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(Commission File Number): 001-09319
001-09320
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
-------------------------
Date of Report (Date of earliest event reported): November 9, 1998
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<S> <C>
PATRIOT AMERICAN HOSPITALITY, INC. WYNDHAM INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter) (Exact Name of Registrant as Specified in its Charter)
DELAWARE DELAWARE
(State or Other Jurisdiction of (State or Other Jurisdiction of
Incorporation or Organization) Incorporation or Organization)
94-0358820 94-2878485
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1950 Stemmons Freeway 1950 Stemmons Freeway
Suite 6001 Suite 6001
Dallas, Texas 75207 Dallas, Texas 75207
(214) 863-1000 (214) 863-1000
(Address, Including Zip Code, and Telephone (Address, Including Zip Code, and Telephone
Number, Including Area Code, of Number, Including Area Code, of
Registrant's Principal Executive Offices) Registrant's Principal Executive Offices)
------------------------------ ------------------------------
PAUL A. NUSSBAUM JAMES D. CARREKER
Chairman of the Board and Chief Executive Officer Chairman of the Board and Chief Executive Officer
Patriot American Hospitality, Inc. Wyndham International, Inc.
1950 Stemmons Freeway 1950 Stemmons Freeway
Suite 6001 Suite 6001
Dallas, Texas 75207 Dallas, Texas 75207
(214) 863-1000 (214) 863-1000
(Name, Address, Including Zip Code, and (Name, Address, Including Zip Code, and
Telephone Number, Including Area Code and Telephone Number, Including Area Code,
of Agent for Service) of Agent for Service)
</TABLE>
--------------------
copies to:
GILBERT G. MENNA, P.C.
KATHRYN I. MURTAGH, ESQ.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
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Item 5. Other Events
FORWARD-LOOKING STATEMENTS. Any statements in this Form 8-K that are
not strictly historical are forward-looking statements within the meanings of
the safe-harbor provision of the Private Securities Litigation Reform Act.
These statements include, among other things, any statements regarding
intent, expectations or belief with respect to (i) availability or terms of
additional sources of capital for the companies, (ii) the companies' ability
to refinance, extend or amend the terms of existing indebtedness, (iii) the
companies' ability to reach settlement on the forward equity contracts, and
(iv) the companies' ability to restore damage sustained at certain of its
properties due to Hurricane Georges. Stockholders are cautioned that, while
forward-looking statements reflect the companies' good faith beliefs, they
are not guarantees of future performance and involve known and unknown risks
and uncertainties, and that actual results may differ materially from those
in the forward-looking statements as a result of various factors. Certain
factors that could cause such differences include, without limitation, the
availability of equity or debt financing at terms and conditions favorable to
the companies, the willingness of the companies' existing lenders to
refinance, extend or amend the terms of existing indebtedness, the
willingness of the counterparties to the companies' forward equity contracts
to enter into settlements regarding those agreements, and other factors
detailed in this Current Report on Form 8-K, in the companies' Quarterly
Report on Form 10-Q for period ended June 30, 1998, and in the companies'
Registration Statements on Form S-3 (File Nos. 333-58705 and 333-65339).
COMBINED LIQUIDITY AND CAPITAL RESOURCES. In June 1998, Patriot
American Hospitality, Inc. ("Patriot") entered into a revised credit facility
with The Chase Manhattan Bank and Chase Securities, Inc. and Paine Webber
Real Estate Securities, Inc. providing a $900 million Revolving Credit
Facility and an aggregate amount of $1.8 billion of Term Loans. Currently,
Patriot has $12.2 million of available funds under the Revolving Credit
Facility. Additionally, the Term Loans have maturities of January 31, 1999
($350 million); March 31, 1999 ($400 million); and March 31, 2000 ($450
million). Patriot and Wyndham International, Inc. ("Wyndham," and together
with Patriot, the "Companies") also have approximately $205 million of other
debt which is currently due on or before December 31, 1998.
The Companies are evaluating possible means of improving liquidity
through refinancing or extending the maturity of existing indebtedness,
issuing additional equity securities, and divesting certain non-core,
non-proprietarily branded hotel assets. The Companies have also
re-strategized capital expenditures and development programs, are improving
operating efficiencies, and are in discussions to seek possible amendments to
the Revolving Credit Facility.
