation to exercise any of its rights or powers
under the applicable Indenture at the request or direction of any of the
Holders, unless such Holders shall have offered to such Trustee reasonable
security or indemnity. Subject to certain provisions, including those requiring
security or indemnification of the applicable Trustee, the Holders of a majority
in principal amount of the Debt Securities of any series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to such Trustee, or exercising any trust or power conferred on such
Trustee, with respect to the Debt Securities of that series.
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the applicable Indenture or for any remedy
thereunder unless such Holder shall have previously given to the applicable
Trustee written notice of a continuing Event of Default and unless the Holders
of at least 25% in aggregate principal amount of the outstanding Debt Securities
of the same series have also made written request, and offered reasonable
indemnity, to such Trustee to institute such proceeding as trustee, and such
Trustee has received from the Holders of a majority in aggregate principal
amount of the outstanding Debt Securities of the same series a direction
inconsistent with such request and has failed to institute such proceeding
within 60 calendar days. However, such limitations do not apply to a suit
instituted by a Holder of a Debt Security for enforcement of payment of the
principal of and interest on such Debt Security on or after the respective due
dates expressed in such Debt Security.
The Company is required to furnish to each Trustee annually a statement as
to the performance by the Company of its obligations under the applicable
Indenture and as to any default in such performance thereunder.
Any additional Events of Default with respect to any series of Debt
Securities, and any variations from the foregoing Events of Default applicable
to any series of Debt Securities, will be described in an applicable Prospectus
Supplement.
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MODIFICATION AND WAIVER
Modifications and amendments of each Indenture may be made by the Company
and the applicable Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Debt Securities of each series
affected thereby, except that no such modification or amendment may, without the
consent of the Holder of each Debt Security affected thereby, (i) change the
Stated Maturity of, or any installment of principal of, or interest on, any Debt
Security; (ii) reduce the principal amount of, the rate of interest on, or the
premium, if any, payable upon the redemption of, any Debt Security; (iii) reduce
the amount of principal of an Original Issue Discount Security payable upon
acceleration of the Maturity thereof; (iv) change the place or currency of
payment of principal of, or premium, if any, or interest on any Debt Security;
(v) impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security on or after the Stated Maturity or Prepayment
Date thereof; (vi) reduce the percentage in principal amount of Debt Securities
of any series, the consent of the Holders of which is required for modification
or amendment of the applicable Indenture or for waiver of compliance with
certain provisions of such Indenture or for waiver of certain defaults; or (vii)
in the case of the Subordinated Indenture, modify any of the provisions relating
to the subordination of the Subordinated Securities in a manner adverse to the
Holders thereof.
The Holders of at least a majority in aggregate principal amount of the Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive, insofar as that series is concerned, compliance by the
Company with certain covenants of the applicable Indenture. The Holders of not
less than a majority in principal amount of the Debt Securities of any series
may, on behalf of the Holders of all Debt Securities of that series, waive any
past default under the applicable Indenture with respect to that series, except
a default in the payment of the principal of, or premium, if any, or interest
on, any Debt Security of that series or in respect of a provision which under
such Indenture cannot be modified or amended without the consent of the Holder
of each Debt Security of that series affected thereby.
