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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
WINSTON HOTELS, INC.
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(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[WINSTON HOTELS INC. LOGO]
IMPORTANT VOTE REMINDER
Dear Shareholder:
On April 1, 1998, Winston Hotels, Inc. (the "Company") mailed to you a
Notice of Annual Meeting of Shareholders, a Proxy Statement with accompanying
proxy card, and an Annual Report to Shareholders for the year ended December 31,
1997, all in connection with the Annual Meeting of Shareholders of the Company
which was held May 5, 1998 (the "Annual Meeting"). In connection with such
mailing, and as stated in the Proxy Statement, the Board of Directors
recommended to the shareholders approval of a proposed amendment (the
"Amendment") to the Company's Articles of Incorporation to delete Article 7 (the
"Debt Limitation").
On May 5, 1998, the Company adjourned the Annual Meeting to provide time
for the Company to solicit additional votes on the Amendment. The Annual Meeting
will be reconvened on July 15, 1998 at 10:00 a.m., local time, at the Company's
offices at 2209 Century Drive, Suite 300, Raleigh, North Carolina (the
"Adjourned Meeting") and you are hereby cordially invited to attend.
The Amendment has been approved by the holders of the Company's Common
Stock. The Company is now seeking the approval of the holders of two-thirds of
the Series A Preferred Stock for the Amendment. The affirmative vote of
two-thirds of the holders of the Series A Preferred Stock voting as a separate
voting group will be necessary to approve the Amendment. Abstentions and shares
held in street name that are not voted on this matter will have the practical
effect of a negative vote on the Amendment for Series A Preferred Stock voting
purposes. The Board of Directors recommends that you vote FOR the approval of
the Amendment and encourages you to please cast your vote accordingly on the
Amendment by completing and returning the enclosed proxy in the envelope
provided.
Management believes that it is important for the Company to have
flexibility in financing the acquisitions of hotel properties, and that as the
Company continues to grow, it will have access to a range of financing
alternatives, including public and private issuances of debt securities as well
as continued equity financings. Management believes that the selective use of
longer term debt can lower the Company's overall cost of capital and increase
shareholder value. Management also believes adoption of the Amendment to
eliminate the Debt Limitation will permit the Company to access debt financing
sources more readily while maintaining a policy limiting indebtedness to a level
which is prudent.
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The Debt Limitation was developed at the time of the Company's initial
public offering in May 1994 when the Company owned 10 hotels. The Debt
Limitation was increased by amendment in 1996 by the Company's shareholders. The
Company now owns a total of 49 hotels. These acquisitions were financed
principally with proceeds from the Company's public offerings of Common Stock
and Series A Preferred Stock and with borrowings under the Company's line of
credit. The Company's ability to raise equity capital is dependent, in large
part, upon capital market conditions, including the general levels of interest
rates. The Board of Directors believes the Amendment will increase the Company's
ability to obtain capital on advantageous terms to take advantage of acquisition
and development opportunities on a timely basis. Also, there are a number of
other hotel REITs and entities that conduct business similar to the Company's
business. Management believes there are approximately 20 such public companies
and that, accordingly, the market for hotel acquisitions is very competitive. To
the Company's knowledge, only one of these entities has a limitation in their
articles of incorporation similar to the Company's on their ability to incur
indebtedness. Some of the Company's competitors initially had debt limitations
in their articles of incorporation but eliminated them by shareholder vote. As
competition for acquisitions has increased, the ability of buyers to close on
acquisitions, without a financing contingency, can be an important advantage in
acquiring hotel properties on favorable terms.