No assurances can be made regarding the availability or terms of
additional sources of capital for the Companies in the future and no
assurances can be given regarding the Companies' ability to successfully
refinance or extend the maturity of existing indebtedness. No assurances can
be given regarding the Companies' success in securing any amendments to the
Revolving Credit Facility. Additionally, in the absence of such amendments,
no assurances can be given that the Companies will continue to meet the
reduced EBITDA coverage ratio requirements which go into effect in December
under the Revolving Credit Facility. If the Companies are unable to secure
additional sources of financing in the future, are unable to successfully
refinance existing indebtedness, or are unable to obtain amendments to
existing covenants under the Revolving Credit Facility, no assurance can be
made that the Companies will be able to meet their financial obligations as
they come due or that the lack of future financing sources would not have a
material adverse effect on the Companies' financial condition and results of
operations.
FORWARD CONTRACTS. The Companies are parties to forward equity
transactions with three counterparties involving the sale of an aggregate of
13.3 million shares (the "Initial Shares") of paired common stock of the
Companies with related purchase price adjustment mechanisms (the "Forward
Contracts"). The Forward Contracts require the Companies from time to time to
issue additional shares of paired common stock or pay cash based upon the
difference between the respective forward prices and the market price of the
Companies' paired common stock. The Companies' aggregate exposure under the
Forward Contracts as of November 1, 1998 was approximately $313.6 million
(assuming the Forward Contracts are settled in cash). The Companies have
registered the sale of up to 44,000,000 shares of paired common stock in
connection with the Forward Contracts; however, to date no sales have been
made under such registration statements. There can be no assurance that such
registration statements will remain effective or that the Companies will not
be required to register additional shares for delivery under the Forward
Contracts.
Settlement under one or more of the Forward Contracts could have
adverse effects on the Companies' liquidity or dilutive effects on the
Companies' capital stock. Delivery of cash would adversely affect the
Companies' liquidity, and delivery of shares would have dilutive effects on
the Companies' capital stock. Moreover, settlement (whether by reason of a
drop in the market price of the paired shares or otherwise) may force the
Companies to issue paired shares at a depressed price, which may heighten the
dilutive effects on the Companies' capital stock. The dilutive effect of a
stock settlement and the adverse liquidity effect of a cash settlement
increase significantly as the market price of the paired shares declines
below the applicable forward price or reference price.
2
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Under each Forward Contract, at settlement the Companies must
deliver to the counterparty paired shares or, under certain circumstances,
cash, with respect to the number of shares of paired common stock initially
sold to such counterparty, based upon the difference between the applicable
forward price and the market price of the paired common stock at the time of
settlement. The forward price is determined by reference to the purchase
price of the Initial Shares plus an imputed return based upon LIBOR plus an
applicable spread between 140 and 150 basis points. The Initial Shares were
issued at the following share prices: $24.8625 (4,900,000 shares, with
NationsBanc Capital Corporation ("Nations") as counterparty); $27.01125
(5,150,000 shares, with PaineWebber Financial Products, Inc. ("PaineWebber")
as counterparty); and $28.8125 (3,250,000 shares, with UBS AG, London Branch
("UBS") as counterparty).
The market price of the paired common stock has dropped
significantly below the respective forward prices under the Forward
Contracts. As a result, the Companies to date have made cash payments
totaling approximately $54.3 million and have delivered an aggregate of
25,258,163 additional shares of paired common stock as collateral to the
counterparties.
The Companies' forward contracts with PaineWebber and UBS,
representing a total obligation of approximately $192 million, reached
maturity on October 15, 1998 without final settlement by the Companies. UBS
has asserted that the Companies are in default under the terms of its forward
contract as the result of the Companies not delivering certain cash
collateral and not mailing a final settlement of the contract in cash
although the Companies have disputed this. In addition, because the market
price of the paired common stock is below applicable unwind thresholds under
the forward contract with Nations (which represents an obligation of
approximately $128 million), Nations has alleged the right to require a
complete settlement of its transaction.
