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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) September 30, 1998
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, FAIFIELD, NEW JERSEY 07004
(address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973)882-1010
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Item 5. Other Events
Effective September 30, 1998, A.F. Petrocelli was appointed to the position
of chairman and CEO replacing David Simon who resigned from both positions. See
Exhibit 99.1
Item 7. Exhibits
99.1 Press release, dated September 15, 1998, with respect to the change in
management.
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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: November 2, 1998 By: /s/ A. F. Petrocelli
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A. F. Petrocelli
President and Chief Executive
Officer
Date: November 2, 1998 By: /s/ Douglas Vicari
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Douglas Vicari, Sr.Vice President
and Chief Financial Officer
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Exhibit 99.1
Fairfield, NJ - Prime Hospitality Corp. (NYSE-PDQ) announced that it has
appointed A.F. Petrocelli to the positions of Chairman and CEO, replacing David
Simon who will resign both posts effective September 30, 1998. Mr. Petrocelli
has served on Prime's board of directors since 1992, and is also Chairman and
CEO of United Capital Corp. (ASE: AFP), a diversified real estate and
manufacturing company. Mr. Simon has served as Chairman and CEO of Prime since
1993. In connection with his resignation, Mr. Simon will also leave his post on
Prime's board of directors.
Mr. Petrocelli announced that the balance of the Company's management is
remaining in place. "The Company has an excellent team in place today," said
Petrocelli. "I am looking forward to working with them to continue the growth of
Prime as one of the premiere franchise and management companies in the lodging
industry."
In addition to his duties managing United Capital Corp.'s extensive real
estate portfolio, Mr. Petrocelli, 55, also sits on the board of directors of the
Metex Corporation, Nathan's Famous, Inc., Philips International Realty Corp. and
the Boyar Value Fund, Inc.
Prime also announced plans to reduce hotel development to levels which can
be funded by internal cash sources. The Company cited uncertainty about hotel
divestiture markets and the attractiveness of stock repurchases as principal
reasons for the change.
Under its revised plans, Prime plans to spend a total of $180 million for
the remainder of 1998 and all of 1999 to complete 38 AmeriSuites and HomeGate
hotels currently under construction. Upon completion of the development program,
Prime will have approximately 100 AmeriSuites and 45 HomeGates. Prime is also
seeking to continue its aggressive expansion of its AmeriSuites, HomeGate and
Wellesley Inns brands through franchising.
According to John Elwood, president and COO, the Company's actions reflect
both fiscal conservatism and the value of financial flexibility in light of the
low trading levels of the Company's stock. "We believe it is wise to limit
spending levels to our internal cash sources," said Elwood. "In light of
uncertainty about the appetite of hotel buyers in this market, our plan will not
depend on asset divestitures. The combination of available revolving credit
commitments plus internal cash flow are sufficient to fund our growth, while
leaving us with the maximum flexibility to capitalize on future opportunities."
Prime Hospitality Corp. currently has 166 hotels under operation,
principally under its AmeriSuites, HomeGate and Wellesley Inn brands. The
additional hotels under development will increase the Company's portfolio of
owned hotels by 23 percent. Furthermore, Prime does not currently expect to sell
to REITs as many as 40 hotels previously slated for divestiture in 1999. As a
result, the Company's projected asset base for 1999 under revised plans is
higher than prior plans.
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"This is the ideal time to manage for financial flexibility," said
Petrocelli. "Our balance sheet is already very strong, and this positions us to
take advantage of opportunities as they arise in the year ahead."
The Company also announced that it expects its 1998 performance to fall
short of consensus expectations by approximately 30 percent in the third quarter
and 20 percent in the fourth quarter. The Company estimated that the revised
outlook could result in 1998 earnings of approximately $1.00 per share. The
Company cited lower unit growth due to development delays, and slower than
expected ramp-up at both its HomeGate hotels and its newly reopened Frenchman's
Reef Marriott hotel in St. Thomas V.I. as reasons for the earnings revision.
Additionally, the Company is reviewing the costs associated with not
developing certain projects which are under contract, and anticipates recording
a one-time charge to write off these amounts. Prime does not expect this charge
to be material to its financial condition or results of operations.
For 1999, the Company indicated that a number of factors are likely to
limit earnings growth. Those factors include significantly reduced development
levels and the diminished prospects for sale/leasebacks. Management indicated
that these and other factors could result in 1999 earnings in the range of $1.15
per share, approximately 25 percent below consensus expectations.
Prime Hospitality Corp., one of the nation's premiere lodging companies, is
an owner, manager and franchisor of 166 hotels throughout the United States and
the U.S Virgin Islands. The Company operates three proprietary brands,
AmeriSuites(R) (all-suites), HomeGate Studios & Suites(R) (extended-stay) and
Wellesley Inns(R) (limited service). Also within its portfolio are owned and/or
managed hotels operated under franchise agreements with national chains.
No assurance can be given that earnings will not be lower than management
currently anticipates. Statements in this press release, other than statements
of historical information, include forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve known and unknown risks
which may cause the Company's actual results in future periods to differ
materially from expected results. These risks are described in the Company's
filings with the Securities and Exchange Commission (SEC) over the last 12
months, copies of which are available from the SEC or may be obtained upon
request from the Company.
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