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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 13, 1999
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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WYNDHAM INTERNATIONAL, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Organization)
7948
(Primary Standard Industrial Classification Code)
94-2872485
(I.R.S. Employer Identification No.)
1950 STEMMONS FREEWAY
SUITE 6001
DALLAS, TX 75207
(214) 863-1000
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Office)
JAMES D. CARREKER
CHIEF EXECUTIVE OFFICER
WYNDHAM INTERNATIONAL, INC.
1950 STEMMONS FREEWAY
SUITE 6001
DALLAS, TX 75207
(214) 863-1000
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service)
--------------------------
COPIES TO:
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GILBERT G. MENNA, P.C. RANDALL H. DOUD, ESQ.
KATHRYN I. MURTAGH, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
GOODWIN, PROCTER & HOAR LLP 919 THIRD AVENUE
EXCHANGE PLACE NEW YORK, NY 10022
BOSTON, MA 02109 (212) 735-3000
(617) 570-1000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
--------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 16,541,706 shares $4.44 $73,403,834 $20,407
</TABLE>
Fee calculated in accordance with Rule 457 of the Securities Act of 1933, as
amended. The proposed maximum aggregate offering price has been determined by
multiplying $4.44 (the average of the high and low trading prices of the paired
shares of common stock of Wyndham International, Inc. and Patriot American
Hospitality, Inc. on April 8, 1999) by 16,547,706.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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THE INFORMATION CONTAINED IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT RELATING TO
THIS EXCHANGE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 13, 1999
PRELIMINARY PROSPECTUS
OFFER TO EXCHANGE COMMON STOCK OF WYNDHAM INTERNATIONAL, INC. FOR ALL
LIMITED PARTNERSHIP INTERESTS IN
WYNDHAM INTERNATIONAL OPERATING PARTNERSHIP, L.P. AND
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P.
WYNDHAM INTERNATIONAL, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON JUNE [ ], 1999, UNLESS EXTENDED.
The exchange offer is being made in connection with the proposed issuance
for cash of $1 billion of a new series of our preferred stock to investors
including affiliates of each of Apollo Real Estate Management III, L.P., Apollo
Management IV, L.P., Thomas H. Lee Equity Fund IV, L.P., Beacon Capital
Partners, L.P. and Rosen Consulting Group. The proceeds of the $1 billion equity
investment will be used to settle our existing forward equity contracts, retire
existing debt and provide additional working and growth capital.
- EXCHANGE RATIOS. We are offering to exchange:
-- One share of our registered common stock for each class A and class
C preferred unit of limited partnership interest of the Wyndham
partnership;
-- One share of our registered common stock for each pair of units
consisting of one class B preferred unit of limited partnership
interest of the Wyndham partnership and one preferred unit of
limited partnership interest of the Patriot partnership;
-- .05 shares of our registered common stock for each common unit of
limited partnership interest of the Wyndham partnership; and
-- .95 shares of our registered common stock for each common unit of
limited partnership interest of the Patriot partnership.
- EXPIRATION DATE. The exchange offer will expire at 5:00 p.m., New York
City time, on June [ ], 1999, unless we extend it.
- TAX CONSEQUENCES. The exchange of your preferred units and common units of
limited partnership interest of the Wyndham partnership and the Patriot
partnership for our common stock in this exchange offer will generally
qualify for tax-deferred treatment under Section 351 of the Internal
Revenue Code. Nonetheless, some holders of units may recognize taxable
gain if they exchange their units, and the amount of gain may be
significant.
- WITHDRAWAL RIGHTS. You may withdraw your tendered units of limited
partnership interest from the exchange offer at any time before it
expires.
- CONDITIONS. We may postpone, terminate or amend the exchange offer if
limited partners, other than Wyndham International, Inc. and PAH LP, Inc.,
holding more than 1.7 million of the outstanding units of limited
partnership interest in each of the Wyndham partnership and the Patriot
partnership do not tender. If the requisite number of units of limited
partnership interest are not exchanged, the investors will not be required
to close the $1 billion equity investment in Wyndham. In addition, holders
of units of the Wyndham partnership and the Patriot partnership who do not
exchange their units for shares will continue to be subject to the
limitations imposed by the limited partnership agreements, including
restrictions on transfer.
- USE OF PROCEEDS. We will not receive any cash proceeds from the exchange
offer.
The boards of directors of each of Wyndham International, Inc. and Patriot
American Hospitality, Inc. recommend that you exchange your units of limited
partnership interest in the Wyndham partnership and the Patriot partnership in
the exchange offer.
Our common stock is currently paired with the common stock of Patriot
American Hospitality, Inc. The paired common stock is listed for trading on the
New York Stock Exchange under the symbol "PAH." On April 12, 1999, the last
reported sale price of the paired common stock was $4 9/16 per paired share.
CONSIDER CAREFULLY THE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK TO BE DISTRIBUTED IN
THE EXCHANGE OFFER OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1999
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TABLE OF CONTENTS
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Where You May Find More Information........................................................................ iii
Summary.................................................................................................... 1
Overview of Wyndham and Patriot.......................................................................... 1
The proposed $1 billion investment and the restructuring of Wyndham and Patriot.......................... 1
The Exchange Offer....................................................................................... 2
Risk Factors............................................................................................... 5
If you do not exchange your units, you will continue to be subject to restrictions on redemption and
transfer contained in the limited partnership agreements............................................... 5
You may recognize taxable gain if you exchange your units for our common stock........................... 5
If Wyndham does not complete the $1 billion equity investment, there may be negative consequences........ 5
The $1 billion investment will dilute net income per share of Wyndham and Patriot common stock........... 5
The conversion price of the preferred stock to be sold to the investors is subject to potential downward
adjustment which could dilute the interests of Wyndham stockholders.................................... 6
Sales relating to existing forward equity contracts could have dilutive effects on our capital stock..... 6
Patriot will pay higher federal income taxes after the restructuring of Wyndham and Patriot.............. 7
Note Regarding Forward-Looking Statements.................................................................. 8
Wyndham and Patriot........................................................................................ 9
The current structure of Wyndham and Patriot............................................................. 9
Business strengths....................................................................................... 9
Business strategy........................................................................................ 9
Internal growth.......................................................................................... 10
External growth.......................................................................................... 10
Current business challenges.............................................................................. 11
The Investment and the Restructuring....................................................................... 12
The $1 billion equity investment......................................................................... 12
The restructuring........................................................................................ 12
Indebtedness............................................................................................. 12
Use of Proceeds............................................................................................ 13
The Exchange Offer......................................................................................... 14
General.................................................................................................. 14
Purposes of the exchange offer........................................................................... 14
Terms of the exchange offer.............................................................................. 14
Expiration Date; extension; amendments................................................................... 15
Procedure for tendering preferred units and common units................................................. 15
Terms and conditions of the letter of transmittal........................................................ 16
Withdrawal rights........................................................................................ 16
Acceptance of preferred units and common units for exchange; delivery of common stock.................... 17
Conditions of the exchange offer......................................................................... 18
Dissenters' rights....................................................................................... 19
Exchange agent........................................................................................... 19
Transfer taxes........................................................................................... 19
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i
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Consequences of failure to exchange...................................................................... 19
Description of Capital Stock............................................................................... 20
Common stock............................................................................................. 20
Preferred stock.......................................................................................... 20
Transfer agent........................................................................................... 21
Comparison of ownership of units and common stock........................................................ 22
Certain Federal Income Tax Consequences.................................................................... 27
Federal income tax treatment of the exchange............................................................. 27
Tax consequences to unitholders who exchange units....................................................... 27
Tax consequences to unitholders who do not exchange all of their units................................... 32
Legal Matters.............................................................................................. 33
Experts.................................................................................................... 33
</TABLE>
ii
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WHERE YOU MAY FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-4 with respect
to the shares of our common stock being offered in the exchange offer. We also
file annual, quarterly and special reports, proxy statements and other
information electronically with the SEC. You may read and copy the registration
statement or any of the reports, statements or other information that we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. Our SEC filings are also available
from the New York Stock Exchange, 20 Broad Street, New York, New York 10005, and
from the Internet site maintained by the SEC at http://www.sec.gov.
This prospectus, which constitutes part of the registration statement, omits
important information that you can find in our registration statement or in the
reports and other documents that we file with the SEC. The SEC allows us to
"incorporate by reference" in this prospectus other information we file with the
SEC. This means that we can disclose important information to you by referring
you to other documents that are legally considered to be part of this prospectus
and later information that we file with the SEC will automatically update and
supersede the information included in this prospectus and the documents listed
below. We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the expiration of the exchange offer.
1. Annual Report on Form 10-K of Patriot American Hospitality, Inc. and
Wyndham International, Inc. for the fiscal year ended December 31, 1998;
2. Current Reports on Form 8-K of Patriot American Hospitality, Inc.
and Wyndham International, Inc. dated: (a) January 5, 1998 (filed January
13, 1998); (b) February 9, 1998 (filed February 12, 1998); (c) March 23,
1998 (filed March 30, 1998); (d) April 2, 1998 (filed April 8, 1998); (e)
April 20, 1998 (filed April 22, 1998); (f) May 27, 1998, as amended (filed
May 27, 1998 and May 28, 1998); (g) June 2, 1998, as amended (filed June 17,
1998, August 6, 1998 and March 26, 1999); (h) November 9, 1998, as amended
(filed November 9, 1998 and November 10, 1998); (i) November 30, 1998 (filed
November 30, 1998); (j) December 16, 1998 (filed December 16, 1998); (k)
December 16, 1998 (filed December 18, 1998); (l) December 20, 1998 (filed
December 22, 1998); (m) January 29, 1999 (filed February 4, 1999); (n)
February 16, 1999 (filed February 16, 1999); (o) March 2, 1999 (filed March
2, 1999); (p) February 26, 1999 (filed March 3, 1999); (q) March 26, 1999
(filed March 26, 1999); and (r) March 26, 1999 (filed March 29, 1999); and
3. The description of the paired shares of Patriot common stock and
Wyndham common stock contained or incorporated by reference in Patriot
American Hospitality, Inc.'s and Wyndham International, Inc.'s Registration
Statement on Form 8-A, including any amendments thereto.
We have filed each of these documents with the SEC and they are available
from the SEC's Internet website and public reference room described above. You
may also obtain a copy of these filings, but generally not the exhibits filed
with them, at no cost, by writing or calling us at the following address: 1950
Stemmons Freeway, Suite 6100, Dallas, TX 75207, Attention: Shareholder Relations
(Telephone No. 214-863-1000).
YOU SHOULD REQUEST DOCUMENTS AT LEAST FIVE BUSINESS DAYS BEFORE THE
EXPIRATION OF THE EXCHANGE OFFER TO ENSURE TIMELY DELIVERY. You should rely only
on the information incorporated by reference or contained in this prospectus. We
have not authorized anyone else to provide you with different information. We
are not making an offer of the securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other than the date on the front of those
documents.
iii
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU.
TO MORE FULLY UNDERSTAND THE EXCHANGE OFFER, YOU SHOULD CAREFULLY READ THIS
ENTIRE DOCUMENT, INCLUDING THE "RISK FACTORS" SECTION STARTING ON PAGE 5. FOR
ADDITIONAL INFORMATION REGARDING WYNDHAM AND PATRIOT, YOU SHOULD READ THE
DOCUMENTS THAT WE HAVE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION LISTED
UNDER THE CAPTION "WHERE YOU MAY FIND MORE INFORMATION" ON PAGE III.
OVERVIEW OF WYNDHAM AND PATRIOT
Wyndham International, Inc. and Patriot American Hospitality, Inc. comprise
a fully integrated and branded hotel enterprise which currently has an aggregate
hotel portfolio of 471 hotel properties, primarily in the luxury and upscale
division, with over 106,000 rooms in the United States, Canada, the Caribbean
and Europe. The following table sets forth some key operating statistics of
Wyndham and Patriot for the years ended December 31, 1997 and December 31, 1998,
as well as comparable information for the upscale hospitality sector in general,
as reported by PricewaterhouseCoopers in the publication HOSPITALITY DIRECTIONS:
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WYNDHAM-BRANDED PORTFOLIO UPSCALE HOSPITALITY SECTOR
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<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
12/31/97 12/31/98 % CHANGE 12/31/97 12/31/98 % CHANGE
----------- ----------- ------------- ----------- ----------- -----------
Average Daily Room Rate................. $ 99.01 $ 107.79 7.9% $ 88.95 $ 93.22 4.8%
Average Occupancy....................... 69.5% 70.3% 1.2% 71.3% 71.1% (0.2%)
Average Revenue per Available Room...... $ 68.81 $ 75.12 9.2% $ 63.44 $ 66.25 4.4%
</TABLE>
Wyndham and Patriot are focused on developing their proprietary brands,
including Wyndham and Grand Bay Hotels & Resorts. Wyndham's and Patriot's
primary growth strategy is to continue to develop their proprietary brands by
increasing distribution, generating greater customer awareness, building brand
loyalty and maintaining customer satisfaction.
Our principal executive offices are located at 1950 Stemmons Freeway, Suite
6001, Dallas, TX 75207 (Telephone No. 214-863-1000).
THE PROPOSED $1 BILLION INVESTMENT AND THE RESTRUCTURING OF WYNDHAM AND PATRIOT
On February 18, 1999, Wyndham, Patriot, the Wyndham partnership and the
Patriot partnership and affiliates of each of Apollo Real Estate Management III,
L.P., Apollo Management IV, L.P., Thomas H. Lee Equity Fund IV, L.P., Beacon
Capital Partners, L.P. and Rosen Consulting Group entered into a securities
purchase agreement under which these investors will purchase $1 billion of a new
series of our preferred stock. Wyndham and Patriot have also received financing
commitments for a $2.45 billion credit facility to be put in place when the $1
billion equity investment is made. We currently plan to use the proceeds from
these transactions to settle forward equity contracts and related price
adjustment mechanisms relating to 13.3 million shares of Wyndham and Patriot
common stock, to repay indebtedness, and for working capital purposes.
As a condition to the $1 billion equity investment, Wyndham and Patriot are
required to restructure their existing organization. Under the planned
restructuring, a subsidiary of Wyndham will merge with Patriot and Patriot will
become a wholly-owned subsidiary of Wyndham. In the merger, Wyndham will issue
new shares of Wyndham common stock in exchange for the then outstanding Patriot
common stock and Patriot series A preferred stock. Additionally, the agreement
between Wyndham and Patriot requiring the pairing of their common stock will
terminate, Patriot's status as a real estate investment trust will terminate
effective January 1, 1999 and Patriot will become a taxable corporation as of
that date. Immediately before the merger, Wyndham and Patriot will also effect
1
<PAGE>
reverse stock splits of their currently outstanding paired shares of common
stock. The effect of the reverse stock splits and the merger will be that each
stockholder will hold a number of shares of Wyndham common stock immediately
after these transactions equal to the number of paired shares that the holder
held, or could have received upon conversion, immediately before these
transactions.
This exchange offer is a condition to, and is being made in connection with,
the proposed restructuring and $1 billion equity investment. It is also a
condition to the $1 billion equity investment that we obtain the consents of the
limited partners of the Wyndham partnership and the Patriot partnership to amend
and restate their limited partnership agreements. The $1 billion equity
investment, the restructuring and related transactions are subject to a number
of other conditions, including approval by the stockholders of Wyndham and
Patriot.
In connection with these transactions, our board of directors will be
restructured to consist initially of eight "Class A" directors designated by the
existing members of our board of directors, eight "Class B" directors designated
by the investors, and three "Class C" directors to be mutually agreed upon by
the investors and the existing board members.
THE EXCHANGE OFFER
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Eligible Limited Partners....... All third party limited partners of the Wyndham
partnership and the Patriot partnership may participate in
the exchange offer. Neither Wyndham, the general partner
and a limited partner of the Wyndham partnership, nor PAH
LP, Inc., a subsidiary of Patriot and a limited partner of
the Patriot partnership, are eligible to participate in
the exchange offer.
The Exchange Ratios............. We are offering to exchange:
- one share of our registered common stock for each class
A and class C preferred unit of limited partnership
interest of the Wyndham partnership;
- one share of our registered common stock for each pair
of units consisting of one class B preferred unit of
limited partnership interest of the Wyndham partnership
and one preferred unit of limited partnership interest
of the Patriot partnership;
- .05 shares of our registered common stock for each
common unit of limited partnership interest of the Wyndham
partnership; and
- .95 shares of our registered common stock for each
common unit of limited partnership interest of the Patriot
partnership.
As of April 12, 1999, there were issued and outstanding
784,377 class A preferred units, 1,324,804 class B
preferred units, 586,814 class C preferred units and
13,845,711 common units of limited partnership interest of
the Wyndham partnership held by third parties. In
addition, there were issued and outstanding 1,324,804
preferred units and 13,845,711 common units of limited
partnership interest of the Patriot partnership held by
third parties. Also, as of April 12, 1999, there were
issued and outstanding 239,745,736 paired shares
(including 80,668,164 paired shares held as collateral by
the counterparties to our foward equity contracts).
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For a comparison of terms of the preferred units and
common units of the Wyndham partnership and the Patriot
partnership and our common stock, see "--Comparison of
Preferred Units, Common Units and Common Stock."