DEFEASANCE
Unless otherwise specified in a Prospectus Supplement applicable to a
particular series of Debt Securities, the Company, at its option, (i) will be
deemed to have been discharged from its obligations with respect to the Debt
Securities of such series (except for certain obligations, including obligations
to register the transfer or exchange of Debt Securities of such series, to
replace destroyed, stolen, lost or mutilated Debt Securities of such series and
to maintain an office or agency in respect of the Debt Securities and hold
moneys for payment in trust) or (ii) will be released from its obligations to
comply with the covenants that are described under "--Certain Covenants" above
with respect to the Debt Securities of such series and any other covenants so
designated in an applicable Prospectus Supplement with respect to the Debt
Securities of such series, and the occurrence of an event described in clause
(iv) under "--Events of Default" above with respect to any defeased covenant and
clauses (v) and (vii) under "--Events of Default" above any other event of
default so designated in an applicable Prospectus Supplement with respect to the
Debt Securities of such series will no longer be an Event of Default if, in
either case, the Company irrevocably deposits with the applicable Trustee, in
trust, money or direct obligations of the United States of America for the
payment of which the full faith and credit of the United States of America is
pledged or obligations of an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable at the issuer's option ("U.S. Government Obligations") or certain
depositary receipts therefor that through the payment of interest thereon and
principal thereof in accordance with their terms will provide money in an amount
sufficient to pay all the principal of (and premium, if any) and any interest on
the Debt Securities of such series on the dates such payments are due in
accordance with the terms of such Debt Securities. Such defeasance may be
effected only if, among other things, (a) no Event of Default or event which
with the giving of notice or lapse or time, or both, would become an Event of
Default under the applicable Indenture shall have occurred and be continuing on
the date of such deposit, (b) no Event of Default described under clause (vi)
under "--Events of
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Default" above or event that with the giving of notice or lapse of time, or
both, would become an Event of Default described under such clause (vi) shall
have occurred and be continuing at any time on or prior to the 90th calendar day
following such date of deposit, (c) in the event of defeasance under clause (i)
above, the Company has delivered an Opinion of Counsel, stating that (1) the
Company has received from, or there has been published by, the IRS a ruling or
(2) since the date of the applicable Indenture there has been a change in
applicable federal law, in either case to the effect that, among other things,
the holders of the Debt Securities of such series will not recognize gain or
loss for United States federal income tax purposes as a result of such deposit
or defeasance and will be subject to United States federal income tax in the
same manner as if such defeasance had not occurred and (d) in the event of
defeasance under clause (ii) above, the Company has delivered an Opinion of
Counsel to the effect that, among other things, the Holders of the Debt
Securities of such series will not recognize gain or loss for United States
federal income tax purposes as a result of such deposit or defeasance and will
be subject to United States federal income tax in the same manner as if such
defeasance had not occurred. In the event the Company fails to comply with its
remaining obligations under the applicable Indenture after a defeasance of such
Indenture with respect to the Debt Securities of any series as described under
clause (ii) above and the Debt Securities of such series are declared due and
payable because of the occurrence of any undefeased Event of Default, the amount
of money and U.S. Government Obligations on deposit with the applicable Trustee
may be insufficient to pay amounts due on the Debt Securities of such series at
the time of the acceleration resulting from such Event of Default. However, the
Company will remain liable in respect of such payments.
SATISFACTION AND DISCHARGE
The Company, at its option, may satisfy and discharge either Indenture
(except for certain obligations of the Company and the applicable Trustee,
including, among others, the obligations to apply money held in trust) when (i)
either (a) all Debt Securities previously authenticated and delivered (other
than (1) Debt Securities that were destroyed, lost or stolen and that have been
replaced or paid and (2) Debt Securities for the payment of which money has been
deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust) have been delivered to the
applicable Trustee for cancellation or (b) all such Debt Securities not
theretofore delivered to such Trustee for cancellation (1) have become due and
payable, (2) will become due and payable at their Stated Maturity within one
year or (3) are to be called for redemption within one year under arrangements
satisfactory to such Trustee for the giving of notice of redemption by such
Trustee in the name and at the expense of the Company, and the Company has
deposited or caused to be deposited with such Trustee as trust funds in trust
for such purpose an amount sufficient to pay and discharge the entire
indebtedness on such Debt Securities not previously delivered to such Trustee
for cancellation, for principal and any premium and interest to the date of such
deposit (in the case of Debt Securities which have become due and payable) or to
the stated maturity or redemption date, as the case may be, (ii) the Company has
paid or caused to be paid all other sums payable under the applicable Indenture
by the Company and (iii) the Company has delivered to such Trustee an Officer's
Certificate and an Opinion of Counsel, each to the effect that all conditions
precedent relating to the satisfaction and discharge of the applicable Indenture
have been satisfied.
