EXHIBIT 31
EDGECLIFF HOLDINGS, LLC
207 Grandview Drive
Fort Mitchell, KY 41017
October 16, 2000
Lodgian, Inc.
3445 Peachtree Road, NE
Suite 700
Atlanta, GA 30326
Attention: Mr. Robert S. Cole,
President and Chief Executive Officer
Dear Mr. Cole:
The purpose of this letter is to reaffirm, for the benefit of your
Board and your stockholders, our interest in acquiring all of the capital stock
of Lodgian, Inc. ("Lodgian").
On October 12, Lodgian announced that it had received a non-binding
proposal from Whitehall Street Real Estate Limited Partnership XIII and its
affiliates ("Whitehall") to acquire all of Lodgian's outstanding shares, subject
to due diligence and the satisfaction of numerous conditions, for a cash price
of between $4.00 and $4.50 per share (the "Whitehall Proposal"). In connection
with its receipt of the Whitehall Proposal, Lodgian announced that it had
granted Whitehall an exclusive 60-day period in which to conduct its due
diligence and negotiate definitive transaction agreements.
As you are aware, we have made several all-cash offers to acquire the
company over the last year. Lodgian's Board has consistently rejected our
efforts, and has continuously refused to negotiate with us.
We hereby offer to acquire Lodgian for $5.00 per share. This is an
all-cash offer to purchase all outstanding shares, which would be funded through
a combination of equity and debt from Edgecliff Holdings, LLC, DLJ Real Estate
Capital Partners, Inc. and Lehman Brothers Inc. This offer is subject to due
diligence and other customary conditions. Although we would have preferred to
make an offer that is not subject to any due diligence condition, Lodgian's
continuing refusal to provide us with access to customary information despite
our repeated indications of interest in acquiring Lodgian and despite our
willingness to enter into a customary confidentiality agreement left us with no
practical alternative.
We are prepared to begin conducting due diligence and negotiating
definitive transaction agreements in connection with our offer immediately, with
the expectation
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that such due diligence and definitive agreements could be completed within a
45-day period. We have signed and enclosed a standard confidentiality agreement.
As you are aware, in light of your Board's decision to pursue an
all-cash sale of Lodgian to Whitehall, your Board has a fiduciary responsibility
to conduct a full and fair sale process, which includes providing competing
bidders with equivalent company information. Accordingly, we hereby request that
you provide us with access to the requisite non-public due diligence information
that would allow us to proceed with our offer, as you have already begun to
provide Whitehall such access in connection with the Whitehall Proposal.
In light of your Board's fiduciary obligations, we do not understand
how Lodgian could legally enter into an exclusivity agreement with Whitehall,
commit to reimburse Whitehall's expenses of up to $3.5 million and grant to
Whitehall a five-day right to match any competing offer without first
approaching us to determine our willingness to make a superior offer. We believe
that these facts, coupled with Lodgian's 3:30 a.m. announcement of its dealings
with Whitehall on the morning of its long delayed 2000 annual meeting of
stockholders and its immediate postponement of that meeting, demonstrates that
the company's primary goal was to prevent Lodgian's stockholders from electing
our nominees to Lodgian's Board, rather than to maximize stockholder value. We
intend to pursue vigorously the election of our nominees to the Board, and, as
you are aware, have already requested an order from the Delaware Court of
Chancery to protect the right of Lodgian's stockholders to a timely election
process and to stop the flagrant abuse of Lodgian's corporate governance
procedures by Lodgian's Board.
We are prepared to meet promptly with you and your representatives to
answer any questions you may have about our offer and to negotiate a mutually
beneficial transaction. You may reach me at our office (859-578-1100).
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In light of your Board's fiduciary duties, we expect to hear from you
promptly. In addition, we do not expect that Lodgian will take any action that
would interfere with the ability of Lodgian's stockholders to receive the
maximum value for their shares, including entering into any agreement to sell
additional assets or grant break-up fees or reimbursements of additional
expenses, without first approaching us. If we do not hear from you promptly
concerning our offer, we will take such further actions as we deem appropriate.
Very truly yours,
/s/ William J. Yung
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William J. Yung
President
cc: Joseph C. Calabro
John M. Lang
Michael A. Leven
Peter R. Tyson
Richard H. Weiner