We will accept all preferred units and common units
validly tendered and not validly withdrawn before the
expiration date. We will pay you cash instead of issuing
fractional shares of our common stock.
Purposes of the Exchange
Offer......................... The principal purpose of the exchange offer is to simplify
our capital structure and provide limited partners of the
Wyndham partnership and the Patriot partnership, other
than Wyndham and PAH LP, Inc., the opportunity to exchange
their units for our registered securities without being
subject to the restrictions on redemption and transfer in
the limited partnership agreements. We anticipate that the
exchange may be made on a tax-deferred basis for some
holders. In addition, the $1 billion equity investment is
conditioned upon the completion of the exchange offer.
Recommendation.................. The boards of directors of each of Wyndham and Patriot
recommend that you exchange your units of limited
partnership interest in compliance with the terms of the
exchange offer.
Consequences of Failure to
Exchange...................... Holders of preferred units or common units of the Wyndham
partnership or the Patriot partnership who do not exchange
their preferred units or common units for shares of our
common stock in the exchange offer or whose preferred
units or common units are not accepted for exchange will
continue to hold those units and will be subject to all of
the limitations of the units, including the restrictions
on redemption and transfer, and could be subject to
additional limitations if the limited partnership
agreements are amended and restated as proposed.
The investors' obligation to make the $1 billion equity
investment is conditioned on the completion of the
exchange offer. As a result, the failure to complete the
exchange offer could result in the investors not making
the $1 billion equity investment.
Expiration Date................. The exchange offer will expire at 5:00 p.m., New York City
time, on June [ ], 1999, unless we extend it.
Exchange Date................... We will accept the preferred units and common units of the
Wyndham partnership and the Patriot partnership for
exchange on the expiration date. We will issue our common
stock promptly after that date.
Conditions of the Exchange
Offer......................... We may postpone, terminate or amend the exchange offer if
limited partners of the Wyndham partnership other than
Wyndham holding more than 1.7 million units of limited
partnership interest do not tender their units or if
limited partners of the Patriot partnership other than PAH
LP, Inc. holding more than 1.7 million units of limited
partnership
</TABLE>
3
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interest do not tender their units. In addition, holders
tendering class B preferred units of limited partnership
interest of the Wyndham partnership must tender such units
with a corresponding number of preferred units of limited
partnership interest of the Patriot partnership.
Completion of the exchange offer is also conditioned on
completion of the other steps of the restructuring,
including the merger of a subsidiary of Wyndham with
Patriot. The exchange offer is not conditioned on the
completion of the $1 billion equity investment.
Other customary conditions also apply to the exchange
offer. We may waive any of these other customary
conditions.
Withdrawal Rights............... You may withdraw your preferred units or common units from
the exchange offer at any time before 5:00 p.m., New York
City time, on the expiration date.
Federal Income Tax
Consequences.................. The exchange of your preferred units and common units of
limited partnership interest of the Wyndham partnership or
the Patriot partnership for our common stock in this
exchange offer will generally qualify for tax-deferred
treatment under Section 351 of the Internal Revenue Code.
Depending on your individual circumstances, however, you
may recognize income or gain, and the amount of income or
gain that you recognize may be significant. For a more
detailed discussion of the United States federal income
tax consequences relevant to the exchange offer, see
"Certain Federal Income Tax Consequences."
Use of Proceeds................. We will not receive any cash proceeds from the issuance of
common stock in the exchange offer.
No Dissenters' Rights........... You do not have any appraisal or dissenters' rights in
connection with the exchange offer under Delaware law or
under the existing limited partnership agreements of the
Wyndham partnership or the Patriot partnership.
Exchange Agent.................. We will act as the exchange agent for the exchange offer.
</TABLE>
4
<PAGE>
RISK FACTORS
IF YOU DO NOT EXCHANGE YOUR UNITS, YOU WILL CONTINUE TO BE SUBJECT TO
RESTRICTIONS ON REDEMPTION AND TRANSFER CONTAINED IN THE LIMITED PARTNERSHIP
AGREEMENTS.
If you do not exchange your preferred units or common units of the Wyndham
partnership or the Patriot partnership for shares of our common stock in the
exchange offer, your units will continue to be subject to the limitations and
restrictions on voting, redemption and transfer contained in the agreements of
limited partnership of the Wyndham partnership and the Patriot partnership.
Neither the preferred units nor the common units have been registered under the
Securities Act of 1933 or any state securities laws and neither may be offered,
sold or otherwise transferred except in compliance with, or in a transaction
exempt from, the registration requirements of the Securities Act and any other
applicable securities laws. In addition, holders who do not exchange their units
may be subject to additional restrictions if the limited partnership agreements
are amended and restated.
YOU MAY RECOGNIZE TAXABLE GAIN IF YOU EXCHANGE YOUR UNITS FOR OUR COMMON STOCK
Although the exchange generally will qualify for tax-deferred treatment
under Section 351 of the Internal Revenue Code, under several circumstances
particular unitholders could recognize income or gain when they exchange their
units (for example as a result of having a share of partnership liabilities in
excess of tax basis, at-risk recapture and the application of Section 304 of the
Internal Revenue Code). The amount of the gain and the taxes that you must pay
on that gain may exceed the value of the Wyndham common stock you receive. For a
more detailed description of the amount and kind of taxable gain that you may
recognize, see "Certain Federal Income Tax Consequences." The taxation of
dispositions of partnership interests is, however, a complex subject, and the
application of these rules to the exchange offer will depend on your individual
circumstances. WE STRONGLY ENCOURAGE YOU TO CONSULT WITH YOUR TAX ADVISORS
REGARDING WHETHER TO PARTICIPATE IN THE EXCHANGE OFFER, AND WHICH UNITS OF
LIMITED PARTNERSHIP INTEREST YOU SHOULD TENDER FOR EXCHANGE.
IF WYNDHAM DOES NOT COMPLETE THE $1 BILLION EQUITY INVESTMENT, THERE MAY BE
NEGATIVE CONSEQUENCES.
In the event that Wyndham stockholders do not approve the $1 billion equity
investment or in the event that the investment is not made, there will be
several potential negative consequences:
- If the $1 billion equity investment is not made on or prior to June 30,
1999, approximately $1.0 billion of debt will mature. Patriot and Wyndham
would have to raise capital from another source or sell assets to produce
proceeds sufficient to pay these debt maturities.
- If the $1 billion equity investment is not made, Patriot and Wyndham may
have to sell significant amounts of assets, including resort properties or
Wyndham-managed properties in major cities, to meet debt maturities. Such
sales could negatively impact our strategy to expand our brand recognition
and build our hotel portfolio.
- If the $1 billion equity investment is not made, we would have to secure
other sources of capital to fund our hotel development programs. In the
absence of available capital, we may have to terminate or reduce our
development activities. Any termination of development activities may
result in our forfeiture of deposits or other funds.
THE $1 BILLION INVESTMENT WILL DILUTE NET INCOME PER SHARE OF WYNDHAM AND
PATRIOT COMMON STOCK
The $1 billion equity investment will have a dilutive effect on net income
per paired share of Wyndham and Patriot common stock. On a pro forma basis,
assuming completion of the reverse stock splits, the merger of Patriot with a
Wyndham subsidiary and the $1 billion equity investment (at the number of shares
of Wyndham common stock initially issuable upon conversion of the preferred
stock
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issued in the $1 billion equity investment), Wyndham and Patriot would have a
net loss per paired share of $(1.33) for the year ended December 31, 1998, as
compared to an historical net loss per paired share of $(2.57) for the year
ended December 31, 1998. The issuance of additional shares of preferred stock to
the investors in payment of dividends over at least the first six years
following the completion of the $1 billion equity investment will also have a
dilutive effect on net income per paired share.
THE CONVERSION PRICE OF THE PREFERRED STOCK TO BE SOLD TO THE INVESTORS IS
SUBJECT TO POTENTIAL DOWNWARD ADJUSTMENT WHICH COULD DILUTE THE INTERESTS OF
WYNDHAM STOCKHOLDERS
The preferred stock to be sold to the investors has an initial conversion
price of $8.59 per share of common stock. However, this conversion price is
subject to downward adjustment in the event Wyndham and Patriot are required to
indemnify the investors under the terms of the securities purchase agreement
relating to the $1 billion equity investment. Wyndham and Patriot will have to
indemnify the investors in a number of circumstances, including:
- upon breaches of the representations, warranties and covenants of Wyndham
and Patriot in the securities purchase agreement relating to the $1
billion equity investment;
- upon the incurrence by Wyndham and Patriot of specified costs relating to
the completion of their restructuring and relating to stockholder
litigation or sales of paired shares issued as collateral under the
forward equity contracts with net proceeds to Wyndham and Patriot of less
than $8.75 per share; and
- in the event Wyndham's management agreement for the Wyndham Anatole hotel
is terminated prior to May 10, 2004 because of Wyndham's termination of an
executive officer specified in the management agreement.
The conversion price will be adjusted in connection with most losses by an
amount equal to the amount of the loss above applicable baskets divided by
167,025,942. For example, a $100 million loss above applicable baskets by
Wyndham and Patriot would result in a conversion price adjustment of
approximately $0.60 and the conversion price, as adjusted, would then equal
$7.99.
Adjustments to the conversion price for breaches of representations and
warranties, special costs related to the restructuring, stockholder litigation
and the Wyndham Anatole hotel management agreement termination are subject to a
maximum amount of approximately $2.27 per share. In order for the total
conversion price adjustments relating to indemnification to equal $2.27, Wyndham
and Patriot would generally have to incur approximately $380 million in losses
above applicable baskets. There is no maximum amount of conversion price
adjustments relating to breaches of covenants or to sales of paired shares by
the counterparties to the forward equity contracts.
SALES RELATING TO EXISTING FORWARD EQUITY CONTRACTS COULD HAVE DILUTIVE EFFECTS
ON OUR CAPITAL STOCK
We are parties to forward equity contracts with three counterparties
involving the sale of an aggregate of 13.3 million paired shares, with related
price adjustment mechanisms. Our aggregate obligation under the forward equity
contracts was approximately $319.7 million at April 12, 1999. As of such date,
we have delivered an aggregate of 80,668,164 paired shares to the counterparties
as collateral in addition to 3,962,358 paired shares that were paid as dividends
on the collateral shares and approximately 12.5 million paired shares currently
owned by the counterparties or their affiliates.
We currently intend to settle in full all of the forward equity contracts
with a portion of the cash proceeds of the $1 billion equity investment. If we
settle the forward equity contracts in cash, the counterparties must deliver to
us all paired shares then owned by them or held by them as collateral under the
forward equity contracts.
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On February 28, 1999, all three counterparties agreed, subject to specified
conditions, not to require settlement under their respective forward equity
contracts or to sell paired shares in connection with the forward equity
contracts until the earlier of (a) the closing of the $1 billion equity
investment and (b) June 30, 1999. The agreements provided that the standstill
obligations would terminate if, among other events, the price of the paired
shares fell to or below a specified threshold. As of the date of this
prospectus, the price of paired shares has fallen below each of the respective
thresholds. As a result, each of the counterparties has the right to require an
immediate settlement of its forward equity transaction.
As of the date of this prospectus, none of the counterparties has indicated
that it intends to sell paired shares or require settlement of its forward
equity contract; however, we cannot assure you that they will not sell paired
shares or require settlement in the future.
We may settle the forward equity contracts by delivering either cash or
paired shares. Generally, we may settle by delivering paired shares only if a
registration statement covering such paired shares is effective. There are
currently effective registration statements covering the sale by the three
counterparties of up to 40 million paired shares and the sale by UBS of an
additional 4 million paired shares in connection with the forward equity
contracts. We cannot assure you that these registration statements will remain
effective. Additionally, we plan to file a registration statement to register
the sale of approximately $63 million additional paired shares held as
collateral by the counterparties. This registration statement is not yet
effective and we cannot assure you that it will become effective. We cannot
assure you that these registration statements will remain effective or that we
will not be required to register more paired shares in connection with the
forward equity transactions.
Sources of cash would not currently be available for us to make the
payments. Moreover, we cannot assure you that our bank lenders would consent to
any cash settlements prior to the closing of the $1 billion equity investment.
In addition, given the current market price of the paired shares, any
settlement in paired shares would have severely dilutive effects on our capital
stock. The dilutive effects increase in the event that the market price of the
paired shares decreases as the result of sales of paired shares by the forward
equity counterparties. If any of the counterparties sells paired shares, the
conversion price of the preferred stock to be issued to the investors will be
adjusted downward to the extent that the price recognized by us on the sale is
less than $8.75 per paired share.
PATRIOT WILL PAY HIGHER FEDERAL INCOME TAXES AFTER THE RESTRUCTURING OF WYNDHAM
AND PATRIOT
In connection with the investors' $1 billion equity investment and the
related restructuring, Patriot will convert from a real estate investment trust
to a taxable corporation. As a result, Patriot will be subject to tax, including
any applicable alternative minimum tax, on its taxable income at corporate
rates, although Wyndham and Patriot will be eligible to file a consolidated
federal income tax return.
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NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements
include statements regarding the intent, belief or current expectations of
Wyndham, Patriot and their management. You are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
a number of risks and uncertainties that may cause Wyndham's and Patriot's
actual results to differ materially from the results discussed in the
forward-looking statements. Among the factors that could cause actual results to
differ materially from those indicated by such forward-looking statements are:
- the availability of debt and equity financing on terms and conditions
favorable to Wyndham and Patriot;
- the willingness of Wyndham's and Patriot's lenders to refinance, extend or
amend the terms of existing indebtedness;
- the willingness of the counterparties to Wyndham's and Patriot's forward
equity contracts to refrain from selling paired shares of Wyndham and
Patriot common stock held by them as collateral under those agreements;
- costs incurred in connection with the restructuring of Wyndham and
Patriot;
- Wyndham's and Patriot's ability to effect sales of assets on favorable
terms and conditions;
- risks associated with the hotel industry and real estate markets in
general; and
- other factors detailed in this prospectus under the caption "Risk
Factors."
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WYNDHAM AND PATRIOT
THE CURRENT STRUCTURE OF WYNDHAM AND PATRIOT
Wyndham and Patriot comprise a fully integrated and branded hotel enterprise
which currently has an aggregate hotel portfolio of 471 hotel properties with
over 106,000 rooms in the United States, Canada, the Caribbean and Europe.
Wyndham and Patriot are engaged in the ownership, management, leasing and
franchising of hotels and resorts, primarily in the luxury and upscale segments.
Wyndham and Patriot are focused on integrating their acquired properties and
operating companies and are developing their proprietary brands, Wyndham, Grand
Bay Hotels & Resorts, and Summerfield Suites. Wyndham and Patriot intend to
continue to develop and build brand recognition of their products by increasing
distribution, generating greater customer awareness, building brand loyalty and
maintaining customer satisfaction.
Wyndham and Patriot currently operate as a paired share real estate
investment trust consisting of Patriot, a real estate investment trust which
owns and leases hotel properties, and Wyndham, an operating company which
manages hotel properties, including properties leased from Patriot. Each of
Wyndham and Patriot conduct a substantial portion of their business through
subsidiary partnerships, the Patriot partnership and the Wyndham partnership,
respectively. Additionally, Wyndham and Patriot conduct a portion of their
business through taxable corporate subsidiaries. Patriot owns the non-voting
stock of the corporate subsidiaries and Wyndham owns the voting stock of these
entities. The common stock of Patriot and Wyndham are paired and trade together
as a single unit.
BUSINESS STRENGTHS
STRONG BRAND NAMES. Our brands all have at least a 15 year history and we
believe that the Wyndham, Grand Bay and Summerfield brands are highly recognized
in the industry. We have established our leading brands primarily by providing
high quality properties, a high level of customer service, and reliability. The
strong Wyndham brand encompasses multiple products including Wyndham Hotels and
Resorts, Wyndham Gardens and Wyndham Grand Heritage, and enables us to
cross-sell properties within each market. Additionally, Patriot recently
acquired the Golden Door Spa which it plans to expand throughout the Grand Bay
properties.
ECONOMIES OF SCALE. As Wyndham and Patriot have increased in size, both
companies have been able to realize cost savings at the local, national and
corporate levels. We have been able to consolidate common functions between
multiple properties located in one city or region which may include sales
functions, laundry and other guest services, maintenance contracts and
property-level management. Nationally, as one of the largest owner-operators of
hotels, we benefit from greater purchasing and negotiating power when addressing
company-wide insurance, marketing, and other hotel services. We believe that
additional cost savings may be realized through further centralization of
accounting, finance, administrative and procurement programs.
GEOGRAPHICALLY DIVERSE OPERATIONS. Wyndham and Patriot have assembled a
geographically diverse portfolio in order to create more consistent and stable
operating performance and provide insulation from regional downturns. Properties
and operations are spread throughout the United States, Canada, the Caribbean
and Europe. We and Patriot target locations that most often are difficult to
duplicate in primary locations near urban centers, airports, new office parks,
and resort/convention centers.
BUSINESS STRATEGY
Our growth strategy is to develop our proprietary hotel brands by increasing
distribution, generating greater customer awareness, building brand loyalty, and
maintaining customer satisfaction.
