SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(a) (2))
[ ] Definitive Proxy Statement
[X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
LODGIAN,INC.
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(Name of Registrant as Specified in Its Charter
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(Name of Person(s) Filing Proxy Statement if other than the Registrant
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and
0-11. N/A
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No. 1
(3) Filing Party:
(4) Date Filed:
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[LODGIAN, INC. LETTERHEAD]
September 21, 2000
Dear Fellow Stockholder:
As our October 12, 2000 annual meeting approaches you may have received
proxy materials from a group led by William Yung. The Yung group has questioned
your board's commitment to finding a buyer for Lodgian. Mr. Yung is asking
stockholders to elect him and his hand-picked nominees to the board, saying that
the Yung group is " . . . positioned to offer the highest value available to the
Company's stockholders." YOUR BOARD DISAGREES AND HAS UNANIMOUSLY DETERMINED TO
OPPOSE THE ELECTION OF MR. YUNG AND HIS NOMINEES. Consider the facts:
O GUIDED BY OUR INVESTMENT BANKERS AT MORGAN STANLEY DEAN WITTER, WE ARE
ACTIVELY PURSUING A STRATEGY TO MAXIMIZE VALUE FOR ALL LODGIAN
STOCKHOLDERS. We have been executing our strategy for several months now
and have reached the point were we are presently having substantive
discussions with third parties interested in a transaction involving
Lodgian. If our negotiations with these parties produce an offer that is
fair and fully-financed, Lodgian will be sold. We agree with Mr. Yung that
a sale of Lodgian may represent the best opportunity for shareholders to
maximize value and we will consider a transaction with any qualified
party, including the Yung group. However, we do not believe that electing
Mr. Yung and his nominees will facilitate maximization of shareholder
value.
O DESPITE OUR ENCOURAGEMENT, THE YUNG GROUP HAS NEVER SUBMITTED A FIRM,
UNCONDITIONAL, FULLY-FINANCED OFFER TO ACQUIRE LODGIAN. Instead, the Yung
group, an affiliate of a competitor of your company, has demanded access
to our confidential proprietary information without agreeing to sign a
standard confidentiality and standstill agreement that protects your
company, and which has been signed by 26 other potential bidders! Contrary
to Mr. Yung's statements, we have been very flexible with regard to the
"standstill" period we have requested of the Yung group. In addition,
notwithstanding Mr. Yung's claims and despite our repeated requests, the
Yung group has never provided credible evidence of its ability to finance
a transaction involving Lodgian.
O IF ELECTED TO YOUR BOARD, WE BELIEVE THE YUNG GROUP WILL CONTINUE TO
DISRUPT OUR EFFORTS TO DELIVER MAXIMUM VALUE TO ALL STOCKHOLDERS. As
shareholders you should be concerned that Mr. Yung and his nominees, if
elected, will act in their own self-interest to acquire Lodgian at the
lowest price and may seek to impede transactions with third parties. We
believe that electing the Yung group will only put Mr. Yung in a position
to offer a lower price for Lodgian than would be offered if the Yung group
remained an unaffiliated third-party and was part of a competitive sale
process. Having the Yung group on the board may also dissuade other
potential bidders from pursuing a transaction with Lodgian if they
perceive a transaction with Mr. Yung is a foregone conclusion. We believe
the Yung group will also be a disruptive force on the Lodgian board given
its substantial conflicts of interest. Mr. Yung is affiliated with
Columbia Sussex Corporation, which competes directly with Lodgian for
properties, sites, customers and employees. We believe the best -- in
fact, the only -- way to induce Mr. Yung to
<PAGE>
make a fair offer for Lodgian is to reject his hand-picked nominees. Ask
yourself this question: Why should Mr. Yung pay fair value for Lodgian if
he can buy it for less through election of his nominees to the board?
O WE WON'T PAY "GREENMAIL" TO MR. YUNG. Having failed thus far to acquire
Lodgian at the lowest price possible, on August 1st Mr. Yung made a secret
"greenmail" proposal to the company. Mr. Yung suggested that Lodgian sell
certain hotels to the Yung group and use part of the proceeds from the
sale to purchase the Yung group's outstanding Lodgian stock -- and only
the Yung group's stock -- at a substantial premium over market price. From
this, we can only conclude that Mr. Yung is attempting to buy Lodgian at a
substantial discount to a fair value or, failing that, to force Lodgian to
repurchase the Yung group's shares at a premium price for which you, our
shareholders, will pay the price and in which you would NOT participate.
Since November of 1999, the Yung group has made at least twenty filings
with the SEC with respect to Lodgian, but not one filing discloses Mr.
Yung's August 1st proposal!
O WHILE YOUR BOARD NEGOTIATES WITH POTENTIAL BIDDERS, WE ARE ALSO OVERSEEING
OPERATING IMPROVEMENTS AND ASSET SALES LEADING TO DEBT REDUCTION THAT MAY
MAKE LODGIAN MORE VALUABLE TO AN ACQUIRER. Our trends continue to improve
by the month and our operating forecast for the balance of 2000 is
favorable. August's 6.8% increase in same-unit RevPAR marked the third
consecutive month in which Lodgian's RevPAR grew faster than the previous
month. This follows July's 4.5% improvement in same-unit RevPAR compared
to 1999. With the bulk of our planned capital expenditures for 2000 now
completed, and in view of our most recent actual results, we are
comfortable in projecting that second half 2000 RevPAR will be up at least
5% over 1999 levels, and total recurring EBITDA for the year 2000 will be
up slightly over the $147 million we reported in 1999 -- even after
considering the negative impact to EBITDA from the 16 asset sales
completed year-to-date. Furthermore, your board is actively addressing the
issues that have led to delays in our financial reporting and we are
confident that Lodgian will return to a regular quarterly reporting
schedule by the end of the year.
We believe your best interests will be served by electing the nominees of
your board and allowing your board to continue the process of delivering maximum
value to stockholders. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED WHITE
PROXY CARD TODAY. VOTE FOR NOMINEES MICHAEL A. LEVEN AND JOHN M. LANG AND
AGAINST THE BY-LAW RESOLUTION PROPOSED BY THE YUNG GROUP. PLEASE DISCARD ANY
GREEN PROXY CARD SENT TO YOU BY THE YUNG GROUP OR ITS AGENTS.
If you have any questions as to how to vote your shares, please call
Robert Cole at (404) 365-3800 or our proxy solicitor, D.F. King & Co., Inc.,
toll free at 1-800-769-6414.
Thank you for your continued support.
Sincerely,
/s/ Robert S. Cole /s/ Joseph C. Calabro
Robert S. Cole Joseph C. Calabro
Chief Executive Officer Chairman of the Board
of Directors
***** IMPORTANT *****
If your shares are held in your own name, please sign, date and return the
enclosed WHITE proxy card today. If your shares are held in "street name", only
your broker or bank can vote your shares and only upon receipt of your specific
instructions. Please return the enclosed WHITE proxy card to your broker or bank
and contact the person responsible for your account to ensure that a WHITE proxy
is voted on your behalf. DO NOT sign any green proxy card you receive from the
Yung group. If you have questions or need assistance in voting your shares,
please call: D.F. KING & CO., INC. 77 WATER STREET, NEW YORK, NEW YORK 10005,
TOLL FREE: 1-800-769-6414.
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