SUBORDINATION
Upon any distribution of assets of the Company upon the dissolution, winding
up, liquidation or reorganization of the Company, the payment of the principal
of (and premium, if any) and interest on the Subordinated Securities will be
subordinated to the extent provided in the Subordinated Indenture in right of
payment to the prior payment in full of all Senior Indebtedness, including
Senior Securities, but the obligation of the Company to make payment of
principal (and premium, if any) or interest on the Subordinated Securities will
not otherwise be affected. No payment on account of principal (or premium, if
any), sinking fund or interest may be made on the Subordinated Securities at any
time when there is a default in the payment of principal, premium, if any,
sinking fund or interest on Senior Indebtedness. In
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the event that, notwithstanding the foregoing, any payment by the Company
described in the foregoing sentence is received by the Subordinated Trustee
under the Subordinated Indenture or the Holders of any of the Subordinated
Securities before all Senior Indebtedness is paid in full, such payment or
distribution shall be paid over to the holders of such Senior Indebtedness or on
their behalf for application to the payment of all Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in full, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness. Subject to payment in full of Senior Indebtedness, the
Holders of the Subordinated Securities will be subrogated to the rights of the
holders of the Senior Indebtedness to the extent of payments made to the holders
of such Senior Indebtedness out of the distributive share of the Subordinated
Securities.
By reason of such subordination, in the event of a distribution of assets
upon insolvency, certain general creditors of the Company may recover more,
ratably, than Holders of the Subordinated Securities. The Subordinated Indenture
provides that the subordination provisions thereof shall not apply to money and
securities held in trusts pursuant to the satisfaction and discharge and the
legal defeasance provisions of the Subordinated Indenture.
If this Prospectus is being delivered in connection with the offering of a
series of Subordinated Securities, the accompanying Prospectus Supplement or the
information incorporated by reference therein will set forth the approximate
amount of Senior Indebtedness outstanding as of a recent date.
LIMITATIONS ON MERGER AND CERTAIN OTHER TRANSACTIONS
Prior to the satisfaction and discharge of either Indenture, the Company may
not consolidate with or merge with or into any other person, or transfer all or
substantially all of its properties and assets to another person unless (i)
either (a) the Company is the continuing or surviving person in such a
consolidation or merger or (b) the person (if other than the Company) formed by
such consolidation or into which the Company is merged or to which all or
substantially all of the properties and assets of the Company are transferred
(the Company or such other person being referred to as the "Surviving Person")
is a corporation organized and validly existing under the laws of the United
States, any state thereof, or the District of Columbia, and expressly assumes,
by an indenture supplement, all the obligations of the Company under the Debt
Securities and the applicable Indenture, (ii) immediately after the transaction
and the incurrence or anticipated incurrence of any indebtedness to be incurred
in connection therewith, no Event of Default exists and (iii) an officer's
certificate is delivered to the applicable Trustee to the effect that the
conditions set forth in the preceding clauses (i) and (ii) have been satisfied
and an opinion of counsel has been delivered to the applicable Trustee to the
effect that the conditions set forth in the preceding clause (i) have been
satisfied. The Surviving Person will succeed to and be substituted for the
Company with the same effect as if it has been named in the applicable Indenture
as a party thereto, and thereafter the predecessor corporation will be relieved
of all obligations and covenants under such Indenture and the Debt Securities.