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INTERNAL GROWTH
SELECTIVELY REBRAND EXISTING OWNED HOTELS. In certain hotels that meet our
quality standards and strategic brand objectives, we will replace the existing
hotel manager with Wyndham management and convert the hotel to the Wyndham or
another proprietary brand. By converting these hotels to a proprietary brand, we
seek to broaden our brand distribution network. Demonstrating the strength of
the Wyndham brand name, the average daily rate for our upscale properties was
$107.79 for the year ended December 31, 1998, compared to the industry average
of $93.22 for the same period. Accordingly, we anticipate that additional
non-Wyndham branded hotels acquired in the future and converted to the Wyndham
brand should achieve higher occupancy rates and average room rates than has
previously been the case as those hotels begin to benefit from Wyndham's brand
recognition, centralized reservation system and group rate pricing.
LEVERAGE PROPRIETARY BRAND NAMES AND LARGE SCALE. We believe that our size
and distribution network open significant new revenue opportunities. In 1999,
our advertising budget will be approximately three times larger than it had been
in any prior single fiscal year. This $23 million effort will be focused on
group/business travelers who currently comprise 45% of our business and high-end
leisure travelers. The concept of a strong Wyndham brand encompassing multiple
products will be a simple and effective message to market the companies.
Further, by adding properties to markets where only one of our other properties
previously existed, we have gained the ability to move customers to different
locations within the same market. This is particularly important to developing a
diverse customer profile as group business can be redirected to other of our
other properties. An additional benefit of an expanded hotel property network
has been our success in securing 500 national corporate accounts while reducing
per guest marketing costs.
STRENGTHENING CUSTOMER LOYALTY. We have been focused on strengthening
consumer loyalty through the implementation of differentiating service
trademarks. For example, we have been upgrading our information systems in order
to compile meaningful guest profiles and to provide real-time guest recognition.
These technological advances have enabled us to launch unique guest services
such as comprehensive vacation planning for frequent guests. Additionally, we
have successfully launched a program targeted at the female business traveler
known as the "Women on Their Way" program. We are the preferred hotel company
for the National Association of Women Business Owners, a national organization
that serves as our advisor on developing products, services and amenities for
the woman business or leisure traveler. A third example is our unique
relationship with American Airlines whereby we are the only hotel chain that
offers triple upgrades and miles to American Airlines frequent flyers.
EXTERNAL GROWTH
SELECTIVELY DEVELOP AND ACQUIRE NEW HOTELS. We have extensive experience in
acquiring and financing lodging properties and believe our industry knowledge,
relationships and access to market information provide a competitive advantage
with respect to identifying, evaluating and acquiring hotel assets. We develop
new hotels that meet our investment objectives, including enhancing the brand
equity of our proprietary brands and achieving satisfactory investment returns.
Such investments are concentrated on hotels for which we will retain long-term
management and franchising through one of our proprietary brands.
AUGMENT FRANCHISE PROGRAM. We intend to increase distribution of our
proprietary brands through franchising new or existing hotels. To implement this
franchising strategy, we have identified a small group of candidates that we
believe are capable of developing and managing a multiple-franchise operation of
ten or more Wyndham hotels. With the use of the proprietary reservation system
and marketing and training programs used by our owned and operated hotels, we
expect the franchising program to attract qualified franchisees and facilitate
more expedient growth of our core brands. A further benefit of growing the
franchise base is that diversified revenue sources from real estate
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ownership and operations reduces the down-side typically associated with real
estate ownership during recessionary periods.
CURRENT BUSINESS CHALLENGES
AGREEMENTS RELATING TO EXISTING CREDIT FACILITY. Our existing credit
facility with The Chase Manhattan Bank, Chase Securities, Inc. and PaineWebber
Real Estate consists of a $900 million revolving credit facility and a series of
term loans in the aggregate amount of $1.8 billion. Interest rates on the
existing credit facility are based on our leverage ratio and vary from 1.75% to
3.0% over LIBOR. Under the original terms of the credit facility, two of the
term loans matured on January 31, 1999 ($350 million) and March 31, 1999 ($400
million). All of the requisite lenders under the credit facility have agreed to
extend the maturity of these two term loans to June 30, 1999. If the investors
do not make the $1 billion equity investment by June 30, 1999, or our agreement
with the investors otherwise terminates, the maturity of these two term loans
will be extended to March 31, 2000 and we will be required to secure the credit
facility with mortgages and other security interests by June 30, 1999. We paid
fees of $11.7 million to the lenders under the credit facility in connection
with their agreement to extend the maturities of the term loans to June 30,
1999.
INTERSTATE'S THIRD-PARTY HOTEL MANAGEMENT BUSINESS. In May 1998, Wyndham,
along with Patriot and Interstate Hotels Company, entered into a settlement
agreement with Marriott International, Inc. which addressed certain claims
asserted by Marriott in connection with Patriot's then-proposed merger with
Interstate. The settlement agreement provided for the dismissal of litigation
brought by Marriott and allowed the completion of Patriot's merger with
Interstate.
In addition to dismissal of the Marriott litigation, the settlement
agreement provides for three principal transactions:
- our re-branding of ten Marriott hotels under the Wyndham name;
- Marriott's assumption of the management of ten Marriott hotels formerly
managed by Interstate for the remaining term of the Marriott franchise
agreement; and
- our divesture, through a spin-off of assets, of the third-party management
business which was operated by Interstate.
If we do not complete the spin-off by April 30, 1999, Marriott will be
entitled to receive 110% of the fees otherwise due under the management
contracts that they assume in the settlement. We will also be subject to
additional penalties including Marriott's right to purchase, subject to
third-party consents, the hotels to be submanaged by Marriott and six additional
Marriott hotels owned by us at their then appraised values.
Additionally, subject to any defenses we may have, we would owe Marriott
liquidated damages with respect to the hotels converted to the Wyndham brand,
those to be submanaged by Marriott, and the six additional Marriott hotels
Marriott would have the option to purchase. We also anticipate that Marriott
would require third-party owners of Marriott-branded hotels that we manage to
replace us as manager of their hotels. As a result, each respective hotel would
either: (1) lose the Marriott brand, at which time we would have to compensate
Marriott for any lost franchise fees; or (2) terminate the management contract
with us and enter into a contract with another manager. We would owe liquidated
damages on any third-party Marriott-franchised hotel which chooses to convert
its brand.
FORWARD EQUITY CONTRACTS. You should read the description of our forward
equity contracts under the caption "Risk Factors" beginning on page 5 for a
description of the business challenges created by these financial instruments.
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THE INVESTMENT AND THE RESTRUCTURING
THE $1 BILLION EQUITY INVESTMENT
Wyndham and Patriot have entered into an agreement with investors including
affiliates of Apollo Real Estate Management III, L.P., Apollo Management IV,
L.P., Thomas H. Lee Equity Fund IV, L.P., Beacon Capital Partners, L.P., and
Rosen Consulting Group providing for a $1 billion equity investment and related
restructuring of the two companies. Wyndham and Patriot have also received a
financing commitment for a $2.45 billion credit facility to be put in place upon
the completion of the $1 billion equity investment. For a description of the
preferred stock to be issued in the $1 billion equity investment, see
"Description of Capital Stock--Preferred Stock." Wyndham and Patriot currently
plan to use the proceeds from the investment to settle their forward equity
contracts, to repay indebtedness and for working capital and growth purposes.
For a description of the financing commitments, see "-- Indebtedness--New Credit
Facility" and "--Increasing Rate Loans."
THE RESTRUCTURING
As a condition to the completion of the $1 billion equity investment, we are
required to complete a restructuring of our existing paired share real estate
investment trust structure. In the restructuring, the following events will
occur:
- A wholly-owned subsidiary of Wyndham will merge with Patriot and Patriot
will become a wholly-owned subsidiary of Wyndham.
- Wyndham and Patriot will each effect a 20:1 reverse split of their common
stock.
- The agreement requiring the pairing of our common stock with Patriot's
common stock will terminate.
- Patriot will terminate its status as a real estate investment trust and
become a taxable corporation effective January 1, 1999.
- The non-voting stock of specified corporate subsidiaries held by the
Patriot partnership will be transferred so that it will be owned directly
by either Wyndham and/or Patriot.
- As described in more detail in this prospectus, we will offer the third
party limited partners in both the Wyndham partnership and the Patriot
partnership an opportunity to exchange their limited partnership interests
for Wyndham common stock.
- We will offer the holders of Wyndham preferred stock an opportunity to
exchange their preferred stock for Wyndham common stock.
The effect of the reverse stock splits and the merger will be that each
stockholder will hold a number of shares of Wyndham common stock immediately
after these transactions equal to the number of paired shares that the holder
held, or could have received upon conversion, immediately before these
transactions.
INDEBTEDNESS
NEW CREDIT FACILITY. Patriot has signed a commitment letter with Chase
Securities Inc. and The Chase Manhattan Bank for senior credit facilities for
Wyndham in the amount of $1.8 billion, comprised of a term loan facility and a
revolving loan facility. Definitive agreements relating to this new credit
facility are expected to be finalized at the same time that the $1 billion
equity investment is completed. The Chase Manhattan Bank will act as the
administrative agent and Chase Securities Inc. will act as the lead arranger for
a syndicate of lenders which will provide us with $1 billion in term loans and
up to $800 million under a revolving loan facility, of which a maximum of $560
million may be drawn at the time of the closing of the $1 billion equity
investment. The term loan facility and the
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revolving facility carry terms of seven years and five years, respectively.
Interest rates for this new credit facility are based upon LIBOR spreads varying
from 1.25% to 3.00% per annum for the revolving loan facility and 2.75% to 3.75%
per annum for the term loan facility, based both on our leverage ratio and on
whether any increasing rate loans, described below, are outstanding. However, at
our election, the term loans and revolving loans may instead bear interest at an
alternative base rate plus the applicable spread. The alternative base rate is
equal to the greater of The Chase Manhattan Bank's prime rate or federal funds
rate plus 0.5%, and the alternative spread is 1.0% below the applicable LIBOR
spread. Subject to limited agreed-upon exceptions, this new credit facility will
be guaranteed by our domestic subsidiaries and will be secured by pledges of
equity interests held by us and our subsidiaries. The proceeds from the term
loan facility will be used to finance the restructuring of Wyndham and Patriot.
The proceeds from the revolving loan facility will be used for working capital
and general corporate purposes, although we may use up to $560 million in
revolving loan proceeds to finance the restructuring of Wyndham and Patriot.
INCREASING RATE LOANS. We also intend to enter into a $650 million
increasing rate loan facility. We have signed a commitment letter with The Chase
Manhattan Bank, Chase Securities, Inc., Bear Stearns & Co. Inc., and The Bear
Sterns Companies Inc. providing that The Chase Manhattan Bank, The Bear Stearns
Companies Inc. and a possible syndicate of other lenders will provide an
increasing rate loan facility in the amount of up to $650 million. The
increasing rate loan facility carries a term of five years. Interest rates for
the increasing rate loan facility are based on LIBOR spreads and are initially
set at 0.25% below the initial LIBOR spread on the term loan facility, but
increase by 0.50% every three months, with a cap of LIBOR plus 4.75%. However,
under other specified circumstances, interest accrues at an alternate rate equal
to the rate borne by three-month treasury securities plus 1.0%, plus the
applicable spread. The lenders under the increasing rate loan facility receive
the benefit of the same guarantees and pledges of security provided under the
new credit facility. The proceeds from the increasing rate loan facility will be
used to finance the restructuring of Wyndham and Patriot.
After the six month anniversary of the completion of the $1 billion equity
investment, lenders transferring increasing rate loans may exchange the
increasing rate loans for exchange notes carrying identical terms to the
increasing rate loans. To the extent any increasing rate loans or exchange notes
are outstanding 180 days after the completion of the $1 billion equity
investment, we must by such date file and maintain a shelf registration
statement with the Securities and Exchange Commission allowing the resale of any
exchange notes outstanding thereafter. We may also offer registered substitute
notes in exchange for all outstanding increasing rate loans and exchange notes.
Our ability to borrow under our revolving facility is subject to our
compliance with a number of customary financial and other covenants, including
total leverage and interest coverage ratios, limitations on additional
indebtedness, and limitations on investments and stockholder dividends.
We have agreed to pay the agents and the lenders customary fees for a
facility of this nature.
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange offer.
On April 9, 1999, the last reported sale price of the paired shares on the
New York Stock Exchange was $4.75. On April 9, 1999, there were approximately
3,143 holders of record of the paired shares.
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THE EXCHANGE OFFER
GENERAL
Participation in the exchange offer is voluntary and holders of preferred
units and common units of the Wyndham partnership and the Patriot partnership
should carefully consider whether to accept. The boards of directors of each of
Wyndham and Patriot recommend that you exchange your units of limited
partnership interest in the exchange offer. Holders of preferred units and
common units are urged to consult their financial and tax advisors in making
their decisions on what action to take in light of their own particular
circumstances.
The exchange offer is open to all third party holders of preferred units and
common units of the Wyndham partnership or the Patriot partnership. Neither
Wyndham, the general partner and a limited partner of the Wyntham partnership,
nor PAH LP, Inc., a wholly-owned subsidiary of Patriot and a limited partner of
the Patriot partnership, are eligible to participate in the exchange offer.
PURPOSES OF THE EXCHANGE OFFER
The principal purpose of the exchange offer is to simplify our capital
structure and provide the holders of the preferred units and common units the
opportunity to exchange their units for freely transferable shares of Wyndham
common stock. Additionally, the $1 billion equity investment is conditioned upon
the completion of the exchange offer.
Upon completion of the exchange offer, all preferred units and common units
of the Wyndham partnership and the Patriot partnership tendered, accepted and
not withdrawn prior to the expiration date will be held by PAH LP, Inc., in the
case of Patriot partnership units tendered, and held by Wyndham, in the case of
Wyndham partnership units tendered.
TERMS OF THE EXCHANGE OFFER
Wyndham is offering to exchange, upon the terms and subject to the
conditions described in this prospectus and in the accompanying letter of
transmittal:
- one share of our registered common stock for each class A and class C
preferred unit of limited partnership interest of the Wyndham partnership;
- one share of our registered common stock for each pair of units consisting
of one class B preferred unit of limited partnership interest of the
Wyndham partnership and one preferred unit of limited partnership interest
of the Patriot partnership;
- .05 shares of our registered common stock for each common unit of limited
partnership interest of the Wyndham partnership; and
- .95 shares of our registered common stock for each common unit of limited
partnership interest of the Patriot partnership.
Wyndham will pay cash to exchanging holders of preferred units and common
units in lieu of issuing fractional shares of common stock. The terms of the
Wyndham common stock differ in certain respects from the terms of the preferred
units and common units of the Wyndham partnership and the Patriot partnership
for which it may be exchanged in this exchange offer. See "Description of
Capital Stock--Common Stock" and "--Preferred Units."
As of April 12, 1999, there were issued and outstanding approximately
784,377 class A preferred units, 1,324,804 class B preferred units, 586,814
class C preferred units and 13,845,711 common units of the Wyndham partnership.
In addition, there were issued and outstanding 1,324,804 preferred units and
13,845,711 common units of the Patriot partnership.
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Tendering holders of preferred units and common units will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
letter of transmittal, transfer taxes with respect to the exchange of preferred
units and common units for Wyndham common stock in the exchange offer.
EXPIRATION DATE; EXTENSION; AMENDMENTS
The expiration date for the exchange offer is 5:00 p.m., New York City time,
on June [ ], 1999, unless we, in our sole discretion, extend the period during
which the exchange offer is open, in which event the expiration date shall be
the latest time and date on which the exchange offer, as so extended, shall
expire. We reserve the right to extend the exchange offer at any time and from
time to time by making a public announcement. There can be no assurance that we
will exercise our right to extend the exchange offer. During any extension of
the exchange offer, preferred units and common units of the Wyndham partnership
and the Patriot partnership previously tendered and not withdrawn in the
exchange offer will remain subject to the right of a tendering holder to
withdraw its preferred units and common units. See "--Withdrawal Rights."
We also expressly reserve the right, subject to applicable law:
- to delay acceptance for exchange of any preferred units and common units
of the Wyndham partnership or the Patriot partnership or terminate the
exchange offer and not accept for exchange any preferred units or common
units in the event that any of the conditions specified in "--Conditions
of the Exchange Offer" below are not satisfied or waived by us or to
comply with applicable law;
- to waive any condition to the exchange offer and accept all preferred
units and common units previously tendered under the exchange offer;
- to amend the exchange offer in any respect; or
- to terminate, cancel, withdraw or otherwise amend or modify the exchange
offer at any time for any reason.
If the exchange offer is so amended, the term "exchange offer" will mean the
exchange offer as so amended. Our reservation of the right to delay acceptance
for exchange of preferred units and common units is subject to the provisions of
Rule 13e-4 and Rule 14e-1(c) under the Securities Exchange Act, which require
that we pay the consideration offered or return the preferred units or common
units deposited by or on behalf of unit holders promptly after the termination
or withdrawal of the exchange offer.
If we extend, delay, terminate or amend the exchange offer, we will make a
public announcement of that fact as soon as practicable. We may choose any
manner to make a public announcement of any extension, delay, termination or
amendment of the exchange offer. We will have no obligation to publish,
advertise or otherwise communicate any public announcement, other than by
issuing a release to the Dow Jones News Service, except in the case of an
announcement of an extension of the exchange offer, in which case we will have
no obligation to publish, advertise or otherwise communicate such announcement
other than by issuing a notice of such extension by press release or other
public announcement, which notice we will issue no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date.
