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This filing is made pursuant to
Rule 424(b)(3) under
the Securities Act of 1933
in connection with
Registration Nos.
333-73069 and 333-73069-01;
333-13325 and 333-13325-01;
333-22219 and 333-22219-01; and
333-47639 and 333-47639-01.
PROSPECTUS SUPPLEMENT NO. 2
DATED AUGUST 25, 2000
TO
PROSPECTUS DATED MARCH 23, 1999
OF
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND
STARWOOD HOTELS & RESORTS
27,392,875 COMMON SHARES
This prospectus supplement updates and adds to the information
contained in the prospectus described above. That prospectus relates to the
public offering, which is not being underwritten, from time to time by certain
Participating Shareholders named in the prospectus of up to a total of
27,392,875 Common Shares. We use capitalized terms in this prospectus supplement
in the same way those terms are used in the prospectus.
We have been advised by four of the original Participating
Shareholders, Firebird Consolidated Partners, L.P. ("Firebird"), Starwood
Opportunity Fund II, L.P. ("SOFI II"), Burden Direct Investment Fund I
("Burden"), and Dover Investment Company ("Dover"), that each of Firebird, SOFI
II, Burden and Dover has distributed or will distribute to that company's
investors some or all of that company's Starwood securities.
The following table discloses certain information known to us
with respect to the beneficial ownership of Common Shares by the investors in
Firebird, SOFI II, Burden and Dover, each of which investors will be a
Participating Shareholder. The number of Common Shares "beneficially owned" is
calculated for each Participating Shareholder in accordance with Rule 13d-3 of
the Exchange Act, and does not necessarily mean that the shareholder owns the
shares for any other purpose. Under Rule 13d-3, a Participating Shareholder
beneficially owns all outstanding Common Shares as to which the shareholder has
sold or shared voting power or investment power. A Participating Shareholder
also is considered to beneficially own all Common Shares that the shareholder
has the right to acquire within 60 days after August 25, 2000, through the
exercise of any stock option or though the exchange of Class A Exchangeable
Preferred Shares of the Trust ("Class A EPS"), Class B Exchangeable Preferred
Shares of the Trust ("Class B EPS" and, with Class A EPS, "Trust EPS"), Class A
RP Units and/or RP Ordinary Units of SLT Realty Limited Partnership or Class B
OP Units and/or OP Ordinary Units of SLC Operating Limited Partnership
(collectively, "Partnership Units"). Unless otherwise indicated in the
footnotes, each shareholder has sole voting and investment power (or shares
those powers with his other spouse) with respect to the shares shown as
beneficially owned.
The following table gives effect to the distributions
described above and assumes that the Participating Shareholders listed sell all
of their Common Shares offered under the prospectus. We are unable to determine
the exact number of shares that will actually be sold, and Messrs. Sternlicht,
Eilian and Grose have informed us that they have no current intent to sell any
of their Common Shares.
Except as indicated in the footnotes to the table or in the
section called "Certain Relationships with Participating Shareholders"
immediately below those footnotes, none of the Participating Shareholders listed
below has held any position or office or had a material relationship with us or
any of our affiliates within the past three years other than as a result of the
ownership of Common Shares.
The date of this Prospectus Supplement is August 25, 2000.
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<TABLE>
<CAPTION>
Number of Common Common Shares Beneficially Owned
Number of Common Shares that May Be After Offering
Name of Participating Shares Beneficially Sold Pursuant to This ---------------------------------
Shareholder Owned Prospectus Number Percent(1)
----------- ------- ------------- -------- ---------
<S> <C> <C> <C> <C>
Barry S. Sternlicht(2) 5,526,965(3) 1,117,225(4) 4,409,740 2.28%
Jonathan Eilian(5) 151,961 14,973 136,988 *
Madison F. Grose(6) 348,073(7) 142,213(8) 205,860 *
Honora Ahern(9) 57,788(10) 6,146(10) 51,642 *
John Hancock Life 21,537 21,537 0 0%
Insurance Co.
John Hancock Variable 2,393 2,393 0 0%
Life Insurance Co.
Massachusetts Mutual 81,688 4,788 76,900 *
Life Insurance Co.