The Companies are currently in discussions regarding possible
resolutions of the respective Forward Contracts to provide the Companies with
the opportunity to resolve the Forward Contracts through payments of cash or
other forms of consideration, and thus to avoid the need to settle in shares.
There can be no assurance that such discussions will be successful. Moreover,
any such resolutions may require the consent of the lenders under the
Companies' credit facility. No assurances can be given that any such consent,
if required and sought, would be obtained.
TREASURY RATE LOCK AGREEMENTS. The Companies previously entered
into three treasury interest rate lock agreements to protect the Companies
against the possibility of rising interest rates in connection with an
anticipated $850 million corporate bond offering originally scheduled for the
fourth quarter of 1998. However, given current conditions in the debt capital
markets, the Companies have decided to delay this debt issuance indefinitely.
Under the rate lock agreements, the Companies receive or make payments based
on the differential between specified interest rates, 6.06%, 6.07% and 5.62%
respectively, and the actual
3
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10-year U.S. Treasury interest rate on a notional principal amount of $525
million. To date, the Companies have settled the entire $525 million in
treasury interest rate locks at rates between 4.59% and 4.67% resulting in a
$49.2 million one-time charge to earnings recorded in the third quarter of
1998.
HURRICANE GEORGES. In September 1998, Hurricane Georges hit the
island of Puerto Rico and the Gulf coast of the United States, including
Florida and Louisiana. Patriot owns three properties on Puerto Rico, the El
Conquistador Resort and Country Club, the El San Juan Hotel and Casino and
the Condado Plaza Hotel. In addition to these properties, Wyndham manages two
properties on the island, the Old San Juan Hotel and Casino and the Wyndham
Palmas del Mar.
The Companies' damage assessment teams, working with the
underwriters for the Companies' insurance providers, have inspected each of
the Companies' owned or managed properties on Puerto Rico and while none of
the properties were destroyed, each sustained damages requiring repair and
construction. Furthermore, each of the Companies' owned or managed properties
sustained damages to the surrounding grounds and landscaping which are in the
process of being repaired. To date, the El San Juan, the Old San Juan, the El
Conquistador, and the Palmas del Mar have re-opened for business. It is
currently anticipated that the remainder of the closed rooms at the Condado
Plaza and the suites at Las Casitas and certain other ancillary facilities at
the El Conquistador will re-open in late November and that the stand alone
ballroom at Palmas del Mar will re-open in mid-January. In addition, the
grand opening of the Golden Door Spa at the El Conquistador which was
scheduled for mid-October will be delayed until mid-December. The Companies'
estimated re-opening dates are subject to the availability of construction
materials and labor. No assurances can be given that the Companies' owned or
managed properties on Puerto Rico will be operating at full capacity by these
estimated dates.
All of the Companies' owned or managed properties on Puerto Rico are
insured with both comprehensive property damage and business interruption
insurance, subject to certain deductibles. The Companies have hired a
consultant to assess their business interruption claims and are currently
negotiating with their insurance carriers regarding coverage for the losses
sustained at the Puerto Rico properties. While the Companies currently
believe that substantially all of the damages sustained at their Puerto Rico
properties will be covered by insurance, no assurances can be made regarding
the timing or amount of the actual payments that will ultimately be received
by the Companies under these policies.
EARNINGS PER PAIRED SHARE. On November 9, 1998, the Companies
issued a press release discussing earnings for the third quarter of 1998.
Such press release is filed herewith as Exhibit 99.15 and is deemed
incorporated herein in its entirety.
4
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Item 7. Financial Statements and Exhibits
Exhibits.
99.1 Purchase Agreement, dated as of April 6, 1998, by and among
Patriot American Hospitality, Inc., Wyndham International,
Inc., PaineWebber Incorporated and PaineWebber Financial
Products, Inc. (incorporated by reference to Exhibit 99.1
to the Companies' joint registration statement on Form S-3,
Nos. 333-58705 and 333-58705-01).
