[Lodgian, Inc. Letterhead]
September 1, 2000
Dear Fellow Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders of
Lodgian, Inc. which will be held on Thursday, October 12, 2000, commencing at
9:30 a.m. local time, at The Resource Forum, 3340 Peachtree Road N.E., Atlanta,
Georgia 30326.
The enclosed proxy statement and WHITE proxy card are being sent to you by your
Board of Directors in connection with the Annual Meeting. At the Annual Meeting
you will be asked to consider and vote upon the election of two Class II
directors to serve for three-year terms and to consider and act upon such other
business as may properly come before the Annual Meeting or any adjournment
thereof. Your Board recommends that you vote to re-elect John M. Lang and
Michael A. Leven. Both Mr. Lang and Mr. Leven are independent directors who have
extensive experience in the hospitality industry.
CAUTION
You may receive a letter and proxy statement from William J. Yung and his
affiliates. The Yung Group is threatening a disruptive and costly proxy contest
over the election of directors at the Annual Meeting. The Yung Group is seeking
to elect Mr. Yung and his handpicked nominees (including one of his attorneys)
to your Board, we believe, for the purpose of forcing an immediate sale of
Lodgian to the Yung Group for an inadequate price, or failing that, to force
Lodgian to repurchase the shares held by the Yung Group - and only the Yung
Group - at a substantial premium to market price.
DO NOT VOTE IN FAVOR OF MR. YUNG'S NOMINEES!
YOUR BOARD IS ACTIVELY PURSUING A STRATEGY DESIGNED TO MAXIMIZE
VALUE FOR ALL LODGIAN STOCKHOLDERS.
Your Board, with the assistance of Morgan Stanley Dean Witter, a prominent,
nationally-recognized investment banking firm, has conducted a detailed
financial analysis of Lodgian and is currently evaluating all strategic
alternatives, including a possible sale of Lodgian. At the same time, we are
pursuing an asset sale and debt reduction strategy and have identified certain
of our assets as potential sale candidates. However, we will not proceed with
any transaction that is not in the best interests of all Lodgian stockholders.
OUR PURPOSE IS TO MAXIMIZE VALUE FOR ALL STOCKHOLDERS, AND NOT JUST FOR MR.
YUNG.
The interests of all Lodgian stockholders will be best served if the Company's
director nominees are re-elected and given the opportunity to continue to assist
in the Board's execution of its carefully designed strategy to maximize
stockholder value. We ask you to support your Board and management by returning
the enclosed WHITE proxy card today and discarding any proxy card sent to you by
the Yung Group.
DO NOT BE MISLED BY MR. YUNG!
As you review our proxy statement and are deciding how to vote your shares,
consider the following:
YOUR BOARD IS FOCUSED ON MAXIMIZING THE VALUE OF YOUR SHARES. Your Board is
actively pursuing a strategy designed to maximize the value of the Company for
all of its stockholders and has hired Morgan Stanley Dean Witter to assist in
this process. Despite what Mr. Yung might tell you, your Board is not opposed to
a sale of Lodgian - for the right price. As we continue to explore all possible
transactions, we will pursue a strategy of increasing the profitability of the
Company and maximizing stockholder value by improving our capital structure,
aggressively reducing debt, improving our hotel operations and product quality,
and disposing of underperforming assets.
THE YUNG GROUP HAS FAILED TO DISCLOSE ITS TRUE PURPOSE AND INTENT. The Yung
Group states that its goal is to maximize stockholder value by forcing an
immediate sale of the Company. It also states that because there have been no
other competing bidders for Lodgian - which is not true - the Yung Group will
"offer the highest value available to the Company's stockholders." WHY IS THE
YUNG GROUP INCITING A PROXY FIGHT INSTEAD OF APPROACHING THE COMPANY AND ITS
STOCKHOLDERS WITH A BONA FIDE OFFER AT AN ATTRACTIVE PRICE? WHY DOESN'T MR. YUNG
SIMPLY MAKE A TENDER OFFER FOR YOUR SHARES? We believe the answer is clear - the
Yung Group is not for real! Mr. Yung is trying to secure a bargain for himself
at the expense of Lodgian's public stockholders. We believe Mr. Yung is trying
to deprive you, our stockholders, of the opportunity to share in the value that
is inherent in the Company's business. Unless and until Mr. Yung submits a real,
unconditional, firm and fair offer for the Company and explains how he would
finance such a transaction, we do not believe the Yung Group is for real, let
alone acting in your best interest.
In addition, you should be aware that Mr. Yung recently made a secret
"greenmail" proposal to the Company. Mr. Yung's proposal was for Lodgian to sell
certain hotels to the Yung Group and use part of the proceeds from the sale to
purchase his outstanding Lodgian stock - and only his stock - at a substantial
premium over market. IN SHORT MR. YUNG IS PREPARED TO SELL YOU OUT IF THE PRICE
IS RIGHT FOR HIM PERSONALLY!
ASK YOURSELF IF WILLIAM YUNG IS LOOKING OUT
FOR YOUR BEST INTEREST - OR HIS OWN?
Because we believe that Mr. Yung and his group have hidden their true purpose
and intent from you, our stockholders, we have filed a complaint in the United
States District Court for the Southern District of New York asserting that the
Yung Group has violated Section 13 of the Securities and Exchange Act of 1934 by
making false and misleading statements in its federally-mandated filings with
the Securities and Exchange Commission on Schedule 13D.