CONVERSION RIGHTS
The terms and conditions, if any, on which Debt Securities being offered are
convertible into Common Stock or other Securities of the Company will be set
forth in the Prospectus Supplement relating thereto. Such terms will include the
conversion price, the conversion period, provisions as to whether conversion
will be at the option of the Holder or the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Debt Securities.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
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REGARDING THE TRUSTEES
Each Indenture contains certain limitations on the right of the applicable
Trustee, should it become a creditor of the Company within three months of, or
subsequent to, a default by the Company to make payment in full of principal of
or interest on any series of Debt Securities when and as the same becomes due
and payable, to obtain payment of claims, or to realize for its own account on
property received in respect of any such claim as security or otherwise, unless
and until such default is cured. However, the applicable Trustee's rights as a
creditor of the Company will not be limited if the creditor relationship arises
from, among other things, the ownership or acquisition of securities issued
under any indenture or having a maturity of one year or more at the time of
acquisition by such Trustee; certain advances authorized by a receivership or
bankruptcy court of competent jurisdiction or by the applicable Indenture;
disbursements made in the ordinary course of business in its capacity as
indenture trustee, transfer agent, registrar, custodian or paying agent or in
any other similar capacity; indebtedness created as a result of goods or
securities sold in a cash transaction or services rendered or premises rented;
or the acquisition, ownership, acceptance or negotiation of certain drafts,
bills of exchange, acceptances, or other obligations. The Indentures do not
prohibit the Trustees from serving as trustee under any other indenture to which
the Company may be a party from time to time or from engaging in other
transactions with the Company. If either Trustee acquires any conflicting
interest and there is an Event of Default under the applicable Indenture with
respect to any series of Debt Securities, such Trustee must eliminate such
conflict or resign.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Certificate of Incorporation presently provides that the authorized
capital stock of the Company consists of 150,000,000 shares of Common Stock and
50,000,000 shares of Preferred Stock. As of May 1, 1997, 25,927,148 shares of
Common Stock were issued and outstanding and no shares of Preferred Stock were
issued or outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share owned of
record on all matters voted upon by stockholders. Subject to preferential rights
that may be applicable to any Preferred Stock outstanding, holders of Common
Stock are entitled to receive dividends if, as and when declared by the Board
out of funds legally available therefor. In the event of a liquidation,
dissolution or winding-up of the Company, holders of Common Stock are entitled
to share equally and ratably in the assets of the Company, if any, remaining
after the payment of all liabilities of the Company and the liquidation
preferences of any outstanding Preferred Stock. Holders of the Common Stock have
no preemptive rights, no cumulative voting rights and no rights to convert their
Common Stock into any other securities, and there are no redemption of sinking
fund provisions with respect to the Common Stock. The Common Stock is listed on
the NYSE under the symbol "BH." The transfer agent and registrar for the Common
Stock is American Stock Transfer and Trust Company.
PREFERRED STOCK
The Board has the authority to issue the authorized shares of Preferred
Stock in one or more series and to fix the designations, relative powers,
preferences, rights, qualifications, limitations and restrictions of all shares
of each such series, including, without limitation, dividend rates, conversion
rights, voting rights, redemption and sinking fund provisions, liquidation
preferences and the number of shares constituting each such series, without any
further vote or action by the stockholders. The issuance of Preferred Stock
could decrease the amount of earnings and assets available for distribution to
holders of Common Stock or adversely affect the rights and powers, including
voting rights, of the holders of Common Stock. The issuance of Preferred Stock
also could have the effect of delaying, deferring or preventing a change in
control of the Company.
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CERTAIN CORPORATE GOVERNANCE MATTERS
The Bylaws provide that nominations for election of directors by the
stockholders may be made by the Board or by any stockholder entitled to vote in
the election of directors generally. The Bylaws require that stockholders
intending to nominate candidates for election as directors deliver written
notice thereof to the Secretary of the Company not later than 60 days in advance
of the meeting of stockholders; provided, however, that in the event that the
date of the meeting is not publicly announced by the Company by inclusion in a
report filed with the Commission under the Exchange Act or furnished to
stockholders, or by mail, press release, or otherwise more than 75 days prior to
the meeting, notice by the stockholder to be timely must be delivered to the
Secretary of the Company not later than the close of business on the tenth day
following the date on which such announcement of the date of the meeting was so
communicated. The Bylaws further require that the notice by the stockholder set
forth certain information concerning such stockholder and the stockholder's
nominees, including their names and addresses, a representation that the
stockholder is entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice, the class and number of shares of the Company's stock owned or
beneficially owned by such stockholder, a description of all arrangements or
undertakings between the stockholder and each nominee, such other information as
would be required to be included in a proxy statement soliciting proxies for the
election of the nominees of such stockholder and the consent of each nominee to
serve as a director of the Company if so elected. The chairman of the meeting
may refuse to acknowledge the nomination of any person not made in compliance
with these requirements.
