Filed by American Skiing Company
Pursuant to Rule 425 under the Securities Act of 1933 and Deemed
Filed Pursuant to Rule 14A-12 Under the Securities Exchange Act of 1934
Subject Company: MeriStar Hotels and Resorts, Inc.
Commission File No.: 1-14331
THE FOLLOWING IS A COPY OF THE JOINT PRESS RELEASE ISSUED BY AMERICAN SKIING
COMPANY AND MERISTAR ON DECEMBER 11, 2000. THE FOLLOWING DOES NOT CONSTITUTE
AN OFFER OF ANY SECURITIES FOR SALE.
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American Skiing Company/MeriStar Hotels & Resorts
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Box 450 Bethel ME 04217
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Phone: 207-824-8100 Fax: 207-824-5274
e-mail: [email protected]
News and information
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For immediate release
MeriStar Contacts: American Skiing Company Contacts:
Melissa Thompson Skip King (Media)
Director, Corporate Communications Vice President, Communications
MeriStar Hotels & Resorts American Skiing Company
(703) 298-3865 (cell) (207) 824-5020
(202) 295-2228
Jerry Daly, Carol McCune (Media) Dan Kashman (Analysts/Investors)
Daly Gray Public Relations Director, Strategic Planning and
(703) 435-6293 Investor Relations
American Skiing Company
(207) 824-5106
American Skiing, MeriStar Hotels & Resorts Announce Merger
Merged Company to Be Renamed Doral International,
Focus on International Leisure and Hospitality
WASHINGTON, D.C./NEWRY, Maine, December 11, 2000-MeriStar Hotels &
Resorts (NYSE: MMH), the nation's largest independent hotel management company,
and American Skiing Company (NYSE: SKI), the nation's largest ski resort
operating company, announced today that they have signed a definitive agreement
to merge.
The merged company will be renamed Doral International, Inc. and will
focus on international leisure and hospitality. Doral International will have
assets exceeding $1.2 billion, pro forma FY 2001 revenues of approximately $600
million, and expected pro forma EBITDA in FY 2001 in excess of $100 million.
Doral International will be headquartered in Washington, D.C.
The new company will operate, own and develop Doral-branded, year-round
mountain and beach resorts, vacation villages and conference centers. In
addition, the company will manage upscale hotels for third-party owners, as well
as operate corporate housing under its proprietary BridgeStreet Accommodations
brand.
The merger combines 9 premium ski resorts, 23 resort hotels, 246
hotels, 15 golf courses and four conference facilities. The company also will
control prime mountain and beach real estate available for future development of
more than 14,000 units.
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The merger has been approved by both companies' boards of directors.
Pending customary conditions, including regulatory and shareholder approval, the
merger is expected to be completed in the first calendar quarter of 2001.
"This merger brings together two companies that share a similar
mission, philosophy and vision for the future," said Leslie B. Otten, chairman
of American Skiing Company. "It creates a new leader in the year-round leisure
business. Doral International will be a dominant, year-round leisure and
conference center brand with an exceptional growth platform. The merger will
create a stronger company with more diversified and less seasonal cash flow, a
stronger capital structure, greater market exposure, a deeper organizational
structure and a broader and more balanced selection of leisure products."
Paul W. Whetsell, chairman and chief executive officer of MeriStar
Hotels & Resorts, said, "Doral International is in a position to reap the
benefits of the heavy infrastructure investment made by American Skiing over the
past several years." Whetsell went on to say, "Our focus will be on improving
EBITDA and cash flow through the sale of the existing fractional real estate
inventory and use of our management and marketing skills to increase market
share, reduce operating expenses and improve margins.
"As we move from more of a development stage to an operating focus, it
will be our intent to create world-class, year-round resorts in attractive cold-
and warm-weather locations, with a full range of lodging and retail facilities,
as well as such amenities as skiing, golf, spas, tennis, and water sports."
Transaction Overview
Under the terms of the merger agreement, MeriStar Hotels & Resorts will
merge into American Skiing Company in a tax-free, stock-for-stock merger.