Ziff Investors 1,744,349 1,720,120 24,229 *
Partnership, L.P. II
Disney Enterprises, 898,009 881,224 16,785 *
Inc.(11)
Star Investors, G.P. 425,113 411,695 13,418 *
Meridian Investment Group 82,289 82,289 0 0%
1985 Trust FBO Clate 10,649 10,313(12) 336 *
Joseph Korsant
1985 Trust FBO Justin 10,649 10,313(12) 336 *
Frederick Korsant
Jack Nash 106,064(13) 102,716(14) 3,348 *
Brainard Holdings, Inc. 59,304 57,432(15) 1,872 *
Lowell D. Kraff 2,039 823 1,216 *
Max C. Chapman 72,243 51,461 20,782 *
Alan D. Schwartz 38,239 15,438 22,801 *
</TABLE>
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<TABLE>
<CAPTION>
Number of Common Common Shares Beneficially Owned
Number of Common Shares that May Be After Offering
Name of Participating Shares Beneficially Sold Pursuant to This --------------------------------
Shareholder Owned Prospectus Number Percent(1)
----------- -------- ------------ -------- ----------
<S> <C> <C> <C> <C>
Geoffrey Boisi 9,530 9,229 301 *
Gregory Beer 5,323 5,155 168 *
Charles E. Mueller 4,026 1,096 2,930 *
James A. Kleeman 585 567 18 *
Merrick R. Kleeman 275,546 141,409 134,137 *
Steven R. Goldman 251,819 5,475 246,344 *
Jamie R. Gates 24,549 13,865 10,684 *
James G. Babb III 26,088 1,399 24,689 *
Michael Mueller 144,678 2,901 141,777 *
Eugene A. Gorab 26,725 8,416 18,309 *
Jerome C. Silvey 47,948 1,741 46,207 *
Geoffrey Beer 10,618 1,053 9,565 *
Jay Sugarman 77,893 3,079 74,814 *
John Kukral 52,309 26,623 25,686 *
Jeffrey Dishner 29,928 1,033 28,895 *
Exclusive Advisors Inc. 40,072(16) 40,072(16) 0 0%
Enivia Pte. Ltd. 40,072(16) 40,072(16) 0 0%
Marbre Services Ltd. 106,860(16) 106,860(16) 0 0%
Canfield Corporation 53,430(16) 53,430(16) 0 0%
Kids Holding Corporation 80,287(16) 80,287(16) 0 0%
William A.M. Burden & 432,854(17) 93,623(17) 339,231 *
Co., L.P.
JAW Holdings I, L.L.C. 105,570(17) 24,584(17) 89,986 *
Lambster Partners 10,937(18) 1,910 9,027 *
Limited Partnership
</TABLE>
-----------------
* Less than one percent (1%).
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(1) The percentage of shares beneficially owned is determined in accordance with
Rule 13d-3 and is based on 193,724,327 Common Shares outstanding on August 22,
2000.
(2) Mr. Sternlicht serves as Chairman and Chief Executive Officer of each of the
Corporation and the Trust, as a Director of the Corporation and as a Trustee of
the Trust.
(3) Includes 165,629 Common Shares that are held for the benefit of Mr.
Sternlicht by entities he controls. Also includes an aggregate of 213,098 Common
Shares owned by three trusts established by Mr. Sternlicht for the benefit of
family members (the "Sternlicht Trusts").
Mr. Sternlicht also has pledged 532,118 Partnership Units to The Chase
Manhattan Bank ("Chase") to secure a loan made by Chase to an entity affiliated
with Mr. Sternlicht and guaranteed by Mr. Sternlicht. If there were to be a
default by such entity under this loan, Chase might become the owner of any or
all of such Partnership Units or the underlying Common Shares and would be a
Participating Shareholder with respect to the shares acquired. In such event,
the number of shares beneficially owned by Mr. Sternlicht would decrease by the
number of shares so acquired by Chase.
(4) Includes 50,437 Common Shares offered hereby that are held of record by the
Sternlicht Trust. See note (3) above.
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(5) Mr. Eilian serves as a Director of the Corporation and a Trustee of the
Trust.
(6) Mr. Grose serves as a Director of the corporation and a Trustee of the
Trust.
(7) Includes 57,788 Common Shares owned by Honora Ahern, Mr. Grose's wife, and
65,305 Common Shares owned by a trust created by Mr. Grose (the "Grose Trust").
Mr. Grose disclaims beneficial ownership of the Common Shares owned by Ms. Ahern
and the Grose Trust.
(8) Includes 7,213 Common Shares offered hereby that are owned by the Grose
Trust. Does not include shares offered hereby that are owned by Ms. Ahern. See
notes (7) and (10) above.
(9) Ms. Ahern is the wife of Mr. Grose.
(10) Does not include shares owned directly by Mr. Grose, Ms. Ahern's husband,
nor shares owned by the Grose Trust (of which Ms. Ahern is a co-trustee).
(11) Disney Enterprises, Inc. was formerly known, and named in the March 23,
1999 Prospectus, as Montrose Corporation.
(12) The two trustees of this trust, Donna Mitchell and Dirk Edward Ziff, share
voting and investment power over all the Common Shares held by and distributed
to this trust.
(13) Includes 21,213 Common Shares offered hereby owned by the Nash Family
Partnership, LP.
(14) Includes 20,543 Common Shares offered hereby held of record by the Nash
Family Partnership, LP. See note (13) above.