PROCEDURE FOR TENDERING PREFERRED UNITS AND COMMON UNITS
Your tender to us of preferred units and common units of the Wyndham
partnership or the Patriot partnership in compliance with the procedures
described below and our acceptance of those units will constitute a binding
agreement between you and us to exchange your units in compliance with the
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terms discussed in this prospectus and in the accompanying letter of
transmittal. We first mailed this prospectus, together with the letter of
transmittal, beginning [ ], 1999, to all holders of preferred units and common
units of the Wyndham partnership or the Patriot partnership known to us.
You may tender your preferred units or common units of the Wyndham
partnership or the Patriot partnership by properly completing and signing the
letter of transmittal and delivering it, and any other documents required by the
letter of transmittal, to us at the address listed on the letter of transmittal
on or before the expiration date. Since the preferred units and common units are
not represented by any certificates, you are not required to deliver any
certificates to tender your units.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER DOCUMENTS
IS AT YOUR ELECTION AND RISK. IF SENT BY MAIL, WE RECOMMEND THAT YOU USE
REGISTERED MAIL, RETURN RECEIPT REQUESTED, AND MAKE YOUR MAILING SUFFICIENTLY IN
ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO US ON OR BEFORE THE
EXPIRATION DATE.
We will consider a tender as having been received on the date we receive
your properly completed and signed letter of transmittal.
We will determine all questions as to the validity, form, eligibility,
including time of receipt, and acceptance for exchange of any tender of
preferred units and common units of the Wyndham partnership or the Patriot
partnership. Our determination will be final and binding. We reserve the
absolute right to reject any preferred units or common units which you do not
properly tender or if the acceptance for exchange of such units may, in the
opinion of our counsel, be unlawful. We also reserve the absolute right to waive
any defect or irregularity in the tender of any preferred units or common units.
Unless waived, any defects or irregularities in connection with tenders of
preferred units or common units for exchange must be cured within a reasonable
period of time. Neither we nor any other person will be under any duty to notify
you of any defects or irregularities in tenders or incur any liability for
failure to give any such notification.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The letter of transmittal contains the terms and conditions of the exchange
offer.
By tendering preferred units or common units of the Wyndham partnership or
the Patriot partnership for exchange, you assign and transfer the preferred
units or common units to Wyndham and irrevocably constitute and appoint us as
your agent and attorney-in-fact to assign, transfer and exchange your units. You
represent and warrant that you have full power and authority to tender,
exchange, assign and transfer the preferred units or common units and to acquire
shares of Wyndham common stock issuable upon the exchange of your units, and
that, when your units are accepted for exchange, we will acquire good and
unencumbered title to your units, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim. You also warrant
that you will, upon request, execute and deliver any additional documents that
we deem to be necessary or desirable to complete the exchange, assignment and
transfer of your units. All authority conferred by you will survive your death
or incapacity and all of your obligations will be binding upon your heirs, legal
representatives, successors, assigns, executors and administrators.
WITHDRAWAL RIGHTS
You may withdraw your tender of preferred units and common units in the
exchange offer at any time prior to 5:00 p.m., New York City time, on the
exchange offer's expiration date.
To be effective, we must receive your written, telegraphic, telex or
facsimile transmission notice of withdrawal prior to the expiration date at the
address listed on the letter of transmittal. A facsimile transmission must be
confirmed by telephone and an original delivered by registered or certified mail
or by guaranteed overnight delivery. Any notice of withdrawal must specify:
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- the person named in the letter of transmittal as having tendered preferred
units and common units to be withdrawn;
- the numbers of the preferred units and common units to be withdrawn;
- a statement that you are withdrawing your election to have your preferred
units or common units exchanged;
- the name of the registered holder of such preferred units or common units;
and
- the name to be credited with the withdrawn preferred units and common
units.
A notice of withdrawal must be signed by the holder in the same manner as
the original signature on the letter of transmittal, including any required
signature guarantees, or be accompanied by evidence satisfactory to us that the
person withdrawing the tender has succeeded to the beneficial ownership of the
preferred units and common units being withdrawn. We will determine all
questions as to the validity of notices of withdrawals, including time of
receipt, and our determination will be final and binding on all parties.
Any preferred units or common units withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the exchange offer. We will
credit any preferred units or common units which have been tendered for exchange
but which are not exchanged for any reason to an account specified by you as
soon as practicable after withdrawal, rejection of tender or termination of the
exchange offer. You may retender properly withdrawn preferred units or common
units by following one of the procedures described under "--Tender Procedure"
above, at any time on or prior to the expiration date.
THE WITHDRAWAL OF TENDERED PREFERRED UNITS OR COMMON UNITS WILL BE DEEMED TO
BE A REJECTION OF THE EXCHANGE OFFER.
ACCEPTANCE OF PREFERRED UNITS AND COMMON UNITS FOR EXCHANGE; DELIVERY OF COMMON
STOCK
Upon the satisfaction or waiver of all the terms of the exchange offer, we
will accept for exchange on the exchange offer's expiration date all preferred
units and common units validly tendered and not withdrawn. We will issue the
shares of Wyndham common stock as promptly as practicable after the expiration
date.
We will determine questions as to the validity, form, eligibility, including
time of receipt, and acceptance of the preferred units or common units in our
sole discretion, and our determination will be final and binding. We reserve the
absolute right to reject any and all tenders of any particular preferred units
or common units not properly tendered or not to accept any particular preferred
units or common units if acceptance might, in our judgment or the judgment of
our counsel, be unlawful. We reserve the absolute right in our sole discretion
to waive any defects or irregularities or conditions of the exchange offer as to
any particular preferred units or common units either before or after the
expiration date, including the right to waive the ineligibility of any holder
who seeks to tender preferred units or common units in the exchange offer. Our
interpretation of the terms and conditions of the exchange offer as to any
particular preferred units or common units either before or after the expiration
date, including the letter of transmittal and its instructions, will be final
and binding on all parties. Unless waived by us, you must cure any defects or
irregularities in connection with your tender of preferred units or common units
for exchange within a reasonable period of time and in any event before the
expiration date. Neither we nor any other person has any duty to give
notification of any defect or irregularity with respect to any tender of
preferred units or common units for exchange, nor will we or any other person
incur any liability for failure to give any notification.
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CONDITIONS OF THE EXCHANGE OFFER
We are not required to accept for exchange, or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Securities
Exchange Act, exchange and issue shares of common stock for any preferred units
and common units tendered. Rule 14e-1(c) relates to our obligation to exchange
and issue shares of common stock for or return tendered preferred units and
common units promptly after termination of the exchange offer. We may postpone
the acceptance for exchange of, or the exchange and issuance of shares of common
stock for, preferred units and common units tendered and to be exchanged and may
terminate or amend the exchange offer if:
- third party limited partners holding more than 1.7 million Wyndham
partnership units do not tender;
- third party limited partners holding more than 1.7 million Patriot
partnership units do not tender;
- with respect to class B preferred units of limited partnership interest of
the Wyndham partnership and preferred units of limited partnership
interest of the Patriot partnership only, third party holders of class B
preferred units of limited partnership interest of the Wyndham partnership
do not tender such units together with a corresponding number of preferred
units of limited partnership interest of the Patriot partnership; or
- the general conditions described below are not satisfied.
All of the general conditions to the exchange offer will be deemed to have
been satisfied unless any of the following events occurs on or after the date of
this prospectus and prior to the expiration date:
- any change (or any condition, event or development involving a prospective
change) has occurred or been threatened in our business, properties,
assets, liabilities, capitalization, stockholders' equity, financial
condition, operations, results of operations or prospects, or in the
general economic or financial market conditions in the United States or
abroad, which is or, in our reasonable judgment, may be, materially
adverse to us or our stockholders or to the value of the preferred units
and common units or there has been a significant decrease in the market
price of or trading in the paired common stock, or we have become aware of
any fact or occurrence which is or may be materially adverse with respect
to the value of the preferred units and common units or with respect to
the contemplated benefits to us of the exchange offer; or
- there is threatened, instituted or pending any action, proceeding or claim
by or before any court or governmental, administrative or regulatory
agency or authority or any other person or tribunal, domestic or foreign,
challenging the making of the exchange offer or our acquisition of any
preferred units and common units, or seeking to obtain any material
damages as a result of or related to the exchange offer, or otherwise
adversely affecting us or the value of the preferred units and common
units, which makes it inadvisable to proceed with the exchange offer, the
acceptance for exchange of preferred units and common units or the
issuance of the shares of common stock in the exchange offer.
All of the conditions listed above are for our sole benefit, and we may
assert any of them regardless of the circumstances giving rise to such
condition. We may waive any condition, in whole or in part, at any time and from
time to time, in our sole discretion. Our failure at any time to exercise any of
the rights listed above will not be deemed a waiver of any such right, and each
such right will be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by us concerning the conditions listed
above will be final and binding.
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If any of the conditions to the exchange offer are not satisfied, we may,
subject to applicable law:
- terminate the exchange offer;
- extend the exchange offer; or
- waive the unsatisfied conditions with respect to the exchange offer and
accept all preferred units and common units tendered pursuant to the
exchange offer.
In addition, we reserve the right to amend or modify any or all of the terms
of the exchange offer at any time for any reason.
DISSENTERS' RIGHTS
You do not have any appraisal or dissenters' rights under Delaware law or
under the agreements of limited partnership of the Wyndham partnership or the
Patriot partnership in connection with the exchange offer.
EXCHANGE AGENT
We will serve as the exchange agent for the exchange offer. No third party
will receive any fees for services in the exchange offer. Letters of transmittal
must be addressed to us at the address listed on the letter of transmittal.
DELIVERY TO AN ADDRESS OTHER THAN THE ADDRESS LISTED ON THE LETTER OF
TRANSMITTAL, OR TRANSMISSIONS OF INSTRUCTIONS BY A FACSIMILE OR TELEX TO ANY
NUMBER OTHER THAN THE NUMBERS LISTED ON THE LETTER OF TRANSMITTAL, WILL NOT
CONSTITUTE A VALID DELIVERY.
TRANSFER TAXES
If you tender your preferred units or common units for exchange, you will
not be obligated to pay any transfer taxes in connection with the transfer and
exchange.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of preferred units or common units who do not exchange their
preferred units or common units for shares of our common stock in the exchange
offer or whose preferred units or common units are not accepted for exchange
will continue to be subject to all of the limitations of the units, including
the restrictions on transfer. In addition, holders who do not exchange their
units could be subject to additional limitations if the limited partnership
agreements are amended and restated as proposed.
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DESCRIPTION OF CAPITAL STOCK
We expect to complete the exchange offer in connection with the completion
of the restructuring of Wyndham and Patriot and the closing of the $1 billion
equity investment. In connection with the $1 billion equity investment, we will
amend and restate our existing certificate of incorporation. Due to the timing
of these events, your rights as a stockholder of Wyndham will be governed by the
amended and restated certificate of incorporation to be adopted in connection
with the $1 billion equity investment. The description of our capital stock in
this section reflects the terms of the amended and restated certificate of
incorporation. The following discussion summarizes the key terms of our
certificate of incorporation and bylaws. This summary is not complete and you
should read our certificate of incorporation and bylaws which are attached as
exhibits to the registration statement of which this prospectus forms a part.
Under our amended certificate of incorporation, we will have the authority to
issue [ ] shares of common stock, and [ ] shares of
preferred stock.
COMMON STOCK
You will be entitled to one vote per share of Wyndham common stock on all
matters voted on by our stockholders, including elections of directors. Except
as otherwise required by law, or provided in any resolution adopted by our board
of directors with respect to any series of preferred stock, the holders of
Wyndham common stock and the preferred stock to be issued to the investors
exclusively possess all voting power. The certificate of incorporation does not
provide for cumulative voting in the election of directors. Subject to the terms
of the preferred stock, the holders of Wyndham common stock are entitled to the
amount of dividends declared from time to time by our board of directors from
available funds. Upon liquidation, and after taking into account any
preferential payments paid to Wyndham preferred stockholders, Wyndham common
stockholders are entitled to receive pro rata all assets of Wyndham available
for distribution to such holders. All shares of Wyndham common stock will, when
issued in the exchange offer, be fully paid and nonassessable, and the holders
of the common stock will not have preemptive rights.
Holders of Wyndham common stock have no conversion, sinking fund or
redemption rights, or preemptive rights to subscribe for any of our securities.
We intend to continue to furnish our stockholders with annual reports
containing audited consolidated financial statements and an opinion expressed by
an independent public accounting firm on those financial statements. We also
intend to continue to furnish to our stockholders quarterly reports for the
first three quarters of each fiscal year containing unaudited financial
information.
PREFERRED STOCK
Our board of directors is authorized to provide for the issuance of shares
of preferred stock in one or more series, to establish the number of shares in
each series and to fix the designation, powers, preferences and rights of each
such series and the qualifications, limitations or restrictions on that stock.
Because our board of directors has the power to establish the preferences and
rights of each class or series of preferred stock, it may afford the holders of
any series or class of preferred stock preferences, powers and rights, voting or
otherwise, senior to the rights of holders of shares of our common stock. The
issuance of shares of preferred stock could have the effect of delaying or
preventing a change in control of Wyndham.
In connection with the $1 billion equity investment, we will issue a new
series of Wyndham preferred stock. The series B preferred stock will have the
following terms, among others:
- dividends payable quarterly, on a cumulative basis, at a rate of 9.75% per
year;
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- for the first six years, dividends payable partly in cash and partly in
additional shares of preferred stock, with the cash component initially
equal to 30% for the first dividend and declining over the period to
approximately 19.8% for the final dividend in year six; for the next four
years, dividends payable in cash or additional shares of preferred stock
as determined by our board of directors; and, thereafter, dividends
payable in cash;
- if any dividends are paid on the Wyndham common stock, additional
dividends in the amount that would have been paid on the shares of Wyndham
common stock into which the preferred stock is then convertible;
- if a change in control or a liquidation of Wyndham occurs within the first
six years, any remaining dividends for the six years will be accelerated
and paid in additional shares of preferred stock;
- not redeemable by Wyndham for six years (other than as described below
during the 170 day period following the completion of the investment);
- voting with the Wyndham common stock on an as-converted basis on matters
submitted to the common stockholders (with special rules applying to the
election of directors) and voting as a separate class on specified
matters; and
- convertible, at the holder's option, into a number of shares of Wyndham
common stock equal to $100.00 divided by the conversion price, initially
equal to $8.59 but subject to potential downward adjustment.
For a period of 170 days following the completion of the $1 billion equity
investment, we may redeem up to $300 million of the preferred stock issued to
the investors. We currently intend to fund this redemption by offering to our
stockholders and the limited partners in our subsidiary operating partnerships
rights to purchase up to three million shares of an additional series of our
preferred stock which generally will have the same economic terms as the
preferred stock issued to the investors but will generally be non-voting, except
as required by law.
TRANSFER AGENT
American Stock Transfer & Trust Company of New York, New York will serve as
the transfer agent for our common stock.
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COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK
The information below highlights a number of significant differences between
the Wyndham partnership and the Patriot partnership, on the one hand, and
Wyndham, on the other hand, relating to, among other things, form of
organization, policies and restrictions, management structure, compensation and
fees, investor rights and federal income taxation. The information in this
section also compares legal rights associated with ownership of units of limited
partnership interest and Wyndham common stock. These comparisons are intended to
assist you in understanding how your investment will be changed if you elect to
exchange your units of limited partnership interest for Wyndham common stock.
This discussion is based upon the current limited partnership agreements of the
Wyndham partnership and the Patriot partnership, on the one hand, and the
amended and restated certificate of incorporation and bylaws of Wyntham to be
adopted in connection with the $1 billion equity investment. This discussion
summarizes the material differences among the limited partnership agreements and
the charter documents, but is not a complete discussion of these matters. You
should carefully review the balance of this prospectus and the registration
statement of which this prospectus is a part for additional important
information about Wyndham.
FORM OF ORGANIZATION AND ASSETS OWNED. The Patriot partnership is organized
as a Virginia limited partnership. A substantial amount of Patriot's operations
are conducted through the Patriot partnership. The Wyndham partnership is
organized as a Delaware limited partnership. A substantial amount of our
operations are conducted through the Wyndham partnership.
We are organized under the laws of the State of Delaware. We maintain both a
limited partner interest and a general partner interest in the Wyndham
partnership, which gives us an indirect investment in the properties and other
assets owned by the Wyndham partnership. As of April 12, 1999, we held an
approximate 87.8% economic interest in the Wyndham partnership, and such
interest will increase if Wyndham partnership units are exchanged in the
exchange offer or are otherwise redeemed or acquired by us. Following the
reorganization of Wyndham and Patriot, Patriot will be one of our wholly owned
subsidiaries. Patriot, through PAH GP, Inc. and PAH LP, Inc., will maintain both
a limited and the sole general partner interest in the Patriot partnership. As
of April 12, 1999, Patriot held indirectly, an approximate 89.0% economic
interest in the Patriot partnership.