American Skiing Company will be renamed Doral International. Additional terms of
the merger are as follows:
o MeriStar shareholders will receive 1.88 shares of Doral International
common stock for each share of MeriStar common stock held as of the record
date.
o American Skiing Company's current Series A Preferred stock, due November
2002, will be restructured at par plus accrued dividends through closing
into a non-convertible preferred security with a 14 percent non-cash
dividend, maturing in August 2006. The Series A preferred holder also will
receive approximately 4.75 million common shares.
o American Skiing Company's current Series B Preferred stock will be
converted at par plus accrued dividends to approximately 75 million shares
of Doral common stock at a conversion price of $2.22 per share.
o The existing senior credit facilities of both companies will be replaced by
a new $285 million bank facility consisting of a $120 million revolver and
$165 million in term loans. It is anticipated that the facility will have a
three-year term and will carry a coupon of LIBOR +400 basis points.
Upon completion of the merger the company expects to have approximately
190 million shares outstanding on a fully diluted basis. The company's real
estate subsidiary, American Skiing Company Resort Properties (ASCRP), will
remain a separate subsidiary, with its existing non-recourse debt remaining
intact. The company expects the debt to be restructured as follows:
o The coupon rates for Tranche A and Tranche B of the ASCRP real estate term
facility will be restructured at more attractive lending rates.
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o The $13 million Tranche C of the real estate term facility held by Oak Hill
Capital Partners will be converted to 5.9 million shares of common equity
of Doral International at $2.22 per common share.
o MeriStar Hospitality, the paper-clipped REIT associated with MeriStar
Hotels & Resorts, has committed a $25 million facility to ASCRP for use as
project-level mezzanine debt for the company's proposed Heavenly Grand
Summit Hotel.
Doral International Business Structure
Doral International will comprise four major leisure and hospitality
business units. The first, the Doral Leisure division, will specialize in
year-round resorts and includes 23 upscale destination resorts, 4 conference
centers and 15 golf courses. Products and services will include resort hotels,
executive conference centers, skiing and snowboarding facilities, golf courses,
spas, restaurants and retail outlets. Doral Leisure also will operate the
brand's well-recognized schools for golf and skiing, featuring the company's
proprietary instructional curriculum. The Doral Leisure division will be led by
William J. ("B.J.") Fair, who currently is president and chief operating officer
of American Skiing Company.
The company's second business segment, hotel management, will focus on
managing upscale, full-service hotels under a wide variety of franchise flags.
Doral International will continue to manage 106 hotels owned by MeriStar
Hospitality Corporation (NYSE: MHX), the nation's third largest hotel real
estate investment trust (REIT). MeriStar Hospitality, which has the right to
approve any mergers that may impact its management contracts, said that its
board of directors has approved the merger. Doral International will be the
nation's largest independent operator of hotels with a management portfolio of
246 properties in the United States, Canada and the Caribbean. The hotel
management division will be led by David McCaslin, currently president of
MeriStar Hotels & Resorts, who has more than 20 years of industry experience.
Doral International's third business segment, which also will report to
McCaslin, will be international corporate housing under the BridgeStreet
Accommodations brand, with more than 3,700 units in the United States and
Europe. Currently the world's third largest provider of corporate housing,
BridgeStreet Accommodations serves a broad cross-section of major international
corporations with facilities in the United States and Europe.
Real estate, Doral's fourth business unit, will focus on development of
upscale vacation villages and resort real estate. The division plans to
introduce and market to owners the Doral Owners Club, an upscale, full-service
travel and lifestyle organization that will offer purchasers of the company's
real estate a variety of amenities. Hernan Martinez, who has more than 20 years
of real estate experience, will be responsible for Doral International's real
estate operations. He presently is chief operating officer of American Skiing
Company Resort Properties.
Following the merger, Leslie B. Otten will be chairman, Paul W.
Whetsell, chief executive officer, and John Emery, chief financial officer.
