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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 25, 1997
PRIME HOSPITALITY CORP.
(Exact name of Registrant as specified in its charter)
COMMISSION FILE NO. 1-6869
DELAWARE 22-2640625
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
700 ROUTE 46 EAST, FAIRFIELD, NEW JERSEY 07004
(address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201)882-1010
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Item 5. Other Events
On July 25, 1997, Prime Hospitality Corp. announced that it had entered
into a merger agreement with Homegate Hospitality, Inc. See Exhibit 1.
Item 7(c). Exhibits
1. Press Release, dated July 25, 1997, with respect to the merger
agreement with Homegate Hospitality, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME HOSPITALITY CORP.
Date: July 28, 1997 By: /s/ David A. Simon
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David A. Simon
President and Chief Executive Officer
Date: July 28, 1997 By: /s/ John M. Elwood
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John M. Elwood, Executive Vice
President and Chief Financial Officer
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Exhibit 1. Press Release
Fairfield, NJ/Austin, TX - Prime Hospitality Corp. (NYSE-PDQ) and Homegate
Hospitality, Inc. (NASDAQ-HMGT) announced today that they have entered into a
definitive agreement providing for the merger of the two companies. Under the
agreement, Prime Hospitality will issue 0.6073 shares of its common stock for
each of the approximately 10.7 million outstanding shares of Homegate
Hospitality. The transaction is valued at approximately $132 million based upon
yesterday's closing price and is expected to be accounted for as a pooling of
interests.
Prime owns or operates 112 hotels nationwide, which includes hotels under its
proprietary AmeriSuites and Wellesley Inns trade names as well as a portfolio of
upscale full-service hotels. Prime is rapidly developing its AmeriSuites
all-suite hotel brand, with 49 hotels open and another 42 under development.
Homegate is a provider of high-quality mid-price extended-stay hotels, with
eight hotels in operation and another 34 Homegate hotels under development. The
Homegate hotels are developed through strategic alliances with Trammell Crow
Residential and Greystar Capital Partners.
As of year end 1997, the management teams believe that the combined entity will
operate a portfolio of approximately 150 hotels, with approximately 70 more
AmeriSuites and Homegate properties under development.
In order to facilitate uninterrupted development of Homegate extended-stay
hotels, Prime has agreed to provide a $65.0 million bridge financing to Homegate
pending completion of the merger. Homegate shareholders representing
approximately 59% of shares outstanding, including affiliates of Crow Investment
Trust and Greystar Capital Partners, have entered into agreements under which
their shares will be voted in favor of the transaction. Additionally, Homegate
and Wyndham Hotel Corporation have entered into an agreement whereby Wyndham's
management agreements with Homegate will be terminated following the merger in
exchange for a termination payment of $12.0 million. This termination fee will
be funded by payments of $8.0 million by the combined company and $4.0 million
by one of Homegate's founding stockholders. The parties plan for Prime to manage
the Homegate hotels subsequent to the merger.
David Simon, President and CEO of Prime, indicated that Prime expects the
transaction to be accretive to the Company's earnings in 1998. "Homegate is an
excellent complement to our AmeriSuites and Wellesley Inns brands," said Simon.
"The Homegate hotels generate excellent investment returns, comparable to our
AmeriSuites. This agreement is a major step in the implementation of our
multi-brand strategy, and will vault us into a position of leadership in the
fast-growing extended-stay hotel segment."
As a result of the merger, Prime will assume Homegate's development alliances
with Crow and
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Greystar. "We are honored to be affiliated with such high quality developers,"
said Simon. "We hope to expand this relationship to further accelerate our
growth in the future."
Robert Faith, President and CEO of Homegate, noted that the combined company
will be well capitalized to support the rapid growth of the Homegate Studios &
Suites hotel brand. "We now have access to the capital we will need to meet our
target of 65 Homegate hotels open or under construction by the end of 1998,"
said Faith. "This agreement establishes us in the forefront of this explosive
industry segment."
The merger agreement is subject to the approval of the shareholders of Homegate
Hospitality and other customary terms and conditions and is expected to be
completed in the fourth quarter of 1997.
Separately, Prime announced on Wednesday, July 23 that it has retained
Montgomery Securities to act as its advisor for the purpose of evaluating and
entering into a sale/leaseback of nine full-service hotels. Prime plans to use
the transaction proceeds to fund the development of its proprietary hotel
brands, including both AmeriSuites and Homegate.
Statements made in this press release are forward-looking statements as defined
by the Private Securities Litigation Reform Act of 1995. These statements
express the current beliefs and expectations of Prime management regarding
Prime's future results and performance, but are subject to a number of known and
unknown risks that could cause actual results to differ materially from those
projected or implied in forward-looking statements. These risks and
uncertainties, including risks relating to real estate ownership and development
of hotel brands, risks of the lodging industry and expansion risks relating to
Prime's development of hotel brands, are described in detail from time to time
in Prime's filings with the Securities and Exchange Commission. Prime accepts no
obligation to update these forward-looking statements.
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