TERM OF EXISTENCE. Each of the limited partnerships has a stated
termination date of December 31, 2050, although each may be terminated earlier
under specified circumstances. Wyndham has a perpetual term, and we intend to
continue our operations for an indefinite time period.
NATURE OF INVESTMENT AND DISTRIBUTION RIGHTS. Wyndham partnership units and
Patriot partnership units are equity interests which entitle each common
unitholder to a pro rata share of cash distributions made to the common
unitholders of the partnerships. Each of Wyndham and PAH LP, Inc. holds common
limited partner units in its respective operating partnership, and as such is
entitled to receive its pro rata share of distributions made to common
unitholders by the Wyndham partnership and the Patriot partnership.
Shares of Wyndham common stock constitute an equity interest in Wyndham.
Each stockholder will be entitled to their pro rata share of any dividends or
distributions paid with respect to shares of Wyndham common stock. The dividends
payable to the stockholders are not fixed in amount and are only paid if, when
and as declared by our board of directors.
AS PARTNERSHIPS, THE WYNDHAM PARTNERSHIP AND PATRIOT PARTNERSHIP ARE NOT
SUBJECT TO FEDERAL INCOME TAXATION. In determining their federal income tax,
unitholders must take into account their allocable share of partnership income,
gain, deduction and loss, whether or not the partnerships make distributions,
and otherwise are subject to the rules governing the taxation of partnerships
and partners. By contrast, unitholders who receive shares of Wyndham common
stock generally will be taxed on the
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earnings of Wyndham only to the extent of dividends paid in respect of their
Wyndham common stock. See "Certain Federal Income Tax Consequences."
ISSUANCE OF ADDITIONAL EQUITY. The Wyndham partnership is authorized to
issue Wyndham partnership units and other partnership interests to its partners
or to other persons for such consideration and on such terms and conditions as
Wyndham, as general partner, in its sole discretion, may deem appropriate. The
Patriot partnership is authorized to issue Patriot partnership units and other
partnership interests to its partners or to other persons for such consideration
and on such terms and conditions as PAH GP, as general partner, in its sole
discretion, may deem appropriate.
Under the terms of the proposed amended and restated certificate of
incorporation, the Wyndham board of directors has the sole authority to
authorize, effect and control issuances of Wyndham common stock. Under the terms
of the current limited partnership agreements of the Wyndham partnership and the
Patriot partnership, as long as each of the partnerships is in existence, the
proceeds of all equity capital raised by Wyndham will be contributed to the
partnerships in exchange for additional units of limited partnership interests.
LIQUIDITY. Subject to specified exceptions, under the limited partnership
agreements a unitholder may transfer all or any portion of its Wyndham
partnership units or Patriot partnership units, as the case may be, with or
without the consent of the general partners. However, each of the general
partners, in its sole and absolute discretion, may or may not consent to the
admission as a unitholder of any transferee of Wyndham partnership units or
Patriot partnership units. If the general partner of the Wyndham partnership or
the Patriot partnership does not consent to the admission of a permitted
transferee, the transferee will be considered an assignee of an economic
interest in the respective partnership but will not be a unitholder for any
other purpose; as such, the assignee will not be permitted to vote on any
affairs or issues on which a unitholder may vote.
The paired common stock is listed on the New York Stock Exchange under the
symbol "PAH." The breadth and strength of this market will depend, among other
things, upon the number of shares outstanding, our financial results and
prospects and the general interest in investments.
PURPOSE AND PERMITTED INVESTMENTS. The purposes of the Wyndham partnership
include the conduct of any business that may be lawfully conducted by a limited
partnership organized under the laws of the State of Delaware. The Wyndham
partnership may invest or enter into partnerships, joint ventures or similar
arrangements and may own interests in any other entity.
Under our proposed amended and restated certificate of incorporation, we may
engage in any lawful activity permitted under the Delaware General Corporation
Law.
The purpose of the Patriot partnership includes the conduct of any business
that may be lawfully conducted by a limited partnership organized under the laws
of the Commonwealth of Virginia. The current agreement of limited partnership of
the Patriot partnership requires the business of the Patriot partnership to be
conducted in such a manner that will permit Patriot to qualify as a real estate
investment trust for federal income tax purposes. This provision will be deleted
in the restructuring. The Patriot partnership may invest or enter into
partnerships, joint ventures or similar arrangements and may own interests in
any other entity.
BORROWING POLICIES. The Wyndham partnership has no restrictions on
borrowings and Wyndham, its general partner, has full power and authority to
borrow money on behalf of the Wyndham partnership. The Patriot partnership has
no restrictions on borrowings, and PAH GP, its general partner, which is
controlled by Patriot, has full power and authority to borrow money on behalf of
the Patriot partnership.
We are not restricted under the proposed amended and restated certificate of
incorporation from borrowing. However, the new $2.45 billion credit facility to
be entered into in connection with the
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$1 billion equity investment will contain restrictive covenants including
covenants with respect to indebtedness, investments, merger, consolidation,
liquidation, dissolution and the sale of assets.
OTHER INVESTMENT RESTRICTIONS. The limited partnership agreements restrict
the authority of the partnerships to make investments, lend funds, or reinvest
their cash flow and net sale or refinancing proceeds.
Neither our proposed amended and restated certificate of incorporation nor
our proposed bylaws impose any restrictions upon the types of investments that
we make.
MANAGEMENT CONTROL. All management powers over the business and affairs of
the Wyndham partnership and the Patriot partnership are vested in the respective
general partners and no unitholder has any right to participate in or exercise
control or management power over the business and affairs of the partnerships.
The limited partnership agreements provide that the general partners of each of
the partnerships be reimbursed for all expenses incurred by them relating to the
management and business of the partnerships.
Our board of directors has exclusive control over our business and affairs
subject only to the restrictions in our proposed amended and restated
certificate of incorporation and proposed bylaws. The policies adopted by our
board of directors may be altered or eliminated without the approval of the
stockholders. Accordingly, except for your vote in the elections of our
directors, you will have no control over our ordinary business policies.
MANAGEMENT LIABILITY AND INDEMNIFICATION. The limited partnership
agreements generally provide that the general partners will incur no liability
to their partnership or any unitholder for losses sustained or liabilities
incurred as a result of errors in judgment or of any act or omission if the
general partner acted in good faith. In addition, neither of the general
partners is responsible for any misconduct or negligence on the part of its
agents, provided the general partner appointed the agents in good faith. The
limited partnership agreements also provide for indemnification of the general
partners, its affiliates, and such other persons as such general partner may
from time to time designate, against any and all losses, claims, damages,
liabilities, joint or several expenses (including reasonable legal fees and
expenses), judgments, fines, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
partnership in which such person may be involved.
Our proposed amended and restated certificate of incorporation, together
with the Delaware General Corporation Law, eliminates a director's personal
liability to Wyndham or our stockholders for breach of fiduciary duty, except
for liability
- for any breach of the director's duty of loyalty to Wyndham or our
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law; or
- for any transaction from which the director derived an improper personal
benefit.
The Delaware General Corporation Law permits, but does not require, a
company to indemnify its directors, officers, employees or agents and expressly
provides that the indemnification provided for under the Delaware General
Corporation Law shall not be deemed exclusive of any indemnification right under
any bylaw, vote of stockholders or disinterested directors, or otherwise. The
Delaware General Corporation Law permits indemnification against expenses and
specified other liabilities arising out of legal actions brought or threatened
against such persons for their conduct on behalf of Wyndham, provided that each
such person acted in good faith and in a manner that they reasonably believed
was in or not opposed to Wyndham's best interests and in the case of a criminal
proceeding,
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had no reasonable cause to believe their conduct was unlawful. The Delaware
General Corporation Law does not allow indemnification by Wyndham of directors
in the case of an action by or in the right of Wyndham, including stockholder
derivative suits, unless the directors successfully defend the action or
indemnification is ordered by the court. The bylaws provide for indemnification
to the fullest extent authorized by the Delaware General Corporation Law and,
therefore, these statutory indemnification rights are available to the
directors, officers, employees and agents of Wyndham.
ANTI-TAKEOVER PROVISIONS. Except in limited circumstances, the general
partners have exclusive management power over the business and affairs of their
partnerships. The general partners may not be removed by the unitholders of
their respective partnerships with or without cause.
Our proposed amended and restated certificate of incorporation and proposed
bylaws provide for a staggered board of directors and advance notice in the
event that any stockholder proposes to submit any matter to vote of the
stockholders at an annual or special meeting of stockholders. In addition, we
intend to adopt a rights plan in connection with, and to become effective at or
before the time of, the $1 billion equity investment. These provisions, as well
as other provisions of the Delaware General Corporation Law, may have the effect
of delaying or discouraging an unsolicited proposal for the acquisition of
Wyndham or the removal of incumbent directors.
VOTING RIGHTS. Under each of the partnership agreements, the unitholders do
not have voting rights relating to the operation and management of the
respective partnerships, except in connection with matters, as described more
fully below, involving certain amendments to the respective partnership
agreements.
Holders of Wyndham common stock have the right to vote on, among other
things, specified amendments to our certificate of incorporation, a merger or
sale of substantially all of our assets, and our dissolution. Under the Delaware
General Corporation Law and the proposed amended and restated certificate of
incorporation, the sale of all or substantially all of our assets, or any merger
or consolidation, requires the approval of our board of directors and holders of
a majority of the outstanding shares of Wyndham common stock. Similarly, under
the Delaware General Corporation Law, our board of directors must obtain
approval of the holders of a majority of all outstanding shares entitled to vote
in order to dissolve the company. Each share of Wyndham common stock has one
vote with respect to matters involving Wyndham. The proposed amended and
restated certificate of incorporation permits our board of directors to classify
and issue preferred stock in one or more series having voting power which may
differ from that of the Wyndham common stock.
AMENDMENT OF THE PARTNERSHIP AGREEMENTS OR THE CERTIFICATE OF
INCORPORATION. Generally, each of the limited partnership agreements may be
amended by the general partners of the respective partnerships without the
consent of the unitholders, except that specified amendments which alter or
change the distribution rights or redemption rights of a unitholder require the
consent of the unitholders holding more than a majority in interest of Wyndham
common partnership units or Patriot common partnership units as well as holders
of a majority of Wyndham preferred partnership units or Patriot preferred
partnership units voting as a separate class.
The proposed amended and restated certificate of incorporation of Wyndham
provides that, with the exception of specified provisions concerning business
combinations with interested stockholders which require the approval of a
greater proportion, the certificate of incorporation may be amended in the
manner prescribed by the Delaware General Corporation Law, which requires the
approval of the board of directors and the approval of the stockholders by the
affirmative vote of a majority of the outstanding shares entitled to vote on
such amendment.
COMPENSATION, FEES AND DISTRIBUTIONS. The general partners are not entitled
to receive any compensation for their services as general partner of their
partnerships. As a partner in their partnerships, however, the general partners
have the same right to allocations and distributions as other
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partners of the partnerships. In addition, each of the partnerships will
reimburse its general partner for administrative expenses incurred relating to
the ongoing operation of the general partner and other expenses arising in
connection with its role as general partner.
The directors and officers of Wyndham receive compensation for their
services.
LIABILITY OF INVESTORS. Under the Wyndham partnership agreement and
applicable Delaware law, the liability of the limited partners for the Wyndham
partnership's debts and obligations is generally limited to the amount of their
investment in the Wyndham partnership. Under the Patriot partnership agreement
and applicable Virginia law, the liability of the limited partners for the
Patriot partnership's debts and obligations is generally limited to the amount
of their investment in the Patriot partnership.
Under the Delaware General Corporation Law, stockholders generally are not
personally liable for our debts or obligations.
COMPARISON OF TAX TREATMENT OF HOLDING STOCK TO HOLDING PARTNERSHIP
UNITS. Wyndham partnership units and Patriot partnership units constitute
equity interests which entitle each unitholder to a pro rata share of
partnership cash distributions. In determining their federal income tax,
unitholders must take into account their allocable share of partnership income,
gain, deduction and loss, whether or not distributions are made. Distributions
by the partnerships are generally tax-free, except to the extent they exceed a
unitholder's basis in its units, in which case they are taxed as capital gains
(subject to certain recapture provisions).
Shares of Wyndham common stock constitute an equity interest in Wyndham.
Each Wyndham stockholder will be entitled to their pro rata share of any
dividends or distributions paid with respect to shares of Wyndham common stock.
In determining their federal income tax, stockholders must generally take into
account any dividends or distributions paid with respect to shares of Wyndham
common stock, but not any share of Wyndham's income. To the extent of Wyndham's
earnings and profits, dividends are taxed as ordinary income to stockholders and
are generally eligible for the dividends-received deduction for corporate
stockholders.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion describes the material federal income tax
consequences to holders of preferred and common units in the Patriot partnership
and the Wyndham partnership that are expected to result from participating in
the exchange offer. This discussion assumes that you hold your preferred units
or common units as capital assets within the meaning of Section 1221 of the
Internal Revenue Code. This discussion does not address all aspects of taxation
of the exchange offer and the related transactions that may be relevant to
particular holders of units in light of their personal investment or tax
circumstances, or to certain types of unitholders subject to special treatment
under the federal income tax laws, such as dealers in securities, foreign
persons, life insurance companies, tax-exempt organizations, financial
institutions and taxpayers subject to the alternative minimum tax. This
discussion does not discuss any state, local or foreign tax considerations. THE
TAX CONSEQUENCES OF YOUR PARTICIPATION IN THE EXCHANGE OFFER WILL DEPEND IN
LARGE PART ON YOUR PARTICULAR CIRCUMSTANCES (INCLUDING, FOR EXAMPLE, THE MANNER
IN WHICH YOU ACQUIRED YOUR UNITS). ALTHOUGH SOME UNITHOLDERS SHOULD BE ABLE TO
PARTICIPATE IN THE EXCHANGE WITHOUT RECOGNIZING GAIN, OTHERS MAY RECOGNIZE
SUBSTANTIAL AMOUNTS OF INCOME OR GAIN. THE AMOUNT OF THE INCOME OR GAIN, OR EVEN
THE TAXES ON THE INCOME OR GAIN, MAY EXCEED THE VALUE OF THE WYNDHAM COMMON
STOCK THAT YOU RECEIVE IN THE EXCHANGE. ACCORDINGLY, WE URGE YOU TO CONSULT YOUR
OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE EXCHANGE
OFFER AND THE RELATED TRANSACTIONS, INCLUDING APPLICABLE FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES.
Goodwin, Procter & Hoar LLP, special tax counsel for Wyndham and Patriot,
has opined on certain federal income tax consequences of the exchange offer and
the restructuring, as discussed below. This opinion is not binding on the
Internal Revenue Service or any court, and no assurance can be given that the
IRS will not challenge the propriety of part or all of such opinion or that such
a challenge would not be successful. Goodwin, Procter & Hoar LLP's opinion
relies and is premised on the accuracy of factual statements and representations
made by Patriot and Wyndham, including a representation to the effect that none
of the existing Wyndham preferred stock will be outstanding at the time of the
merger. No other opinions of counsel have been rendered, and neither Patriot nor
Wyndham will request any ruling or determination letters from the IRS on any tax
issue connected with the exchange offer, the restructuring or any related
transactions.
This discussion is based on the Internal Revenue Code as currently in
effect, applicable Treasury Regulations and judicial and administrative
interpretations thereof, all of which are subject to change, including changes
that may be retroactive.
FEDERAL INCOME TAX TREATMENT OF THE EXCHANGE
Goodwin, Procter & Hoar LLP has opined to the effect that the transfers by
unitholders of their preferred and common units in the Patriot and Wyndham
partnerships in exchange for shares of Wyndham common stock, together with the
transfers by the Patriot stockholders of their Patriot stock for Wyndham common
stock (or Wyndham common stock and cash) will qualify for treatment under
Section 351 of the Code, except as otherwise required by Section 304 of the Code
(which is discussed below).
TAX CONSEQUENCES TO UNITHOLDERS WHO EXCHANGE UNITS
IN GENERAL. Provided that the exchange qualifies for Section 351 treatment,
and subject to certain exceptions discussed below regarding liabilities in
excess of basis, at-risk recapture and Section 304 of the Code, the federal
income tax consequences of the exchange will be as follows:
- Unless you receive cash in the exchanges or the merger, you will not
recognize gain or loss on the exchange of your preferred or common units
for Wyndham common stock.
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- If you receive cash in lieu of fractional shares of Wyndham common stock
(or cash for Patriot series B preferred stock in the merger), you will
recognize gain (but not loss) equal to the lesser of (a) the amount of the
cash and (b) the amount by which the sum of (i) the cash, (ii) the fair
market value of the Wyndham common stock you receive in the exchange and
the merger and (iii) the partnership liabilities attributable to the units
that you exchange, exceeds your aggregate tax basis in the units and
Patriot stock that you transfer to Wyndham.
- The tax basis of the shares of Wyndham common stock that you receive will
be equal to the aggregate tax basis of the units that you exchange and any
shares of Patriot stock that you exchange for Wyndham common stock,
decreased by the amount of the partnership liabilities attributable to the
units and increased by the amount of any gain that you recognize in the
exchange and in the merger.
- The holding period of the shares of Wyndham common stock that you receive
will include the holding period of the units and any shares of Patriot
stock that you exchange for Wyndham common stock, assuming that you hold
your units and your Patriot stock as capital assets at the time of the
exchange and the merger.