Transaction Benefits
Management believes the merger will provide a number of competitive
advantages and growth opportunities. The new company expects to benefit from:
o Being the nation's first major year-round destination resort and conference
center brand;
o Cross-marketing among the new company's combined upscale traveler base that
will generate an estimated 23 million leisure and business visits in 2001;
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o Increasing revenue opportunities through a wider array of product
offerings, including skiing and snowboarding, spa, food & beverage, retail,
golf, tennis and other leisure amenities;
o Approximately $2 million to $4 million in cost savings by eliminating
redundant public company costs, gaining additional purchasing power and
back office consolidation;
o Introducing and marketing the Doral Owners Club, which provides vacation
ownership benefits to real estate owners; and o Taking advantage of greater
size, distribution and economies of scale.
"Our target market for Doral Leisure will be the expanding universe of
active baby boomers and the echo boom generation immediately following them,"
said Otten. "Both market segments have a high preference for leisure travel.
Baby boomers are consumers of skiing, golf, and resort real estate, and
increasingly have the money and time to pursue these leisure interests. The echo
boom generation actively seeks the outdoor recreation and adventure
opportunities that we provide, and our company is the industry leader in
converting new skiers and snowboarders from beginners to lifelong participants."
Whetsell noted that Doral International's greater size and
distribution, along with more diverse resort management expertise, also will
help the company attract additional management contracts, either directly or
through joint ventures and sliver investments with institutional and individual
owners. "We also see opportunities to expand our BridgeStreet Accommodations
brand both domestically and in Europe."
Capital Structure
"Doral International will have a new debt structure to support the
execution of our operating business plan. The success of that plan, coupled with
the sale of existing real estate inventory, will result in an improved overall
capital structure and significantly enhanced credit statistics," said John
Emery, chief investment officer of MeriStar Hotels & Resorts. "We are fully
focused on reducing debt and maximizing free cash flow. This will provide an
opportunity for significant future reductions in our cost of debt, as well as a
prudent, balanced capital structure."
Upon completion of the merger, Doral International will have an
11-member board. Otten and Whetsell will be the only inside directors. Oak Hill
Capital Partners, a private equity partnership founded by Robert M. Bass and his
team of investment professionals, which will own more than 45 percent of Doral
International, will name four members to the board. The remaining members will
be independent directors.
Conference Call at Noon ET, December 11
A conference call will be held at noon Eastern time, Monday, December
11 regarding the merger, followed by a question and answer period. Real-time
access to the presentation will be available to MeriStar and American Skiing
shareholders and other interested parties by calling (800) 482-5547, reference
number 880379. A simultaneous webcast of the call will be available at
MeriStar's Web site, www.meristar.com, American Skiing Company's Investor
Relations site at www.peaks.shareholder.com and www.streetevents.com. A replay
of the presentation will be available through 5 p.m. on December 14 by dialing
(800) 625-5288, reference number 880379 or logging onto www.meristar.com.
Headquartered in Newry, Maine, American Skiing Company, founded by
Leslie B. Otten, is the largest operator of alpine ski, snowboard and golf
resorts in the United States. Its resorts include Steamboat in Colorado;
Killington, Mount Snow and Sugarbush in Vermont; Sunday River and Sugarloaf/USA
in Maine; Attitash Bear Peak in New Hampshire; The Canyons in Utah; and Heavenly
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in California/Nevada. Additional information is available on the company's Web
site, www.peaks.com.
MeriStar Hotels & Resorts operates 231 hospitality and leisure
properties with more than 48,000 rooms and 11 golf courses in 34 states, the
District of Columbia, Canada, Puerto Rico and the U.S. Virgin Islands.
BridgeStreet Accommodations, a MeriStar subsidiary, is one of the world's
largest corporate housing providers, offering upscale, fully furnished corporate
housing throughout the United States, Canada and Europe. For more information
about MeriStar Hotels & Resorts, visit the company's Web site: www.meristar.com.
American Skiing Company plans to file a Registration Statement on Form
S-4 with the SEC in connection with the merger transaction. The Form S-4 will
contain a prospectus, a proxy statement for the special meetings of both
American Skiing and MeriStar Hotels & Resorts, Inc. and other documents.