99.2 Purchase Price Adjustment Mechanism Agreement, dated as of
April 6, 1998, by and among Patriot American Hospitality, Inc.,
Wyndham International, Inc., PaineWebber Incorporated and
PaineWebber Financial Products, Inc. (incorporated by reference
to Exhibit 10.3 to the Companies' Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998) (Nos. 001-09319 and 001-
09320).
99.3 Letter Agreement, dated July 30, 1998, by and among Patriot
American Hospitality, Inc., Wyndham International, Inc. and
PaineWebber Financial Products, Inc. (incorporated by reference
to Exhibit 99.3 to the Companies' joint registration statement
on Form S-3, Nos. 333-58705 and 333-58705-01).
99.4 Letter Agreement, dated August 14, 1998, by and among Patriot
American Hospitality, Inc., Wyndham International, Inc. and
PaineWebber Financial Products, Inc. (incorporated by reference
to Exhibit 10.4 to the Companies' Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998) (Nos. 001-09319 and 001-
09320).
99.5 Purchase Agreement, dated as of February 26, 1998, by and among
Patriot American Hospitality, Inc., Wyndham International, Inc.
and NMS Services, Inc. (incorporated by reference to
Exhibit 10.5 to the Companies' Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998) (Nos. 001-09319 and 001-
09320).
99.6 Purchase Price Adjustment Mechanism, dated as of February 26,
1998, by and among Patriot American Hospitality, Inc., Wyndham
International, Inc. and NMS Services, Inc. (incorporated by
reference to Exhibit 10.6 to the Companies' Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998) (Nos. 001-09319
and 001-09320).
99.7 Amendment to Agreements, dated as of August 14, 1998, by and
among Patriot American Hospitality, Inc., Wyndham International,
Inc. and NationsBanc Mortgage Capital Corporation (incorporated
by reference to Exhibit 10.7 to the Companies' Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998)
(Nos. 001-09319 and 001-09320).
99.8 Purchase Agreement, dated December 31, 1997, by and among
Patriot American Hospitality, Inc., Patriot American Hospitality
Operating Company, UBS Limited and Union Bank of Switzerland
(incorporated by reference to Exhibit 10.8 to the Companies'
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998) (Nos. 001-09319 and 001-09320).
99.9 Forward Stock Contract, dated as of December 31, 1997, by and
among Patriot American Hospitality, Inc., Patriot American
Hospitality Operating Company, and Union Bank of Switzerland
(incorporated by reference to Exhibit 10.9 to the Companies'
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998) (Nos. 001-09319 and 001-09320).
99.10 Letter Agreement, dated as of August 14, 1998, by and among
Patriot American Hospitality, Inc., Wyndham International,
Inc. and UBS AG, London Branch (incorporated by reference to
Exhibit 10.10 to the Companies' Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998) (Nos. 001-09319 and
001-09320).
99.11 Letter Agreement, dated September 11, 1998, by and among
Patriot American Hospitality, Inc., Wyndham International,
Inc. and UBS AG, London Branch (incorporated by reference to
Exhibit 99.11 to the Companies' joint registration statement on
Form S-3, Nos. 333-58705 and 333-58705-01).
99.12 Letter, dated September 15, 1998, from PaineWebber Financial
Products, Inc. to Patriot American Hospitality, Inc. and
Wyndham International, Inc. (incorporated by reference to
Exhibit 99.12 to the Companies' joint registration statement on
Form S-3, Nos. 333-58705 and 333-58705-01).
99.13 Letter Agreement, dated September 30, 1998, by and among
Patriot American Hospitality, Inc., Wyndham International,
Inc. and PaineWebber Financial Products, Inc. (incorporated by
reference to the same numbered exhibit to the Companies' joint
registration statement on Form S-3, Nos. 333-65339 and
333-65339-01).
99.14* Debt Maturity Schedule of the Companies as of November 5, 1998.
99.15+ Press Release by the Companies
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* filed herewith
+ to be filed by amendment
5
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be filed on its behalf by the
undersigned thereunto duly authorized.
PATRIOT AMERICAN HOSPITALITY, INC.
Dated: November 9, 1998 By: /s/ Lawrence S. Jones
-------------------------------------
Name: Lawrence S. Jones
Title: Executive Vice President and Treasurer
WYNDHAM INTERNATIONAL, INC.