- You will be required to file additional information with your federal
income tax return for your tax year in which the exchange occurs.
- If you hold shares of Patriot stock at the time of the merger, and Section
304 of the Code applies as discussed below, then for purposes of the
calculations above you should disregard any partnership liabilities, cash
and shares of Patriot stock that are subject to special treatment under
Section 304.
RECOGNITION OF GAIN WHERE LIABILITIES EXCEED BASIS. Under Section 357(c) of
the Code, if a corporation assumes liabilities of the transferor (or accepts
property subject to liabilities) in a transaction subject to Section 351, the
transferor must recognize gain in the amount by which the liabilities exceed the
transferor's basis in the property contributed to the corporation. For this
purpose, partnership liabilities allocable to the units that you exchange will
be treated as your liabilities and assumed by Wyndham. Accordingly, you will
recognize gain when you exchange units if and to the extent that (a) the
aggregate amount of partnership liabilities attributable to the units you
exchange exceeds (b) your aggregate tax basis in the units you exchange plus
your aggregate tax basis in any shares of Patriot stock you exchange in the
merger. Depending on your individual circumstances, you may be able to offset
this gain with any prior suspended losses from the issuing partnership (I.E.
losses that were allocated to you by the partnership, but which you could not
deduct under Section 704(d) of the Code because they exceeded your tax basis),
subject to any applicable at-risk limitations under Section 465 of the Code.
CHARACTER OF THE GAIN RECOGNIZED. Any gain that you recognize under Section
357(c) of the Code must be allocated among the units and Patriot stock that you
transfer to Wyndham in the exchange offer and the merger, in proportion to their
relative fair market values. Gain allocated to the Patriot stock you exchange
for Wyndham stock will be treated as capital gain, assuming that you hold the
stock as a capital asset and will be long-term capital gain if you have a
holding period in the Patriot stock of more than one year. Gain allocated to the
units will generally be capital gain and also treated as long term capital gain
to the extent that you have a holding period of more than one year with respect
to your units.
It is possible that a portion of the gain that you recognize with respect to
your units may be recharacterized as ordinary income under Section 751 of the
Code. This will occur if the issuing partnership holds appreciated inventory, or
depreciable property, other than real estate, the value of which exceeds its
depreciated basis. We believe, and intend to take the position, that although
both the Patriot partnership and the Wyndham partnership hold inventory and
non-real estate depreciable
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property (collectively, so-called "hot assets"), the value of the hot assets
does not exceed their tax basis. We cannot assure you, however, that this
position will be respected by the IRS, and it is possible that some portion of
any gain you recognize with respect to your units will be recharacterized as
ordinary income under Section 751 of the Code.
In addition to the recharacterization of gain as ordinary income under
Section 751 of the Code, a portion of any gain you recognize may possibly be
recharacterized as "unrecaptured Section 1250 gain," subject to tax at a maximum
rate of 25%, rather than the maximum 20% rate applicable to long term capital
gains. Although we do not believe that any portion of your gain will be so
recharacterized under current law, the Treasury is authorized to promulgate
regulations treating gain from the sale of pass-thru entities, such as
partnerships, as unrecaptured Section 1250 gain to the extent that the pass-thru
entity has taken depreciation deductions on its real property. The Treasury has
not announced any intention to promulgate regulations to this effect, but could
do so prior to the time of the completion of the exchange offer and could do so
after the time of the exchange offer with retroactive effect.
BASIS. Unlike shares of stock, your tax basis in your units is computed as
if you held a single, unitary interest in the issuing partnership and includes
your share of that partnership's liabilities. In general, your initial basis in
your units has been increased by your share of the issuing partnership's income
and any increases in your share of the partnership's liabilities. Your initial
basis has also been decreased by your share of the issuing partnership's losses,
by distributions, and by any decreases in your share of the issuing
partnership's liabilities, except that your basis has not been reduced below
zero by any of these adjustments. Your tax basis in your units will also be
adjusted up or down for your share of the issuing partnership's income or loss
for the partial year ending on the date of the exchange.
If you exchange fewer than all of your units in one of the partnerships, you
must allocate your aggregate tax basis between the units you exchange and the
units you retain. The method by which basis must be allocated depends on whether
your share of the partnership's liabilities exceeds your tax basis in your
units. In general, the basis in the units exchanged is equal to the sum of the
partnership liabilities attributable to those units, plus a portion of the
residual basis in your units (I.E. your basis in your units computed without
including your share of the partnership's liabilities) allocated based on the
relative fair market values of the units exchanged and the units retained. If,
however, your share of the partnership's liabilities exceeds your tax basis,
then your tax basis is allocated to the units exchanged based on the ratio of
the liabilities attributable to the units exchanged to your total share of the
partnership's liabilities.
SHARE OF LIABILITIES. Your share of the liabilities of a partnership is
determined under Section 752 of the Code. In general, under Section 752 of the
Code, each liability of a partnership is allocated to those partners who (or
whose affiliates) bear the economic risk of loss if each liability is not paid
by the partnership, whether they bear the risk of loss as general partners of
the partnership, by contract, by reason of being the lender to the partnership
(or an affiliate of the lender) with respect to such liability or otherwise. In
general, liabilities for which no partner bears the economic risk of loss,
so-called "nonrecourse liabilities," are allocated among the partners in three
tiers: first among the partners in proportion to certain deductions or
distributions that were financed by the liabilities (those which create
"partnership minimum gain"); second in proportion to the taxable gain that would
be allocated under Section 704(c) of the Code (or under the principles of
Section 704(c)) if the assets of the partnership subject to the nonrecourse
liabilities were sold for an amount equal to the nonrecourse liabilities; and
third in proportion to the partners' interests in profits.
In general, because the partnership liabilities allocable to units are
included in the basis of those units, your exchange of units will not cause you
to recognize gain under Section 357(c), unless your tax basis has been reduced
by other factors, such distributions to you in excess of your share of the
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partnership's income or distributions or deductions financed with nonrecourse
debt (including through predecessor partnerships acquired by the Patriot
partnership or the Wyndham partnership). In this regard, you should note that
the Patriot partnership has made distributions to its unitholders in excess of
its net income.
If you acquired your units in exchange for a contribution of property and
you undertook by contract the economic risk of loss for a portion of the issuing
partnership's indebtedness, if you negotiated for the maintenance of specified
amounts of nonrecourse debt on the property you contributed, or if you are a
lender to the issuing partnership (or an affiliate of a lender), you are
particularly at risk of recognizing gain under Section 357(c) (or causing
at-risk recapture, as discussed below). If any of these circumstances apply to
you, we urge you to consult with your tax advisors regarding the potential
benefit of retaining some or all of your share of partnership liabilities by
retaining a portion of your units.
Because of the complexity of the rules under which partnership liabilities
are allocated, we strongly encourage all unitholders to consult with their tax
advisors regarding the application of these rules to their particular
circumstances.
POSSIBLE AT-RISK RECAPTURE. Section 465 of the Code requires individuals
and closely held corporations to recapture losses previously allowed with
respect to their interests in a partnership in the event their amount "at-risk"
with respect to that partnerhsip becomes less than zero. The consequence of
recapture is that a taxpayer must recognize income equal to the negative at-risk
amount. A partner's at-risk amount is generally equal to its basis in its
partnership units, adjusted to exclude certain non-qualified partnership
liabilities which would otherwise be included in basis ("At-Risk Basis") and
increased by any gain recognized on the disposition of the partner's units. One
event that would reduce a partner's at-risk amount and therefore potentially
create a negative at-risk amount is the reduction of the partner's share of
qualified liabilities. Although guidance is scarce, it is likely that the
recapture income that a partner would recognize is treated as either ordinary
income or has the character of the losses and deductions previously allowed.
In general, as long as your At-Risk Basis in the units that you exchange is
greater than your share of qualifying indebtedness attributable to those units,
you should not recognize recapture income under Section 465(e) of the Code.
However, if your share of such liabilities exceeds your At-Risk Basis in the
units you exchange you will be subject to at-risk recapture although the amount
of recapture will be reduced or substantially eliminated by the amount of the
gain that you recognize under Section 357(c) of the Code apportioned to those
units (as discussed above). If you may be subject to these rules, you should
consult your tax advisor concerning your share of the qualifying indebtedness of
the Patriot partnership, and the application of these rules to your particular
circumstances.
GAIN RECOGNIZED UNDER SECTION 304 OF THE CODE. The following discussion
applies only to unitholders who both exchange units and hold Patriot stock at
the time of the merger. Section 304 of the Code will not apply and therefore
supercede the tax consequences generally covered by Section 357 of the Code if
the former Patriot shareholders control Wyndham following the Merger and all
related transactions. "Control" for this purpose means the ownership of stock
possessing at least 50% of the total combined voting power of all classes of
stock entitled to vote or at least 50% of the total combined value of all
classes of stock (determined with reference to certain constructive ownership
rules). A determination as to whether this control requirement will be satisfied
will depend on certain facts and circumstances at the time of the restructuring
which cannot be predicted. For example, changes in the market value of paired
shares could determined whether former Patriot shareholders will have control of
Wyndham by value. Moreover, the extent to which unitholders who are not also
Patriot shareholders acquire Wyndham shares by exchanging their units could
determine whether former Patriot shareholders will have control of Wyndham by
vote.
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If the requirements of Section 304 of the Code are satisfied, and you are a
Patriot shareholder at the time of the merger, Section 304 of the Code, and not
Section 351 of the Code, will govern the tax treatment of any Patriot shares
that Wyndham acquires (or is deemed to acquire) for cash or the assumption of
liabilities. For this purpose, it is possible that the partnership liabilities
attributable to the units you exchange (and any cash you receive in lieu of
fractional shares) will be treated, in part, as liabilities assumed (and cash
paid) by Wyndham in partial consideration for your Patriot stock, which could
cause you to recognize gain or loss under Section 304 of the Code. If the form
of the transaction is respected for tax purposes, however, this result will not
occur. Wyndham will be treated as assuming the partnership liabilities
attributable to your units (or paying cash in lieu of issuing fractional shares
in the exchange) only in consideration for your units and not in consideration
for any of your Patriot stock. We currently intend to report the transaction for
tax purposes consistent with this allocation. The IRS takes the position,
however, that cash received and liabilities assumed in a Section 351 exchange
should be allocated PRO RATA among the assets being exchanged by the transferor.
The IRS might apply a similar approach for purposes of Section 304 of the Code,
in which case the liabilities allocable to the units (and cash for fractional
shares) would be treated as if they were assumed by Wyndham in exchange for a
PRO RATA portion (based on relative fair market values) of each unit you
exchange in the exchange offer and each share of each class of Patriot stock you
exchange in the merger.
If and to the extent that the liabilities allocable to your units (or cash
for fractional shares) are treated as amounts paid for your Patriot stock, the
liabilities (or cash) will be treated under Section 304 as cash distributed to
you in redemption of stock of Wyndham (a "deemed redemption"). In general, the
cash you are deemed to receive in this deemed redemption will be treated as
either a dividend from Wyndham (to the extent of the earnings and profits of
Patriot and Wyndham) or as a sale of shares to Wyndham (resulting in gain or
loss). It will be treated as a dividend unless the deemed redemption is
"substantially disproportionate" or "not essentially equivalent to a dividend"
within the meaning of Section 302(b) of the Code, as determined by comparing
your pre-transaction ownership in Patriot with your post-transaction indirect
ownership in Patriot through Wyndham, taking into account stock you actually
own, as well as stock you are treated as constructively owning under Section 318
of the Code, with certain modifications set out in Section 304 of the Code. For
this purpose, your post-transaction indirect ownership in Patriot will equal
your percentage interest in Wyndham stock determined by value. Whether your
ownership in Patriot is increased or decreased in the transaction will depend,
among other things, on the number of units you exchange, which will generally
increase your post-transaction ownership of Patriot, as well as the impact of
the substantial dilution that will result from the $1 billion equity investment
in Wyndham.
If you hold Patriot series B preferred stock, you should note that your
exchange of units may also affect the treatment of the cash you receive in
exchange for those shares, because (i) the exchange of units will increase your
post-transaction ownership in Patriot and thereby increase the likelihood that
cash paid for your series B preferred stock will be treated as a dividend; and
(ii) the IRS might treat for Section 304 purposes some of the cash received for
your series B preferred stock as paid in consideration for your units (based on
the pro rata allocation described above).
Unitholders who also own Patriot stock should see the proxy materials
delivered to them regarding the restructuring for additional discussion of
Section 304 and should consult with their tax advisors regarding the application
of Section 304 to their particular circumstances, including the application of
the attribution rules.
REPORTING REQUIREMENTS. Regulations under Section 351 of the Code require
you to file a statement with your federal income tax return for the taxable year
in which you participate in a transaction subject to Section 351 of the Code.
Similarly, regulations under Section 751 of the Code require you to file a
statement with your federal income tax return for the taxable year in which you
dispose of an interest in a partnership that holds hot assets.
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TAX CONSEQUENCES TO UNITHOLDERS WHO DO NOT EXCHANGE ALL OF THEIR UNITS
IN GENERAL. In general, and subject to the discussion below, the
consummation of the exchange will not cause you to recognize gain or loss, other
than with respect to any units that you may exchange for Wyndham common stock.
You will continue to be treated as a partner in the partnerships in which you
hold units and will include in your income your allocable share of the
partnerships' items of income, gain, loss, deduction and credit.
GAIN FROM THE DISTRIBUTION OF THE DECONTROLLED SUBSIDIARIES. If proposed
amendments to its partnership agreement are approved, the Patriot partnership
will distribute its stock in several corporate, or "decontrolled," subsidiaries
directly to PAH, L.P., and the unitholders in the Patriot partnership should
recognize neither gain nor loss with respect to the distribution. If the
proposed partnership amendments are not approved, however, the Patriot
partnership may make a pro rata distribution of the stock in decontrolled
subsidiaries to all of the unitholders in the Patriot partnership following the
exchange. If you contributed appreciated property to the Patriot partnership
within the five year period prior to the distribution of decontrolled
subsidiaries stock, and the fair market value of decontrolled subsidiaries stock
distributed to you exceeds your basis in your Patriot partnership units, you
will recognize gain equal to the lesser of the excess and the amount of gain
that you would recognize if the Patriot partnership sold the property that you
contributed to it at its fair market value. The character of this gain will be
capital gain, unrecaptured Section 1250 gain, or ordinary income in proportion
to the gain that would have been allocated to you in the hypothetical sale of
the property you contributed. Your basis in your units will be increased by any
gain that you recognize. Your basis in decontrolled subsidiaries stock will be
equal to the lesser of the Patriot partnership's basis in the stock distributed
to you and your basis in your units. For purposes of determining your basis in
decontrolled subsidiaries stock, any gain that you recognize in the distribution
will be treated as occurring immediately prior to the distribution.
The subsequent mergers of decontrolled subsidiaries into a subsidiary of
Wyndham in exchange for Wyndham common stock should be treated as part of the
larger Section 351 exchange that includes the exchange of units for shares of
Wyndham common stock, the merger and the $1 billion equity investment. In this
case, if you participate in the exchange offer, the calculations described above
should include consideration of the Wyndham common stock you receive for your
decontrolled subsidiary stock, as well as the tax basis of the decontrolled
subsidiary stock. If you do not participate in the exchange offer, you will not
recognize any further gain or loss on the exchange of decontrolled subsidiary
stock for Wyndham common stock, your tax basis in the Wyndham common stock that
you receive will be equal to your tax basis in your decontrolled subsidiary
stock, and your holding period in the Wyndham common stock will include the
Patriot partnership's holding period in the decontrolled subsidiary stock.
CONSEQUENCES OF THE REDUCTION OF DEBT AND RE-ALLOCATION OF LIABILITIES. The
use of the investors' funds to pay down debt of a partnership in which you hold
units and the proposed amendments to the partnership agreements may cause your
share of that partnership's liabilities to be reduced. This reduction will be
treated as a distribution of cash to you and will be taxable if the amount of
the deemed distribution exceeds your tax basis in that partnership's units. The
gain will generally be capital gain, subject to recharacterization as ordinary
income under Section 751 of the Code, and possibly as Section 1250 gain, as
discussed above. In addition, if you are subject to the at-risk rules, these
transactions may reduce your share of the partnerships' qualified indebtedness,
which may cause you to recognize recapture income under Section 465(e) of the
Code.