MR. YUNG HAS MISCHARACTERIZED HIS DEALINGS WITH LODGIAN. The Yung Group claims
that Lodgian has dismissed the Yung Group's "offers" and has not given serious
consideration to any transactions with the Yung Group. This is simply not true.
The Yung Group has never approached the Company with a bona fide proposal to
effect any sale or other business combination transaction. During the Company's
discussions with the Yung Group's representatives the Yung Group did not make
any firm or fair proposals for a business combination - it only requested
confidential, non-public information concerning the Company (while refusing to
sign a confidentiality agreement that would protect your Company's proprietary
information). Moreover, the Yung Group has not offered any strategic plan or
ideas to improve the performance of your company. Your Board was obviously very
reluctant to share confidential information with a direct competitor, especially
in light of the Yung Group's refusal to sign a customary confidentiality
agreement.
MR. YUNG AND HIS AFFILIATES ARE DIRECT COMPETITORS OF LODGIAN, AND, WE BELIEVE,
ARE MOTIVATED SOLELY BY THEIR OWN SELF-INTEREST. The Yung Group depicts itself
as an unbiased, neutral stockholder interested only in maximizing the value of
its fellow stockholders' investments. What the Yung Group fails to fully and
clearly disclose is that it is a DIRECT COMPETITOR of the Company. Mr. Yung owns
Columbia Sussex Corporation, which competes directly with Lodgian for
properties, sites, customers and employees. A vote for the Yung Group's nominees
could result in two employees of a direct competitor of your Company serving on
your Board.
WE BELIEVE ALL OF THE ABOVE HIGHLIGHT THE YUNG GROUP'S SELF INTEREST AND LACK OF
CONCERN FOR LODGIAN STOCKHOLDERS.
WE BELIEVE YOUR CHOICE IS CLEAR.
o It is vital that Lodgian continue to have in place a Board that will act in
the best interests of all of Lodgian stockholders and not have members who
are unduly influenced by their own selfish interests.
o Your Board believes that its nominees, and not Mr. Yung and his hand-picked
nominees, are in the best position to help Lodgian evaluate its strategic
alternatives, decide on the courses of action that are in the best interests
of all of the stockholders and to implement those decisions.
WE URGE YOU NOT TO ALLOW MR. YUNG'S SELF-INTERESTED TACTICS TO DISRUPT OR
DICTATE THE FUTURE OF LODGIAN AND YOUR INVESTMENT IN YOUR COMPANY. YOUR BOARD
RECOMMENDS THAT YOU VOTE FOR LODGIAN'S SLATE OF CANDIDATES FOR THE BOARD OF
DIRECTORS.
We deeply regret that a costly and disruptive proxy contest is being forced upon
you at a time when Lodgian's collective energies should be devoted toward
maximizing value for all Lodgian stockholders. We believe your best interests
will be served by electing the nominees of your Board of Directors and allowing
your Board to continue the process of finding the best way to maximize
stockholder value. PLEASE SIGN, DATE AND MAIL THE ENCLOSED WHITE PROXY CARD
TODAY. PLEASE DISCARD ANY PROXY CARD SENT TO YOU BY THE YUNG GROUP.
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
(800) 769-6414.
On behalf of the associates of Lodgian, we would like to express our
appreciation for your continued support.
Sincerely,
ROBERT S. COLE JOSEPH C. CALABRO
CHIEF EXECUTIVE OFFICER CHAIRMAN OF THE BOARD
OF DIRECTORS
***** IMPORTANT*****
This letter contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. As a result of a number of
factors, including factors that Lodgian, Inc. may not currently foresee,
Lodgian, Inc.'s results may differ materially from those set forth in the
forward-looking statements. Please refer to Lodgian, Inc.'s filings with the
Securities and Exchange Commission for a more complete discussion of these
factors.
ATTENTION LODGIAN STOCKHOLDERS
After reading the enclosed materials we urge you to show your support for your
company and do the following:
1. Sign and return the enclosed WHITE proxy card TODAY.
2. Do not return the Green proxy card sent to you by the Yung
Group.
3. If your shares of Lodgian common stock are held in your own
name, please sign, date and return the enclosed WHITE proxy
card today in the postage-paid envelope provided.
4. If your shares of Lodgian common stock are held in
"Street-Name," only your bank or broker can execute a proxy on
your behalf, and only upon receipt of your specific
instructions. Please sign, date and return the enclosed WHITE
proxy instruction form to your bank or broker today in the
postage paid envelope provided. To ensure that your vote is
effective, please contact the persons responsible for your
account and instruct them to execute a WHITE proxy card on
your behalf.
If you have any questions or require any assistance in executing or delivering
your proxy, please write or call:
D.F. King & Co., Inc.
77 Water Street
New York, NY 10005
Call Toll-Free: (800) 769-6414
Your attendance at the Annual Meeting and your vote, either by proxy or in
person, is very important. Please vote today. It is important that you vote, no
matter how many shares you own.
o IF YOU HOLD YOUR SHARES THROUGH A BROKERAGE FIRM, your broker cannot vote
your shares unless he or she receives your specific instructions. Please
sign, date and return the WHITE PROXY CARD in the envelope provided by your
broker.
o IF YOU ARE SIGNING AS A CUSTODIAN, TRUSTEE, PARTNER, OFFICER, EXECUTOR OR
ATTORNEY, please write in such title next to your signature.