(15) Robert K. Hamshaw and N. Berggruen share voting and investment power over
all the Common Shares distributed to Brainard Holdings, Inc.
(16) These shares were originally owned by Dover.
(17) These shares were originally owned by Burden. Burden is a general
partnership comprised of two partners, William A.M. Burden & Co., L.P. ("WAM"),
which is the managing general partner of Burden, and JAW Holdings I, L.L.C.
("JAW"). Jeffrey A. Weber is the
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managing member of JAW and the President of Burden Brothers Inc., which is the
general partner of WAM. Mr. Weber has sole voting power and shared investment
power over all the Starwood securities, including the distributed shares, held
by WAM and has sole voting and investment power over all the Starwood
securities, including the distributed shares, held by JAW.
(18) Neil G. Bluhm has sole voting and investment power over all the Common
Shares held by and distributed to Brainard Holdings, Inc..
------------------------------------------------------------------------------
Certain Relationships with Starwood Capital and Its Affiliates
General. Starwood Capital Group L.P. ("Starwood Capital") is a
privately held investment firm that was formed in 1993 to make (directly and
through controlled companies) various types of investments in real estate and
real estate - related interests. Barry S. Sternlicht controls and has been the
Chief Executive Officer of Starwood Capital since its formation; Madison Grose
and Jonathan Eilian are Senior Managing Directors of Starwood Capital; and James
Babb, Geoffrey Beer, Jeffrey Dishner, Merrick Kleeman, Jerome Silvey and Jay
Sugarman are, or within the past three years have been, officers or other senior
executives of Starwood Capital or its affiliates. Messrs. Sternlicht, Grose,
Eilian, Babb, Beer, Dishner, Kleeman, Silvey and Sugarman, Honora Ahern, Jamie
Gates, Steve Goldman, Eugene Gorab, John Kukral and Michael Mueller, and Burden,
Lambster Partners Limited Partnership and Ziff Investors Partnership, L.P. II
hold direct or indirect interests in Starwood Capital. In addition, all of the
Participating Shareholders listed in this Supplement No. 2 currently hold, or
within the last three years have held, interests in certain portfolio
investments of Starwood Capital, including one or more of those described below
or, in the case of John Hancock Life Insurance Co., John Hancock Variable Life
Insurance Co. and Massachusetts Mutual Life Insurance Co., interests in Firebird
alone.
Trademark License. An affiliate of Starwood Capital has
granted to us, subject to Starwood Capital's unrestricted right to use such name
and trademarks, an exclusive, non-transferable, royalty-free license to use the
"Starwood" name and trademarks in connection with the acquisition, ownership,
leasing, management, merchandising, operation and disposition of hotels
worldwide, and to use the "Starwood" name in our corporate name worldwide, in
perpetuity.
Starwood Capital Noncompete. In connection with our 1995
restructuring, Starwood Capital agreed (the "Starwood Capital Noncompete") that,
with certain exceptions, Starwood Capital and its affiliates would not compete
directly or indirectly with us within the United States and would present to us
all opportunities presented to Starwood Capital to acquire (i) fee or ground
leasehold interests or other equity interests in hotels in the United States and
(ii) debt interests in hotels in the United States where it is anticipated that
the equity will be acquired by the debt holder within one year from the
acquisition of such debt. During the term of the Starwood Capital Noncompete,
neither Starwood Capital nor any of its affiliates other than us is permitted to
acquire any such interest. The Starwood Capital Noncompete continues until no
officer, director, general partner or employee of Starwood Capital is on our
Board of Directors (subject to exceptions for certain restructurings, mergers or
other combination transactions with unaffiliated parties). With the approval in
each case of a majority of our disinterested Directors and Trustees, from time
to time we have waived the restrictions of the Starwood Capital Noncompete in
whole or in part with respect to particular acquisition opportunities in which
we had no interest.
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Portfolio Investments. An affiliate of Starwood Capital holds
an approximately 25% non-controlling interest in a golf course management
company that currently manages over 40 golf courses, including seven golf
courses that are amenities to resorts that we manage or franchise. Until March
1999, an affiliate of Starwood Capital held a 20% non-controlling equity
interest in a company that operates the timeshare component of The Regina
Resorts in Los Cabos, Cancun and Puerto Vallarta, Mexico; another affiliate of
Starwood Capital owns the common area of the Sheraton Tamarron Resort which we
manage. An affiliate of Starwood Capital has an indirect general partnership
interest in an entity that manages over 40 health clubs, including health club
and spa space in certain hotels we own, manage or franchise.
Other Management-Related Investments. A number of the
Participating Shareholders listed in this Prospectus Supplement No. 2 (including
Messrs. Sternlicht, Grose, Eilian and Kleeman) own interests in an affiliate of
Starwood Capital that owns the common area facilities and certain undeveloped
land at The Westin Innisbrook Resort. In May 1997, this affiliate entered into a
management agreement for the Innisbrook property with Westin Hotels & Resorts
Worldwide, Inc. ("Westin Worldwide"), which was then a privately held company.