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LEGAL MATTERS
The validity of the shares of Wyndham common stock to be issued in the
exchange offer will be passed upon for, and an opinion with respect to certain
material tax consequences of the exchange offer will be rendered to, Wyndham by
Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the: 1. (a) Combined
Financial Statements of Patriot and Wyndham as of December 31, 1998 and 1997 and
for each of the years in the period ended December 31, 1998, (b) the
Consolidated Financial Statements of Patriot as of December 31, 1998 and 1997
and for each of the years in the period ended December 31, 1998 and the related
financial schedules, and (c) the Consolidated Financial Statements of Wyndham as
of December 31, 1998 and 1997 and for the year ended December 31, 1998 and the
six months ended December 31, 1997 included in the Joint Annual Report on Form
10-K of Patriot American Hospitality, Inc. and Wyndham International, Inc. for
fiscal year ended December 31, 1998, as set forth in their report which is
incorporated by reference in this prospectus; 2. (a) Consolidated Financial
Statement of WHG Resorts & Casinos, Inc. as of June 30, 1997 and 1996 and for
each of the three years in the period ended June 30, 1997 and the related
financial statement schedule, (b) the Financial Statements of Posadas de San
Juan Associates as of June 30, 1997 and 1996 and for each of the three years in
the period ended June 30, 1997 and the related financial statement schedule, (c)
the Financial Statements of WKA El Con Associates as of June 30, 1997 and 1996,
and for each of the three years in the period ended June 30, 1997, and (d) the
Financial Statements of El Conquistador Partnership, L.P. as of March 31, 1997
and 1996 and for each of the three years in the period ended March 31, 1997,
included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Wyndham International, Inc. dated April 20, 1998 (filed
April 22, 1998) as set forth in their reports which are incorporated by
reference in this prospectus; 3. (a) Consolidated Financial Statements of SF
Hotel Company, L.P. as of January 2, 1998 and January 3, 1997 and for the years
then ended, and (b) Combined Financial Statements of SC Suites Summerfield
partnerships as of January 2, 1998 and January 3, 1997 and for the three years
in the period ended January 2, 1998, included in the Joint Current Report of
Form 8-K of Patriot American Hospitality, Inc. and Wyndham International, Inc.
dated June 2, 1998, as amended (filed June 17, 1998 and August 6, 1998), as set
forth in their reports which are incorporated by reference in this prospectus.
Each of the above referenced financial statements and schedules are incorporated
herein by reference in reliance on Ernst & Young LLP's reports, given on their
authority as experts in accounting and auditing.
The Financial Statements of Sheraton City Centre as of December 31, 1996 and
for the year then ended and the Statement of Direct Revenues and Direct
Operating Expenses for the Wyndham Emerald Plaza for the year ended December 31,
1996, included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Wyndham International, Inc. dated January 5, 1998, which
is incorporated by reference herein, have been audited by PriceWaterhouseCoopers
LLP as set forth in their report thereon included therein and incorporated
herein by reference. The (a) Consolidated Financial Statements of Wyndham Hotel
Corporation as of December 31, 1996 and 1997 and for each of the three years in
the period ended December 31, 1997, and (b) the Consolidated Financial
Statements of Interstate Hotels Company as of December 31, 1996 and 1997 and for
the three years in the period ended December 31, 1997 included in Interstate's
1997 Annual Report on Form 10-K dated March 31, 1998, and the CHC Lease Partners
financial statements as of December 31, 1996 and the period inception (October
2, 1995) through December 31, 1995, incorporated by reference herein, by
reference to the Current Report on Form 8-K dated July 1, 1997, and the CHC
International Hospitality Division Financial Statements as of November 30, 1995,
1996 and 1997 included in the Joint Current Report on Form 8-K of Patriot
American Hospitality, Inc. and Wyndham International, Inc. dated April 20, 1998
(filed April 22, 1998), (c) financial statements of
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Royal Palace Associates as of December 31, 1997 and for the year then ended
incorporated by reference herein, by reference to the Current Report on Form 8-K
of Patriot American Hospitality, Inc. and Wyndham International, Inc., dated
June 2, 1998 which is incorporated by reference herein have been audited by
PriceWaterhouseCoopers LLP, independent accountants, as set forth in their
report thereon. Each of the above referenced financial statements have been
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing.
The financial statements of Arcadian International Limited (formerly
Arcadian International Plc) and subsidiary undertakings, and Malmaison Limited
and subsidiary undertakings, incorporated in this Prospectus by reference from
the Joint Current Report of Form 8-K/A of Patriot American Hospitality, Inc. and
Wyndham International, Inc. dated June 2, 1998, have been audited by Arthur
Andersen, charted accountants and registered auditors, as indicated in their
reports with respect thereto, are incorporated by reference herein in reliance
upon the authority of said firm as experts in accounting and auditing in giving
such reports.
34
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a corporation
to indemnify its directors, officers, employees and agents against certain
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, provided they act in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation. Wyndham's certificate of incorporation and bylaws require Wyndham
to indemnify its officers and directors to the full extent permitted by Delaware
law.
Section 102 of the Delaware General Corporation Law authorizes a corporation
to limit or eliminate its directors' liability to the corporation or its
stockholders for monetary damages for breaches of fiduciary duties, other than
for (a) breaches of the duty of loyalty, (b) acts or omissions involving bad
faith, intentional misconduct or knowing violations of the law, (c) unlawful
payments of dividends, stock purchases or redemptions, or (d) transactions from
which a director derives an improper personal benefit. Wyndham's certificate of
incorporation contains provisions limiting the liability of the directors to
Wyndham and to its stockholders to the full extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law authorizes a corporation
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation against any liability
asserted against him and incurred by him or her in any such capacity, or arising
out of his or her status as such. Wyndham's certificate of incorporation and
bylaws provide that Wyndham may, to the full extent permitted by law, purchase
and maintain insurance on behalf of any director, officer, employee or agent of
Wyndham against any liability that may be asserted against him or her, and
Wyndham currently maintains such insurance. Wyndham currently has $75 million of
liability insurance covering its directors and officers for claims asserted
against them or incurred by them in such capacity, including claims brought
under the Securities Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The Exhibit Index beginning on page E-1 is hereby incorporated by reference.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has
II-1
<PAGE>
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the State of Texas on April 12, 1999.
<TABLE>
<S> <C> <C>
WYNDHAM INTERNATIONAL, INC.
By: /s/ JAMES D. CARREKER
-----------------------------------------
Name: James D. Carreker
TITLE: CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below hereby constitutes and appoints James D. Carreker or Carla S. Moreland or
either of them his true and lawful agent, proxy and attorney-in-fact, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to (a) act on, sign and file with the
Securities and Exchange Commission any and all amendments (including
post-effective amendments) to this registration statement together with all
schedules and exhibits thereto and any subsequent registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together
with all schedules and exhibits thereto, (b) act on, sign and file such
certificates, instruments, agreements and other documents as may be necessary or
appropriate in connection therewith, (c) act on and file any supplement to any
prospectus included in this registration statement or any such amendment or any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and (d) take any and all actions which may
be necessary or appropriate in connection therewith, granting unto such agent,
proxy and attorney-in-fact full power and authority to do and perform each and
every act and thing necessary or appropriate to be done, as fully for all
intents and purposes as he might or could do in person, hereby approving,
ratifying and confirming all that such agents, proxies and attorneys-in-fact or
any of their substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman and Chief
/s/ JAMES D. CARREKER Executive
- ------------------------------ Officer (PRINCIPAL April 12, 1999
James D. Carreker EXECUTIVE OFFICER)
Executive Vice President
/s/ LAWRENCE S. JONES and Treasurer (PRINCIPAL
- ------------------------------ FINANCIAL OFFICER AND April 12, 1999
Lawrence S. Jones PRINCIPAL ACCOUNTING
OFFICER)
/s/ KARIM ALIBHAI
- ------------------------------ President, Chief Operating April 12, 1999
Karim Alibhai Officer and Director
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ LEONARD BOXER
- ------------------------------ Director April 12, 1999
Leonard Boxer
/s/ BURTON C. EINSPRUCH,
M.D.
- ------------------------------ Director April 12, 1999
Burton C. Einspruch, M.D.
/s/ SUSAN T. GROENTEMAN
- ------------------------------ Director April 12, 1999
Susan T. Groenteman
/s/ ARCH K. JACOBSON
- ------------------------------ Director April 12, 1999
Arch K. Jacobson
/s/ JAMES C. LESLIE
- ------------------------------ Director April 12, 1999
James C. Leslie
/s/ PAUL A. NUSSBAUM
- ------------------------------ Director April 12, 1999
Paul A. Nussbaum
/s/ ROLF E. RUHFUS III
- ------------------------------ Director April 12, 1999
Rolf E. Ruhfus III
/s/ SHERWOOD WEISER
- ------------------------------ Director April 12, 1999
Sherwood Weiser
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Restated Certificate of Incorporation of Wyndham International, Inc. (1)
3.2 Amended and Restated Bylaws of Wyndham International, Inc. (1)
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the validity of the securities being offered*
23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP (Dallas, Texas)*
23.3 Consent of Ernst & Young LLP (San Juan, Puerto Rico)*
23.4 Consent of Ernst & Young LLP (Wichita, Kansas)*
23.5 Consent of Price Waterhouse LLP (Pittsburgh, Pennsylvania)*
23.6 Consent of Price Waterhouse LLP (Tampa, Florida)*
23.7 Consent of Price Waterhouse LLP (Miami, Florida)*
23.8 Consent of Price Waterhouse LLP (Dallas, Texas)*
23.9 Consent of Arthur Andersen LLP (London, United Kingdom)*
24.1 Powers of Attorney (included on signature pages hereto)
99.1 Form of Letter of Transmittal*
99.2 Form of Letter to Limited Partners*
</TABLE>
- ------------------------
* Filed herewith
(1) Previously filed as an exhibit to Wyndham's Current Report on Form 8-K (SEC
File No. 001-09319) filed with the SEC on March 2, 1999.
E-1
<PAGE>
Exhibit 5.1
Goodwin Procter & Hoar LLP
Exchange Place
Boston, MA 02109
April 12, 1999
Wyndham International, Inc.
1950 Stemmons Freeway, Suite 6001
Dallas, TX 75207
Re: Wyndham International, Inc.
REGISTRATION STATEMENT ON FORM S-4
Ladies and Gentlemen:
We have acted as special counsel to Wyndham International, Inc., a
Delaware corporation (the "Company"), in connection with the public offering by
the Company of up to 16,541,706 shares (the "Shares") of the Company's common
stock, par value $.01 per share (the "Common Stock"), in connection with the
Company's offer (the "Exchange Offer") to exchange Common Stock for all of the
issued and outstanding units of limited partnership in Wyndham International
Operating Partnership, L.P. and Patriot American Hospitality Partnership, L.P.
(the "Partnerships").
This opinion is being furnished in accordance with the requirements
of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as
amended (the "Act"). In connection with this opinion, we have examined
originals or copies, certified or otherwise identified to our satisfaction,
of (i) the Registration Statement on Form S-4, including the prospectus
forming part thereof, as filed with the Securities and Exchange Commission
(the "Commission") on April 13, 1999 under the Act (the "Registration
Statement"); (ii) the Certificate of Incorporation of the Company, as
presently in effect; (iv) the By-Laws of the Company, as presently in effect;
and (v) certain resolutions of the Board of Directors of the Company relating
to the issuance and sale of the Shares and related matters. We have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such records of the Company and such agreements, certificates
of public officials, certificates of officers or other representatives of the
Company and others, and such other documents, certificates and records as we
have deemed necessary or appropriate as a basis for the opinions set forth
herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or
<PAGE>
Wyndham International Inc.
April 12, 1999
Page 2
photostatic copies and the authenticity of the originals of such latter
documents. In making our examination of documents executed or to be executed by
parties other than the Company, we have assumed that such parties had or will
have the power, corporate or other, to enter into and perform all obligations
thereunder and have also assumed the due authorization by all requisite action,
corporate or other, and execution and delivery by such parties of such documents
and the validity and binding effect thereof. As to any facts material to the
opinions expressed herein which we have not independently established or
verified, we have relied upon statements and representations of officers and
other representatives of the Company and others.
Members of our firm are admitted to the bar in the Commonwealth of
Massachusetts, and we do not express any opinion as to the laws of any other
jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that
when (i) the Registration Statement becomes effective; and (ii) certificates
representing the Shares have been delivered in accordance with the terms of
the Exchange Offer, the issuance and sale of the Shares will have been duly
authorized, and the Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
-------------------------------
GOODWIN, PROCTER & HOAR LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-4 and the related Prospectus of Wyndham
International, Inc. to be filed with the Securities and Exchange Commission
on or about April 13, 1999 for the registration of 16,541,706 shares of
common stock of Wyndham International, Inc. and to the incorporation by
reference therein of our report dated March 1, 1999 with respect to the
Consolidated Financial Statements and financial statement schedules of
Patriot American Hospitality, Inc., the Consolidated Financial Statements of
Wyndham International, Inc. and the Combined Financial Statements of Patriot
American Hospitality, Inc. and Wyndham International, Inc. included in the
1998 Joint Annual Report on Form 10-K of Patriot American Hospitality, Inc.
and Wyndham International, Inc., filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
Dallas, Texas
April 8, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-4 and the related Prospectus of Wyndham
International, Inc. to be filed with the Securities and Exchange Commission
on or about April 13, 1999 for the registration of 16,541,706 shares of
common stock of Wyndham International, Inc. and to the incorporation by
reference therein of our reports (a) dated August 7, 1997 (except for Note
18, as to which the date is September 17, 1997) with respect to the
Consolidated Financial Statements of WHG Resorts & Casinos Inc. and related
financial statement schedule; (b) dated August 7, 1997 with respect to the
Financial Statements of Posadas de San Juan Associates and related financial
statement schedule; (c) dated August 11, 1997 with respect to the Financial
Statements of WKA El Con Associates; and (d) dated May 2, 1997 with respect
to the Financial Statements of El Conquistador Partnership L.P.; all of which
are included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Wyndham International, Inc. dated April 20, 1998, filed
with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
San Juan, Puerto Rico
April 8, 1999
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and the related Prospectus of Wyndham
International, Inc. to be filed with the Securities and Exchange Commission
on or about April 13, 1999 for the registration of 16,541,706 shares of
common stock of Wyndham International, Inc. and to the incorporation by
reference therein of our reports (a) dated March 4, 1998 with respect to the
Consolidated Financial Statements of SF Hotel Company, L.P.; and (b) dated
February 3, 1998 with respect to the Combined Financial Statements of SC
Suites Summerfield Partnerships; both of which are included in the Joint
Current Report on Form 8-K/A No. 1 of Patriot American Hospitality, Inc. and
Wyndham International, Inc. dated June 2, 1998, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Wichita, Kansas
April 8, 1999
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and
to the incorporation by reference in the Joint Registration Statement on Form
S-4 of Wyndham International, Inc. of our report dated February 11, 1998,
except for Note 21, as to which the date is March 1, 1998, and Note 3, as to
which the date is March 30, 1998, on our audit of the consolidated financial
statements of Interstate Hotels Company as of December 31, 1996 and 1997, and
for the three years in the period ended December 31, 1997, included in the
Joint Current Report on Form 8-K of Patriot American Hospitality, Inc. and
Wyndham International, Inc. dated April 20, 1998.
/s/ PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
April 9, 1999
<PAGE>
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and
to the incorporation by reference in the Prospectus constituting part of the
Joint Registration Statement on Form S-4 of Wyndham International, Inc. of
our report dated January 23, 1998, and our audit of the financial statements
of Royal Palace Hotel Associates, included in the Current Report on Form 8-K
of Patriot American Hospitality, Inc. and Patriot American Hospitality
Operating Company dated June 2, 1998.
/s/ PricewaterhouseCoopers LLP
Tampa, Florida
April 9, 1999
<PAGE>
EXHIBIT 23.7
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and
to the incorporation by reference in the Prospectus constituting part of the
Joint Registration Statement on Form S-4 of Wyndham International, Inc. of
our reports (i) dated February 27, 1998 relating to the financial statements
of CHC International Inc. Hospitality Division as of November 30, 1996 and
1997 and for each of the years ended November 30, 1995, 1996 and 1997
included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Wyndham International, Inc. dated April 18, 1998; and
(ii) dated February 13, 1997, except as to Note 4, which is as of March 18,
1997, relating to the financial statements of CHC Lease Partners as of and
for the year ended December 31, 1996 and as of December 31, 1995 and for the
period inception (October 2, 1995) through December 31, 1995 included in the
Joint Current Report on Form 8-K of Patriot American Hospitality, Inc. and
Patriot American Hospitality Operating Company dated July 1, 1997.
/s/ PricewaterhouseCoopers LLP
Miami, Florida
April 9, 1999
<PAGE>
EXHIBIT 23.8
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and
to the incorporation by reference in the Prospectus constituting part of the
Joint Registration Statement on Form S-4 of Wyndham International, Inc. of
our reports (i) dated December 12, 1997, on our audit of financial statements
of Sheraton City Centre as of and for the year ended December 31, 1996,
included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Wyndham International, Inc. dated January 5, 1998; (ii)
dated December 12, 1997, on our audit of the Statement of Direct Revenue and
Direct Operating Expenses of Wyndham Emerald Plaza for the year ended
December 31, 1996, included in the Current Report on Form 8-K of Patriot
American Hospitality, Inc. and Wyndham International, Inc. dated January 5,
1998 and (iii) dated February 12, 1998, on our audit of the Consolidated
Financial Statements of Wyndham Hotel Corporation as of December 31, 1996 and
1997, and for each of the three years in the period ended December 31, 1997
included in the Current Report on Form 8-K of Patriot American Hospitality,
Inc. and Wyndham International, Inc. dated April 20, 1998.