American Skiing and MeriStar plan to mail the joint proxy statement and
prospectus contained in the Form S-4 to their stockholders. The Form S-4 and
joint proxy statement and prospectus will contain important information about
American Skiing, Meristar, the merger and related matters. Investors and
stockholders should read the joint proxy statement and prospectus and the other
documents filed with the SEC in connection with the merger carefully before they
make any decision with respect to the merger. A copy of the merger agreement
with respect to the merger will be filed by both American Skiing and Meristar as
an exhibit to each's respective Form 8-K dated December 11, 2000. The Form S-4,
the joint proxy statement and prospectus, the Form 8-Ks and all other documents
filed with the SEC in connection with the merger transaction will be available
when filed free of charge at the SEC's web site, at www.sec.gov. In addition,
the proxy statement/prospectus, the Form 8-K and all other documents filed with
the SEC in connection with the merger will be made available to investors free
of charge by calling or writing to the American Skiing and MeriStar contact
addresses listed above.
In addition to the Form S-4, the joint proxy statement and prospectus
and the other documents filed with the SEC in connection with the merger, both
American Skiing and MeriStar are obligated to file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements and other information filed with the SEC at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549
or at the other public reference rooms in New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on
public reference rooms. Filings with the SEC also are available to the public
from commercial document-retrieval services and at the web site maintained by
the SEC at www.sec.gov.
The identity of the people who, under SEC rules, may be considered
"participants in the solicitation" of MeriStar's stockholders in connection with
the proposed merger, and a description of their interests, is available in an
SEC filing on Schedule 14A, which will be made by MeriStar. A list of
"participants in the solicitation" of American Skiing's stockholders in
connection with the proposed merger, and a description of their interests, is
available in an SEC filing on Schedule 14A, which will be made by American
Skiing.
This press release contains forward-looking statements about MeriStar
Hotels & Resorts, Inc., including those statements regarding future operating
results and the timing and composition of revenues, among others. Except for
historical information, the matters discussed in this press release are
forward-looking statements that are subject to certain risks and uncertainties
that could cause the actual results to differ materially, including the
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following: the ability of the companies to complete the merger, the ability of
the company to successfully implement its acquisition strategy and operating
strategy; the merged company's ability to manage rapid expansion; significant
leverage; changes in economic cycles; competition from other hospitality
companies; and changes in the laws and government regulations applicable to the
companies.
The historical and forward-looking statements about American Skiing
Company contained in this press release are not based on historical facts, but
rather reflect American Skiing Company's current expectations concerning future
results and events. Similarly, statements that describe the company's
objectives, plans or goals are or may be forward-looking statements. Such
forward-looking statements involve a number of risks and uncertainties. In
addition to factors discussed above, other factors that could cause actual
results, performances or achievements to differ materially from those projected
include, but are not limited to, the following: changes in regional and national
business and economic conditions affecting both American Skiing Company's resort
operating and real estate segments; competition and pricing pressures; failure
to effectively integrate or operate recently acquired companies and assets;
failure to renew or refinance existing financial liabilities and obligations or
attain new outside financing; failure of on-mountain improvements and other
capital expenditures to generate incremental revenue; adverse weather conditions
regionally and nationally; seasonal business activity; changes to federal, state
and local land use regulations; changes to federal, state and local regulations
affecting both American Skiing Company's resort operating and real estate
segments; litigation involving anti-trust, consumer and other issues; failure to
renew land leases and forest service permits; disruptions in water supply that
would impact snowmaking operations and impact operations; the loss of any of our
executive officers or key operating personnel; control of American Skiing
Company by principal stockholders; failure to hire and retain qualified
employees and other factors listed from time-to-time in American Skiing
Company's documents filed by the Company with the Securities Exchange
Commission. The forward-looking statements included in this document are made
only as of the date of this document and under section 27A of the Securities Act
and section 21E of the Exchange Act, we do not have any obligation to publicly
update any forward-looking statements to reflect subsequent events or
circumstances.