In addition to the nomination procedures described above, the Certificate of
Incorporation and Bylaws provide, in general, that (i) the number of directors
of the Company will be fixed, within a specified range, by a majority of the
total number of the Company's directors (assuming no vacancies) or by the
holders of at least 80% of the Company's voting stock, (ii) the directors of the
Company in office from time to time, or, if no directors remain in office, the
stockholders, will fill any vacancy or newly created directorship on the Board,
with any new director to serve for the full term of the directorship to which he
or she is so elected, (iii) directors of the Company may be removed with or
without cause by the vote of the majority of the total number of the Company's
directors (assuming no vacancies) or only for cause by the holders of at least
80% of the Company's voting stock, (iv) stockholder action can be taken only at
an annual or special meeting of stockholders and not by written consent in lieu
of a meeting, (v) except as described below, special meetings of stockholders
may be called only by the Chairman or a Vice Chairman of the Board or by a
majority of the total number of directors of the Company (assuming no vacancies)
and the business permitted to be conducted at any such meeting is limited to
that brought before the meeting by the Company's Chairman of the Board or his
specific designee or by a majority of the total number of directors of the
Company (assuming no vacancies), and (vi) the Board, the Chairman or a Vice
Chairman may postpone and reschedule any previously scheduled annual or special
meeting of stockholders. The Bylaws also require that stockholders desiring to
bring any business before an annual meeting of stockholders deliver written
notice thereof to the Secretary of the Company not later than 60 days in advance
of the meeting of stockholders; provided, however, that in the event that the
date of the meeting is not publicly announced by the Company by press release or
inclusion in a report filed with the Commission under the Exchange Act or
furnished to stockholders more than 75 days prior to the meeting, notice by the
stockholder to be timely must be delivered to the Secretary of the Company not
later than the close of business on the tenth day following the day on which
such announcement of the date of the meeting was so communicated. The Bylaws
further require that the notice by the stockholder set forth a description of
the business to be brought before the meeting and the reasons for conducting
such business at the meting and certain information concerning the stockholder
proposing such business and the beneficial owner, if any, on whose behalf the
proposal is made, including their names and addresses, the class and number of
shares of the Company that are owned beneficially and of record by each of them,
and any material interest of either of them in the business proposed to be
brought before the meeting. Upon the written request of the holders of not less
than a majority of the Company's voting stock, the Board will be required to
call a
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meeting of stockholders for any lawful purpose (which may not, however, include
the election of directors) and fix a record date for the determination of
stockholders entitled to notice of and to vote at such meeting (which record
date may not be later than 60 days after the date of receipt of notice of such
meeting), provided that in the event that the Board calls an annual or special
meeting of stockholders to be held not later than 90 days after receipt of any
such written request, no separate special meeting of stockholders as so
requested will be required to be convened provided that the purposes of such
annual or special meeting called by the Board include (among others) the
purposes specified in such written request of the stockholders.
