EXHIBIT A
EDGECLIFF HOLDINGS, LLC
207 Grandview Drive
Fort Mitchell, KY 41017
December 10, 2000
Lodgian, Inc.
3445 Peachtree Road, NE
Suite 700
Atlanta, GA 30326
Attention: Mr. Joseph C. Calabro,
Chairman of the Board
Dear Mr. Calabro:
Edgecliff, Inc. ("EDGECLIFF"), a wholly owned subsidiary of
Edgecliff Holdings, LLC ("PARENT"), hereby makes the following proposal,
pursuant to which holders of shares of common stock of Lodgian, Inc. ("LODGIAN")
(including shares issued upon the conversion of the Lodgian Capital Trust 7%
Convertible Redeemable Equity Structured Trust Securities issued pursuant to a
prospectus dated September 2, 1999 (the "CRESTS")) (the "SHARES") would receive
$4.75 per Share in cash for their respective Shares (the "CASH PRICE"), subject
to the terms and conditions set forth below.
Our proposal contemplates that the acquisition of Lodgian
would take the form of a merger (the "MERGER") pursuant to which a newly
created, wholly-owned subsidiary of Edgecliff would be merged with and into
Lodgian, with Lodgian as the surviving entity of the Merger. Pursuant to the
Merger, holders of Shares would receive, in exchange for their Shares, an amount
of cash per Share equal to the Cash Price.
The aggregate Cash Price for all the Shares, the repayment of
a portion of Lodgian's presently outstanding debt and the payment of certain
fees and expenses would be funded with a combination of equity and debt
financing. The equity financing would consist of (a) a capital contribution from
Parent of $65 million and (b) pursuant to a letter and memorandum of
understanding (attached hereto as Schedule A), dated as of June 14, 2000,
executed by Columbia Sussex Corporation (an affiliate of Edgecliff) and DLJ Real
Estate Capital Partners, Inc. ("RECP"), a preferred stock investment in
Edgecliff from RECP in an aggregate amount up to $150 million. The debt
financing would be provided by Lehman Brothers Holdings Inc. ("LEHMAN," together
with Parent and RECP, the "FINANCING SOURCES") on the terms and conditions set
forth in the commitment letter and term sheet to be executed (attached hereto as
Schedule B). In addition, a portion of Lodgian's presently outstanding high
yield bonds would be refinanced pursuant to an exchange offer as set forth on
Schedule C attached hereto.
<PAGE>
We understand that Lodgian is in the process of selling
certain properties which you have previously disclosed to us and are set forth
on Schedule I to Exhibit A attached hereto. Our proposal assumes that these
properties, if sold, are sold for prices not materially less than those set
forth on Schedule I and that no other properties are sold. Our proposal also
assumes that Lodgian's outstanding debt at December 31, 2000 is not greater than
$730 million, after giving effect to the sale of the properties set forth on
Schedule I.
Upon your acceptance of our proposal as set forth in this
letter and your execution of an agreement substantially in the form set forth as
Exhibit A attached hereto, we are prepared to complete our due diligence review
of Lodgian and to meet with you and your advisors to discuss our comments on the
draft Agreement and Plan of Merger we received from you and to work on
finalizing other definitive agreements (collectively, the "DEFINITIVE
AGREEMENTS") with Lodgian. Such Definitive Agreements would contain customary
representations, warranties, covenants and other provisions. In addition,
consummation of the proposed transaction by Edgecliff would be subject to the
conditions set forth in the Definitive Agreements, including but not limited to,
those set forth on Schedule C attached hereto.
Of course, at this stage of the process, our proposal is only
an expression of interest and is not intended to be legally binding, and
Edgecliff does not intend to be legally bound to any transaction with Lodgian
unless and until the Definitive Agreements are fully executed and delivered.
We believe Edgecliff is uniquely positioned to proceed with a
transaction in the best interests of Lodgian stockholders on an expeditious
basis.
The schedules and exhibits attached to this letter are
intended to be confidential and should not be disclosed by you to any person
(other than those of your employees and advisors who need to receive them for
appropriate consideration by you of their contents, who shall be subject to the
same confidentiality obligation) unless disclosure is required by law. In the
event Lodgian determines that disclosure is so required, we request that any
such disclosure be reviewed by Edgecliff and its advisors prior to its release.
Pursuant to the confidentiality agreement with you, we hereby
advise you that our counsel has advised us that public disclosure of this letter
is required under Section 13(d) of the Securities Exchange Act of 1934, as
amended, as soon as practicable.
<PAGE>
This proposal is open until 5:00 p.m., New York City time, on
Wednesday, December 13, 2000, and will expire at that time if not accepted. We
look forward to working with you on this proposed transaction. You may contact
any of the following to discuss this proposal:
Joseph E. Marquet Work: (859) 578-1108
(Columbia Sussex) Home: (513) 385-3343
Cell: (513) 260-5305
James M. Dubin Work: (212) 373-3026
(Paul, Weiss) Home: (914) 967-3127
Cell: (917) 952-7300
Scott L. Bok Work: (212) 408-0683
(Greenhill & Co.) Home: (212) 396-0441
Cell: (917) 941-4891
John D. Liu Work: (212) 408-0678
(Greenhill & Co.) Home: (212) 585-2142
Cell: (917) 532-3450.
Very truly yours,
/s/ William J. Yung
-------------------
William J. Yung
President
cc: Robert S. Cole
John M. Lang
Michael A. Leven
Peter R. Tyson
Richard H. Weiner
Anthony Larino
Dennis J. Block