When we acquired Westin Worldwide in January 1998 (see "The Westin Acquisition"
below), we acquired Westin Worldwide's rights and obligations under this
management agreement. We currently are attempting to resolve a disagreement with
the other party to the Innisbrook management agreement (that is, the company
that owns the facilities and land described above) relating to various payment
and other provisions of the management agreement.
Debt Securities. In February 1999, we purchased in the open
market for $23 million from unaffiliated third-parties debt securities of an
issuer in which an affiliate of Starwood Capital had a non-controlling equity
interest.
Aircraft Lease. In February 1998, we leased a Gulfstream III
Aircraft from Star Flight LLC, an affiliate of Starwood Capital. The term of the
lease is one year; when that year ends, the lease automatically renews for
one-year terms until either party terminates the lease upon 90 days' written
notice. The rent for the aircraft, which was set at approximately 90% of the
aircraft's fair market value (based on two estimates from unrelated third
parties), is (i) a monthly payment of 1.25% of the lessor's total costs relating
to the aircraft (approximately $123,000 at the beginning of the lease, with this
amount increasing as additional costs are incurred by the lessor), plus (ii)
$300 for each hour that the aircraft is in use.
ITT Merger. We engaged an affiliate of Starwood Capital to act
as our financial advisor in connection with our acquisition of ITT Corporation
and related transactions. Such affiliate received a fee of $10.5 million in cash
and 131,388 Common Shares plus a tax "gross-up" payment of $5 million for these
services following the closing of the ITT transaction.
Starwood Capital Reimbursement Agreement. In August 1997, an
affiliate of Starwood Capital and we agreed that until December 31, 1998, we
would reimburse that affiliate for its out-of-pocket expenses and internal costs
(including allocation of overhead) for services provided to us, other than
internal costs of such affiliate for services of its senior management, (subject
to variance from time to time as approved by our independent Directors or
Trustees, as appropriate) effective August 12, 1997. During 1998, we reimbursed
such affiliate approximately $391,000 for out-of-pocket expenses and
approximately $253,000 for internal costs in accordance with this agreement. The
engagement of a Starwood Capital affiliate to act as our financial advisor in
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connection with the ITT Merger was not subject to this reimbursement limitation.
Policies of the Starwood Board. Our Board policy provides that
any contract or transaction between us and any other company in which one or
more of our Directors, Trustees or officers are directors or officers, or have a
financial interest, must be approved or ratified by a majority of the
disinterested Directors or Trustees after the material facts as to the
relationship or interest and as to the contract or transaction are disclosed or
are known to those persons. Each of the transactions between us and Starwood
Capital (or its affiliates) described in this Supplement No. 2 was so approved.
The Westin Acquisition. In January 1998, we acquired Westin
Worldwide and certain affiliated companies (together "Westin" and this
acquisition, the "Westin Acquisition"). Prior to the Westin Acquisition,
Starwood Capital and certain of its affiliates had interests in Westin, as
follows:
(i) More than 99% of the outstanding ownership interests in
Westin Worldwide were owned by W&S LLC. Woodstar Investor Partnership
("Woodstar") held an approximately 50% voting interest (and approximately 35%
interest in profits) in W&S LLC. Woodstar was in turn owned approximately 4% by
SOFI II and approximately 96% by Marswood Investors, L.P. ("Marswood"), each of
which was controlled by Starwood Capital.
(ii) Each of the Participating Shareholders listed in this
Supplement No. 2 (or in the case of Participating Shareholders who acquired
their Starwood securities from Burden or Dover, their predecessors in interest)
other than John Hancock Variable Life Insurance Co., John Hancock Variable Life
Insurance Co. and Massachusetts Mutual Life Insurance Co. (the "Insurance
Company Investors") had a direct or indirect ownership interest in SOFI II
and/or Marswood.
In connection with the Westin Acquisition, all of the
outstanding shares of Westin Worldwide were canceled and the members of W&S LLC,
including Woodstar, received their proportionate shares (which approximated
their respective profit interests in W&S LLC) of the Class A EPS and Class B EPS
shares and the Partnership Units that were issued in connection with the Westin
Acquisition.
Firebird. Each of the Insurance Company Investors is a
limited partner of Firebird; the general partner of Firebird is SOFI II
Firebird was formed in 1994 to acquire some of our the outstanding debt; this
debt was subsequently exchanged for Partnership Units.
Non-Starwood Investments. A number of the Participating
Shareholders listed in this Supplement No. 2 currently have, or within the last
three years had, direct or indirect interests in one or more affiliates of
Starwood Capital (or portfolio investments of these affiliates) that made
real-estate investments that are wholly unrelated to us.
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