The Debt Limitation as contained in the Articles of Incorporation is set
forth below:
7. Limitation on Indebtedness. The Corporation may not incur or allow to
exist as of the end of any month Indebtedness (as defined below) in an
amount in excess of forty-five percent (45%) of the Corporation's
investment in hotel properties, at cost, after giving effect to the
Corporation's use of proceeds from any indebtedness. For purposes of the
foregoing restrictions, "cost" shall mean that the cost of properties be
accounted for using the purchase method of accounting, including
situations where properties are acquired from affiliates or others and are
accounted for at the historical cost basis of the affiliates or others
under generally accepted accounting principles. For purposes of the
foregoing restrictions, "Indebtedness" of the Corporation shall mean all
direct and indirect obligations of the Corporation, its subsidiaries or
any partnership in which the Corporation serves as general partner, for
borrowed money (including all notes payable and drafts accepted
representing extensions of credit) and all obligations evidenced by bonds,
debentures, notes or other similar instruments on which interest charges
are customarily paid, including obligations under capital leases. For
purposes of this Article 7, the Corporation's investment in hotel
properties shall include all investments made directly or indirectly
through the Corporation or through its subsidiaries or any partnership in
which the Corporation serves as general partner.
If the Amendment is approved by the shareholders, there will be no
limitation in the Company's Articles of Incorporation or Bylaws on the Company's
ability to incur indebtedness and the Board of Directors, in its discretion and
in the exercise of its fiduciary duty, will be able to determine levels of
indebtedness without shareholder approval. Although Management and
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the Board of Directors believes the elimination of the Debt Limitation is in the
best interests of the Company and its shareholders, the elimination of the Debt
Limitation will increase the risk that the Company could become highly
leveraged, resulting in an increase in debt service that could adversely affect
the Company's cash flow and ability to make distributions to its shareholders,
and create an increased risk of default on its obligations and increased risk of
foreclosure on its property securing debt.
Please complete and return the enclosed proxy in the envelope provided. If
you attend the Adjourned Meeting, you may revoke your proxy and vote in person.
If you would like to obtain another copy of any of the proxy materials
previously sent to you (including, but not limited to, the Proxy Statement)
without charge, please contact James D. Rosenberg, Chief Financial Officer and
Chief Operating Officer, Winston Hotels, Inc., 2209 Century Drive, Suite 300,
Raleigh, North Carolina 27612, telephone (919) 510-6010.
The Adjourned Meeting is being held on July 15, 1998. Regardless of how
many shares you own, please vote your proxy as soon as possible.
Sincerely yours,
/s/ Robert W. Winston III
Robert W. Winston III
Chief Executive Officer and President
Enclosures
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WINSTON HOTELS, INC.
Series A Preferred Stock Proxy for
Annual Meeting of Shareholders
Solicited by the Board of Directors
The undersigned hereby appoints Robert W. Winston, III and James D. Rosenberg
and each of them, as attorney and proxy of the undersigned, each with the full
power of substitution, to represent the undersigned and to vote all of the
shares of Series A Preferred Stock in Winston Hotels, Inc. which the undersigned
is entitled to vote at the Annual Meeting of Shareholders to be held on May 5,
1998 at 10:00 a.m., local time, at the Homewood Suites Hotel, 5400 Edwards Mill
Road, Raleigh, North Carolina, and any adjournments thereof (1) as hereinafter
specified upon the proposal listed on the reverse side and as more particularly
described in the Company's Proxy Statement, receipt of which is hereby
acknowledged and (2) in their discretion upon such other matters as may properly
come before the meeting and any adjournments thereof.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE
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Please sign exactly as your name(s) appear(s) on the reverse side hereof. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign the full corporate name by
the president or other authorized officer. If a partnership, please sign in the
partnership name by an authorized person.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
______________________________________ _____________________________________
______________________________________ _____________________________________
______________________________________ _____________________________________
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WINSTON HOTELS, INC.
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SERIES A PREFERRED STOCK
Mark box at right if an address change or comment
has been noted on the reverse side of this card. [ ]
RECORD DATE SHARES:
The Board of Directors Recommends a Vote FOR the Proposal Listed Below:
1. Proposal to delete Article 7 of the Company's Articles of Incorporation
which limits the Company's level of permitted indebtedness to 45% of
investments in hotel properties.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please be sure to sign and date this Proxy. Date , 1998
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Shareholder sign here Co-owner sign here
DETACH CARD