Under applicable provisions of Delaware law, the approval of a Delaware
company's board of directors, in addition to stockholder approval, is required
to adopt any amendment to the company's certificate of incorporation, but a
company's bylaws may be amended either by action of its stockholders or, if the
company's certificate of incorporation so provides, its board of directors. The
Certificate of Incorporation and Bylaws provide that (i) except as described
below, the provisions summarized above and nomination procedures may not be
amended by the stockholders, nor may any provision inconsistent therewith be
adopted by the stockholders, without the affirmative vote of the holders of at
least 80% of the Company's voting stock, voting together as a single class,
except that if any such action (other than any direct or indirect amendments to
the provision requiring that stockholder action be taken at a meeting of
stockholders rather than by written consent in lieu of a meeting) is approved by
the holders of a majority, but less than 80%, of the then-outstanding voting
stock (in addition to any other approvals required by law, including approval by
the Board with respect to any amendment to the Certificate of Incorporation),
such action will be effective as of 15 months from the date of adoption and (ii)
the Bylaw provisions relating to the right of stockholders to cause special
meetings of stockholders to be called and to the composition of certain
directorate committees may not be amended by the Board without stockholder
approval.
The foregoing provisions of the Certificate of Incorporation and Bylaws
relating to advance notice of stockholder nominations may discourage or make
more difficult the acquisition of control of the Company by means of a tender
offer, open market purchase, proxy contest or otherwise. The provisions may have
the effect of discouraging certain types of coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to acquire control of
the Company first to negotiate with the Company. The Company's management
believes that the foregoing measures will provide benefits to the Company and
its stockholders by enhancing the Company's ability to negotiate with the
proponent of any unfriendly or unsolicited proposal to take over or restructure
the Company and that such benefits outweigh the disadvantages of discouraging
such proposals because, among other things, negotiation of such proposals could
result in an improvement of their terms.
The Company is a Delaware corporation and is subject to Section 203 of the
General Corporation Law of the State of Delaware (the "DGCL"). In general,
Section 203 prevents an "interested stockholder" (defined generally as a person
owning 15% or more of a corporation's outstanding voting stock) from engaging in
a "business combination" (as defined in Section 203) with a Delaware corporation
for three years following the date such person became an interested stockholder
unless (i) before such person became an interested stockholder, the board of
directors of the corporation approved the transaction in which the interested
stockholder became an interested stockholder or approved the business
combination, (ii) upon consummation of the transaction that resulted in the
interested stockholder's becoming an interested stockholder, the interested
stockholder owns at least 85% of the voting stock of the corporation outstanding
at the time such transaction commenced (excluding stock held by directors who
are also officers of the corporation and by employee stock plans that do not
provide employees with the rights to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer) or
(iii) following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of at least two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder. Under Section 203, the
restrictions described above also do not apply to certain business combinations
proposed by an interested stockholder following
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the announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors and
which transaction is approved or not opposed by a majority of the board of
directors then in office.
Because the Board approved the issuance of the Common Stock in connection
with the formation of the Company, the transactions contemplated in connection
with the Company's initial public offering and the transactions contemplated in
connection with the Holiday Acquisition, the statutory restrictions on business
combination transactions are not applicable to any person or group (and certain
transferees) that became, is deemed to have become, becomes or is deemed to
become the beneficial owner of 15% or more of the voting stock of the Company as
a result of its receipt of Common Stock in connection therewith.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities, Common
Stock, Preferred Stock or any combination thereof. Warrants may be issued
independently, together with any other Securities offered by a Prospectus
Supplement, and may be attached to or separate from such Securities. Warrants
may be issued under warrant agreements (each, a "Warrant Agreement") to be
entered into between the Company and a warrant agent specified in the applicable
Prospectus Supplement (the "Warrant Agent"). The Warrant Agent will act solely
as an agent of the Company in connection with the Warrants of a particular
series and will not assume any obligation or relationship of agency or trust for
or with any holders or beneficial owners of Warrants. The following sets forth
certain general terms and provisions of the Warrants offered hereby. Further
terms of the Warrants and the applicable Warrant Agreement will be set forth in
the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the Warrants
in respect of which this Prospectus is being delivered, including, where
applicable, the following: (i) the title of such Warrants; (ii) the aggregate
number of such Warrants; (iii) the price or prices at which such Warrants will
be issued; (iv) the designation, number and terms of the Debt Securities, Common
Stock, Preferred Stock, Depositary Shares or combination thereof, purchasable
upon exercise of such Warrants; (v) the designation and terms of the other
Securities, if any, with which such Warrants are issued and the number of such
Warrants issued with each such Security; (vi) the date, if any, on and after
which such Warrants and the related underlying Securities will be separately
transferable; (vii) the price at which each underlying Security purchasable upon
exercise of such Warrants may be purchased; (viii) the date on which the right
to exercise such Warrants shall commence and the date on which such right shall
expire; (ix) the minimum amount of such Warrants which may be exercised at any
one time; (x) information with respect to book-entry procedures, if any; (xi) a
discussion of any applicable federal income tax considerations; and (xii) any
other terms of such Warrants, including terms, procedures and limitations
relating to the transferability, exchange and exercise of such Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any one or more of the following
ways: (i) through one or more underwriters, (ii) through one or more dealers or
agents (which may include one or more underwriters) or (iii) directly to one or
more purchasers.