By: /s/ Lawrence S. Jones
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Name: Lawrence S. Jones
Title: Executive Vice President and Treasurer
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DEBT SCHEDULE
11/5/98
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BALANCE
DEBT 05-NOV MATURITY RATE
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NationsBank 12,875,000 11/18/98 Libor + 2.75
CHC Loans 103,000,000 12/15/98 Libor + 2.25
Emerald Plaza 35,000,000 12/31/98 Libor + 1.9
Casa Marina 30,566,000 12/31/98 Libor + 2.0
Harrisburg 19,838,875 12/31/98 Libor + 2.25
Arcadian Feb 98 Facility 850,000 12/31/98 SLibor(3) + 1.75
Arcadian Overdraft Facility 3,400,000 Reviewed Annually UK Base + 1.25
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Condado 55,000,000 1/29/99 Libor + 2.25
El Conquistador 90,000,000 1/29/99 Libor + 2.25
Tranche I 350,000,000 1/31/99 Libor + 2.25
Arcadian Feb 98 Facility 5,950,000 2/31/99 SLibor + 1.75
Tranche II 400,000,000 3/31/99 Libor + 2.25
Unsecured Recourse Loan 160,000,000 4/15/99 Libor + 2.25
Golden Door Spa 2,000,000 6/1/99 AFR
Chase Promissory Note 49,255,000 11/5/99 Libor + 2.25
Syracuse 9,774,066 12/1/99 8.0%
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Tranche III 450,000,000 3/31/00 Libor + 2.25
Golden Door Spa 2,000,000 6/1/00 AFR
Revolver(1) 887,758,199 7/18/00 Libor + 2.25
Arcadian Additional Loan 6,800,000 7/31/00 SLibor + 1.75
Santa Maria 4,000,000 8/27/00 Libor + .5
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Golden Door Spa 2,000,000 6/1/01 AFR
Reach 9,347,583 7/1/01 8.0%
Wyndham PeachTree 38,000,000 10/23/01 Libor + 3.50
Arcadian Term Loan 29,750,000 11/01/01 Libor + 1.25
Arcadian Revolving Credit
Facility 30,600,000 11/01/01 Libor + 1.25
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St. Louis 8,276,404 5/1/02 9.6%
Pittsburgh 14,462,744 6/1/02 9.0%
Meadows Del Mar 1,172,016 6/1/02 Libor + 3.56
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Tranche B 599,500,000 3/31/03 Libor + 2.5
El San Juan 42,100,000 8/31/03 Libor + 2.0
Malmaison Senior Debt 25,956,300 12/1/03 Libor + 2.5
Leeds Site Debt 2,260,710 12/1/03 Libor + 2.5
Bourbon Orleans 13,500,000 1/1/04 Libor + 2.0
Ventana Canyon 28,488,769 3/1/05 6.50%
Radisson Beachwood 5,064,553 5/31/05 9.75%
Clubhouse 22,826,894 10/1/05 8.7%
Reach 14,990,400 10/1/05 9.1%
El Conquistador 25,000,000 2/7/06 Libor + .9
Wyndham Senior Sub(2) 1,510,000 5/15/06 10.5%
Gressy Term Loan 2,448,000 4/1/07 TBB + 2.5
Met Life Portfolio 84,058,200 10/1/07 8.08%
Embassy Suites Chicago 41,671,000 10/16/08 8.25%
Greenspoint 41,372,000 10/16/08 8.25%
Great Eastern Tranche A 25,500,000 10/15/10 9.00%
Great Eastern Tranche B 13,600,000 10/15/10 Libor + 1.75
Saletta Term Loan 8,639,000 7/1/14 Ribor + 1.75
Buena Vista 47,223,119 12/1/15 9.11%
Vinings 9,675,000 2/1/23 6.15%
Summerfield 338,200 On Demand Prime
Capital Leases 31,450,256
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TOTAL 3,898,848,288
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(1) LOCs of Approximately $24M exist which count against credit availability
(2) Unable to locate payee in order to tender notes
(3) SLibor - Sterling Libor