/s/ PricewaterhouseCoopers LLP
Dallas, Texas
April 9, 1999
<PAGE>
EXHIBIT 23.9
CONSENT OF CHARTERED ACCOUNTANTS AND REGISTERED AUDITORS
As Chartered Accountants, we hereby consent to the incorporation by reference
in the Joint Registration Statement on Form S-4 and the related prospectus of
Wyndham International, Inc. of our reports on the financial statements of
Arcadian International Limited (formerly Arcadian International Plc) and
subsidiary undertakings and Malmaison Limited and subsidiary undertakings
dated 22 July 1998 and 17 July 1998 respectively, except with respect to
Note 1 of those financial statements as to which the date of our report is 24
March 1999, which are included in the Joint Current Report on Form 8-K/A of
Patriot American Hospitality, Inc. and Wyndham International, Inc., dated
June 2, 1998.
/s/ Arthur Andersen
1 Surrey Street
London
WC2R 2PS
9 April 1999
<PAGE>
LETTER OF TRANSMITTAL
WYNDHAM INTERNATIONAL, INC.
OFFER TO EXCHANGE COMMON STOCK OF
WYNDHAM INTERNATIONAL, INC. FOR
UNITS OF LIMITED PARTNERSHIP INTEREST IN
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P. AND
WYNDHAM INTERNATIONAL OPERATING PARTNERSHIP, L.P.
- --------------------------------------------------------------------------------
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE [ ],
1999, UNLESS EXTENDED BY WYNDHAM. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
To tender, this letter of transmittal should be delivered only to:
WYNDHAM INTERNATIONAL, INC.
<TABLE>
<CAPTION>
BY MAIL OR HAND DELIVERY: FACSIMILE TRANSMISSION:
<S> <C>
Wyndham International, Inc. Attention: [ ]
1950 Stemmons Freeway (214) [ ]
Suite 6001
Dallas, TX 75207
Attention: [ ]
</TABLE>
To confirm receipt of this letter of transmittal, please call: (214)[ ]
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY OF THIS LETTER OF TRANSMITTAL.
The undersigned acknowledges that he or she has received Wyndham's
prospectus dated [ ], 1999 and this letter of transmittal, which
together constitute Wyndham's offer to exchange up to an aggregate of 16,541,706
shares of common stock, par value $.01 per share, of the Company, which have
been registered under the Securities Act of 1933, for all of the issued and
outstanding preferred units and common units of limited partnership interest of
(i) Wyndham International Operating Partnership, L.P., and (ii) Patriot American
Hospitality Partnership, L.P. from the holders thereof.
The undersigned has signed this letter of transmittal and completed the
appropriate boxes below to indicate the action the undersigned desires to take
with respect to the exchange offer.
PLEASE READ THIS LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE
COMPLETING THIS LETTER OF TRANSMITTAL.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO WYNDHAM AT THE ADDRESS AND
TELEPHONE NUMBERS SET FORTH ABOVE.
<PAGE>
This letter of transmittal, properly completed and duly executed, with any
other documents required by this letter of transmittal, must be received by
Wyndham at its address set forth herein on or prior to the Expiration Date in
order for a holder's tender of Partnership Units to be effective. The
partnership units are uncertificated and, therefore, no delivery of any
certificates is necessary to tender your partnership units.
List below the partnership units to which this letter of transmittal
relates. If the space provided below is inadequate, the numbers of partnership
units tendered should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF PREFERRED UNITS AND COMMON UNITS TENDERED
<S> <C> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF NUMBER AND NUMBER OF NUMBER AND NUMBER OF
REGISTERED HOLDER(S): CLASS OF WYNDHAM CLASS OF PATRIOT
(PLEASE FILL IN, IF BLANK) WYNDHAM COMMON PATRIOT COMMON
PREFERRED UNITS PREFERRED UNITS
UNITS UNITS
Total:
</TABLE>
/ / Check here if you are a broker-dealer and wish to receive 10 additional
copies of the Prospectus and 10 copies of any amendments or supplements
thereto:
Name ___________________________________________________________________________
Address ________________________________________________________________________
2
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the exchange offer, the
undersigned hereby tenders to Wyndham International, Inc. the preferred units
and common units of limited partnership interest identified herein of either (i)
Wyndham International Operating Partnership, L.P., or (ii) Patriot American
Hospitality Partnership, L.P. in exchange for shares of Wyndham common stock
upon the terms and subject to the conditions set forth in Wyndham's prospectus
dated [ ], 1999, receipt of which is hereby acknowledged, and in this
letter of transmittal (which, together with the prospectus, constitute the
"exchange offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the partnership units tendered herewith in accordance with the terms
and conditions of the exchange offer (including, if the exchange offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of Wyndham all right, title and interest in and to such partnership units
as are being tendered herewith.
The undersigned hereby irrevocably constitutes and appoints Wyndham as its
agent and attorney-in-fact with respect to the tendered partnership units, with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) subject only to the right of
withdrawal described in the prospectus, to cause the partnership units to be
assigned, transferred and exchanged. The undersigned represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the partnership units and to acquire the Wyndham common stock issuable upon the
exchange of such tendered partnership units, and that, when the same are
accepted for exchange, Wyndham will acquire good and unencumbered title to the
tendered partnership units, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim. The undersigned also
warrants that it will, upon request, execute and deliver any additional
documents deemed by Wyndham to be necessary or desirable to complete the
exchange, assignment and transfer of tendered partnership units. The undersigned
has read and agrees to all of the terms of the exchange offer.
The undersigned understands that tenders of partnership units pursuant to
the procedures described in "The Exchange Offer--Procedure for Tendering
Preferred Units and Common Units" in the prospectus and in the instructions
attached hereto will, upon Wyndham's acceptance for exchange of such tendered
partnership units, constitute a binding agreement between the undersigned and
Wyndham upon the terms and subject to the conditions of the exchange offer.
The exchange offer is subject to certain conditions as set forth in the
prospectus under the caption "The Exchange Offer--Conditions of the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, at any time and from time to time, by
Wyndham), as more particularly set forth in the prospectus, Wyndham may not be
required to exchange any of the partnership units tendered hereby.
The name(s) and address(es) of the registered holder(s) of the partnership
units tendered hereby should be printed above, if they are not already set forth
above under "Description of Preferred Units and Common Units Tendered." The
number of partnership units to which this letter of transmittal relates,
together with the number of partnership units that the undersigned wishes to
tender, should be indicated in the appropriate boxes above under "Description of
Preferred Units and Common Units Tendered."
All authority conferred or agreed to be conferred in this letter of
transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. A tender of
partnership units made pursuant to the exchange offer may not be withdrawn after
the expiration date. A purported notice
3
<PAGE>
of withdrawal will be effective only if delivered to Wyndham in accordance with
the specified procedure set forth in the prospectus under the heading "The
Exchange Offer--Withdrawal Rights."
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the common stock be
issued in the name(s) of the undersigned.
BY TENDERING PARTNERSHIP UNITS AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (1) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF WYNDHAM, (2) ANY WYNDHAM COMMON STOCK TO BE RECEIVED BY THE
UNDERSIGNED IS BEING ACQUIRED IN THE ORDINARY COURSE, (3) THE UNDERSIGNED HAS NO
ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF WYNDHAM COMMON STOCK TO BE
RECEIVED IN THE EXCHANGE OFFER, AND (4) IF THE UNDERSIGNED IS NOT A
BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE
IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH COMMON
STOCK. BY TENDERING PARTNERSHIP UNITS PURSUANT TO THE EXCHANGE OFFER AND
EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER OF PARTNERSHIP UNITS WHICH IS A
BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE
LETTERS ISSUED BY THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE
SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A) SUCH PARTNERSHIP
UNITS HELD BY THE BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH
PARTNERSHIP UNITS WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL
DELIVER THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) IN
CONNECTION WITH ANY RESALE OF SUCH WYNDHAM COMMON STOCK (PROVIDED THAT, BY SO
ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WELL NOT BE
DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES
ACT).
THE UNDERSIGNED, BY COMPLETING THE BOXES ENTITLED "DESCRIPTION OF PREFERRED
UNITS AND COMMON UNITS TENDERED" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL,
WILL BE DEEMED TO HAVE TENDERED THE PARTNERSHIP UNITS AS SET FORTH IN SUCH
BOXES.
4
<PAGE>
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE [ ])
Must be signed by registered holder(s) exactly as name(s) appear(s) on Wyndham's
records for partnership units hereby tendered or on the register of holders
maintained by either (i) Wyndham International Operating Partnership, L.P., or
(ii) Patriot American Hospitality Partnership, L.P., or by any person(s)
authorized to become the registered holder(s) by endorsements and documents
transmitted herewith (including such opinions of counsel, certifications and
other information as may be required by Wyndham for partnership units to comply
with the restrictions on transfer applicable to the Partnership Units). If
signature is by an attorney-in-fact, executor, administrator, trustee, guardian,
officer of a corporation or another acting in a fiduciary capacity or
representative capacity, please set forth the signer's full title.
(SIGNATURE(S) OF HOLDER(S))
Date: _______________________, 1999
Name(s) ________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (full title) __________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number _________________________________________________
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
5
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS)
To be completed ONLY if Wyndham common stock or partnership units not
tendered are to be issued in the name of someone other than the registered
holder of the partnership units whose name(s) appear(s) above. See Instruction
2.
Issue
- - partnership units not tendered to:
- - common stock to:
Name(s): _______________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
(PLEASE PRINT)
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(AREA CODE AND TELEPHONE NUMBER)
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS)
To be completed ONLY if common stock or partnership units not tendered are
to be sent to someone other than the registered holder of the partnership units
whose name(s) appear(s) above, or such registered holder(s) at an address other
than that shown above. See Instruction 2.
Mail
- - partnership units not tendered to:
- - common stock to:
Name(s): _______________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
(PLEASE PRINT)
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(AREA CODE AND TELEPHONE NUMBER)
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL.
A properly completed and duly executed copy of this letter of transmittal or
facsimile thereof, and any other documents required by this letter of
transmittal, must be received by Wyndham at its address set forth herein at any
time prior to the expiration date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND EXCEPT AS OTHERWISE
PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR
CONFIRMED BY WYNDHAM. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this letter of transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the partnership units.
2. PARTIAL TENDERS; WITHDRAWALS.
If fewer than all of the partnership units are tendered, the tendering
holder should fill in the number of shares tendered in the column entitled
"Number of Units Tendered."
Tenders of partnership units pursuant to the exchange offer may be withdrawn
at any time prior to the expiration date. To be effective, a written or
facsimile transmission notice of withdrawal must be received by Wyndham prior to
the expiration date at any of its addresses set forth herein, and with respect
to a facsimile transmission, must be confirmed by telephone and an original
delivered by guaranteed overnight delivery. Any such notice of withdrawal must
specify the person named in this letter of transmittal as having tendered the
partnership units to be withdrawn, a statement that such holder is withdrawing
his election to have such partnership units exchanged, and the name of the
registered holder of such partnership units, and must be signed by the holder in
the same manner as the original signature on this letter of transmittal or be
accompanied by evidence satisfactory to Wyndham that the person withdrawing the
tender has succeeded to the beneficial ownership of the partnership units being
withdrawn. Wyndham will return the properly withdrawn partnership units promptly
following receipt of notice of withdrawal. Any special issuance instruction or
special delivery instruction with respect to partnership units must comply with
applicable transfer restrictions on such partnership units.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL WRITTEN INSTRUCTION AND ENDORSEMENTS.
If any of the partnership units tendered hereby are owned of record by two
or more joint owners, all such owners must sign this letter of transmittal.
If a number of partnership units registered in different names are tendered,
it will be necessary to complete, sign and submit as many separate copies of
this letter of transmittal as there are different registrations of partnership
units.
When this letter of transmittal is signed by the registered holders or
holders of partnership units listed and tendered hereby, no separate written
instruments of transfer or exchange are required.
If this letter of transmittal or separate written instruments of transfer or
exchange are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in
7
<PAGE>
a fiduciary or representative capacity, such persons should so indicate when
signing, and, unless waived by Wyndham, proper evidence satisfactory to Wyndham
of their authority so to act must be submitted.
4. TRANSFER TAXES.
Wyndham shall pay all transfer taxes, if any, applicable to the transfer and
exchange of partnership units to it or its order pursuant to the exchange offer.
If a transfer tax is imposed for any reason other than the transfer and exchange
of partnership units to Wyndham or its order pursuant to the exchange offer, the
amount of any such transfer taxes (whether imposed on the registered holder or
any other person) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exception therefrom is not submitted
herewith the amount of such transfer taxes will be billed directly to such
tendering holder.
5. WAIVER OF CONDITIONS.
Wyndham reserves the right to waive in its reasonable judgment, in whole or
in part, at any time and from time to time, any of the conditions to the
exchange offer set forth in the prospectus.
6. IRREGULARITIES.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of partnership units will be
determined by Wyndham, whose determination will be final and binding. Wyndham
reserves the absolute right to reject any partnership units not properly
tendered or the acceptance for exchange of which may, in the opinion of
Wyndham's counsel, be unlawful. Wyndham also reserves the absolute right to
waive any defect or irregularity in the tender of any partnership units. Unless
waived, any defects or irregularities in connection with tenders of partnership
units for exchange must be cured within such reasonable period of time as
Wyndham will determine. Neither Wyndham, nor any other person will be under any
duty to give notification of any defects or irregularities in tenders or incur
any liability for failure to give any such notification.
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
assistance or additional copies of the prospectus and this letter of
transmittal, may be directed to Wyndham at the address and telephone number set
forth above.
8
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF MUST BE
RECEIVED BY WYNDHAM ON OR PRIOR TO THE EXPIRATION DATE.
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------
SUBSTITUTE Part I: PLEASE Social Security Number or
FORM W-9 PROVIDE YOUR TIN IN Employer Identification Number
DEPARTMENT OF THE TREASURY THE SPACE AT THE ------------------------
INTERNAL REVENUE SERVICE RIGHT AND CERTIFY BY
SIGNING AND DATING
BELOW.
-------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C>
Payer's Request for Taxpayer Part II: For Payees exempt from backup Part III
Identification Number (TIN) withholding, see the enclosed Guidelines for Awaiting TIN:
Certification of Taxpayers Identification Number / /
on Substitute Form W-9 and complete as
instructed therein.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C>
CERTIFICATION. Under penalties of perjury, I certify that:
(1) The Number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by
the Internal Revenue Service (IRS) that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or the IRS has notified me that I am
no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS. You must cross out item (2) above if you have been notified
by the IRS that you are subject to backup withholding because of underreporting interest
or dividends on your tax return. However, if after being notified by the IRS that you
were subject to backup withholding you received another notification from the IRS that
you were no longer subject to backup withholding, do not cross out item (2).
ALSO SEE INSTRUCTIONS IN THE ENCLOSED GUIDELINES.
</TABLE>
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------
PLEASE SIGN HERE Signature Date
K
- -----------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Exhibit 99.2
WYNDHAM INTERNATIONAL OPERATING PARTNERSHIP, L.P.
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P.
1950 STEMMONS FREEWAY, SUITE 6001
DALLAS, TEXAS 75207
, 1999
Dear Limited Partner:
WYNDHAM INTERNATIONAL, INC. IS OFFERING YOU THE OPPORTUNITY TO EXCHANGE
YOUR UNITS OF LIMITED PARTNERSHIP INTEREST FOR REGISTERED SHARES OF COMMON
STOCK OF WYNDHAM. THE BOARDS OF DIRECTORS OF WYNDHAM AND PATRIOT BELIEVE
THAT THE EXCHANGE OFFER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE LIMITED
PARTNERS OF THE WYNDHAM PARTNERSHIP AND THE PATRIOT PARTNERSHIP. WE RECOMMEND
THAT YOU EXCHANGE YOUR LIMITED PARTNERSHIP INTERESTS IN THE EXCHANGE OFFER.
The exchange offer is being made in connection with a proposed $1 billion
equity investment in Wyndham. In connection with the investment, the
companies plan to restructure their existing corporate structure by merging a
wholly-owned subsidiary of Wyndham with Patriot and terminating Patriot's
status as a real estate investment trust.
We are also seeking your consent to amend and restate the limited
partnership agreements of the Wyndham partnership and the Patriot partnership
to, among other things, (1) eliminate provisions related to Patriot's status
as a real estate investment trust, (2) relax the restrictions on transfers and
redemptions of units and (3) put in place provisions that will treat limited
partners of the limited partnerships on the same basis as stockholders of
Wyndham. We recommend that you consent to the proposed amendments to the
limited partnership agreements.
If the requisite number of units of limited partnership interest are
not exchanged in the exchange offer, the investors will not be required to
close the proposed $1 billion equity investment in Wyndham. In addition,
holders who do not exchange their units for registered shares will continue
to be subject to the limitations imposed by the limited partnership
agreements and could also be subject to additional restrictions as a result
of the amendments to the limited partnership agreements.
The accompanying Offer to Exchange provides detailed information
regarding the exchange offer, the proposed $1 billion investment and the
related restructuring of the companies. The accompanying consent solicitation
provides additional information regarding the proposed amendments to the
limited partnership agreements. We urge you to read these documents carefully.
<PAGE>
Please complete the enclosed letter of transmittal and consent form as
soon as possible. If you have any questions or need assistance, please call
us at 214-863-1000.
Sincerely,
James D. Carreker
CHIEF EXECUTIVE OFFICER
WYNDHAM INTERNATIONAL, INC.
PATRIOT AMERICAN HOSPITALITY, INC.