The distribution of the Securities may be effected from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. In
connection with the sale of the Securities, underwriters, dealers and agents may
receive compensation from the Company or from purchasers of the Securities in
the form of discounts, concessions or commissions. Underwriters, dealers and
agents who participate in the distribution of the Securities may be deemed to be
underwriters, and any discounts or commissions received by them from the Company
and any profit on the resale of Securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act. Any such
underwriter, dealer or agent will be identified and any such compensation
received from the Company will be described in an applicable Prospectus
Supplement.
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Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of the Securities may be
entitled to indemnification by the Company against certain liabilities,
including under the Securities Act, or contribution from the Company to payments
which the underwriters, dealers or agents may be required to make in respect
thereof. The underwriters, dealers and agents may engage in transactions with,
or perform services for, the Company in the ordinary course of business.
All Securities will be a new issue of securities with no established trading
market, other than the Common Stock, which is listed on the NYSE. Any Common
Stock sold pursuant to a Prospectus Supplement will be listed on the NYSE,
subject to official notice of issuance. Any underwriters to whom Securities are
sold by the Company for public offering and sale may make a market in such
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the secondary market for any Securities.
VALIDITY OF SECURITIES
Unless otherwise indicated in an applicable Prospectus Supplement relating
to the Securities, the validity of the Securities offered hereby will be passed
upon for the Company by Jones, Day, Reavis & Pogue, New York, New York.
EXPERTS
The financial statements of Bristol Hotel Company incorporated in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
The financial statements of Bristol Hotel Asset Company incorporated in this
Prospectus by reference to the Company's Current Report on Form 8-K dated March
14, 1997, and as amended on April 10, 1997, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
The financial statements of Bristol Hotel Company as of December 31, 1995
and for the eleven months then ended and the financial statements of Harvey
Hotel Companies for the one month ended January 31, 1995 and the year ended
December 31, 1994 incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITY
OTHER THAN THE REGISTERED SECURITIES OF THE COMPANY OFFERED BY THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
The Company.................................... S-1
Developments Since the IPO..................... S-2
Operating and Growth Strategies................ S-4
The Offering................................... S-7
Use of Proceeds................................ S-7
Price Range of Common Stock and Dividend
Policy........................................ S-7
Pro Forma Financial Data....................... S-8
Underwriting................................... S-14
Legal Matters.................................. S-15
The Company's Hotels........................... A-1
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company.................................... 3
Risk Factors................................... 4
Use of Proceeds................................ 8
Ratio of Earnings to Fixed Charges............. 9
Description of Debt Securities................. 9
Description of Capital Stock................... 17
Description of Warrants........................ 20
Plan of Distribution........................... 20
Validity of Securities......................... 21
Experts........................................ 21
</TABLE>
2,750,000 SHARES
[LOGO]
BRISTOL
HOTEL COMPANY
COMMON STOCK
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PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
LEHMAN BROTHERS
MONTGOMERY SECURITIES
SMITH BARNEY INC.
MAY 12, 1997
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