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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 02549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 13, 1999
SUNSTONE HOTEL INVESTORS, INC.
(Exact name of registrant as specified in its charter)
Maryland 000-26304 52-1891908
(State or other jurisdiction (Commission File (IRS Employer Identification
of incorporation) Number) No.)
903 Calle Amanecer, San Clemente, California 92673
(Address of principal executive offices) (zip code)
(949) 369-4000
(Registrant's Telephone Number)
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Item 5 Other Events
On July 13, 1999, Sunstone Hotel Investors, Inc., (the "Company") and
SHP Acquisition L.L.C. and SHP Investors Sub, Inc. entered into an Agreement and
Plan of Merger dated as of July 12, 1999 (the "Merger Agreement") providing for
the merger of the Buyer with and into the Company. On the same day, the Company
issued a press release with respect to the Merger Agreement and the transactions
contemplated thereby.
The Merger Agreement and press release are attached as Exhibits 1 and 2
hereto, respectively, and are incorporated herein by reference.
Item 7. Exhibits
1. * Agreement and Plan of Merger dated as of July 12, 1999 among the
Company, SHP Acquisition L.L.C. and SHP Investors Sub, Inc.
2. Press release issued by the Company on July 13, 1999.
* to be filed by amendment
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SIGNATURE
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.
SUNSTONE HOTEL INVESTORS, INC.
Registrant
/s/ R. Terrence Crowley
-------------------------------------
R. Terrence Crowley
Chief Operating Officer
Dated: July 13, 1999
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EXHIBIT 99.2
[SUNSTONE LETTERHEAD]
FOR IMMEDIATE RELEASE
JULY 13,1999
WESTBROOK AND MANAGEMENT AGREE TO BUY
SUNSTONE FOR $10.35/SHARE
SAN CLEMENTE, CALIF., JULY 13 - The Special Committee of the Board of Directors
of Sunstone Hotel Investors, Inc. ("Sunstone") (NYSE:SSI) today announced that
Sunstone has entered into a merger agreement to be acquired by SHP Acquisition,
LLC ("SHP"), an affiliate of Westbrook Partners and certain members of
Sunstone's senior management, for $10.35 per share in cash. Limited partners in
Sunstone Hotel Investors LP can elect to receive the same consideration per OP
unit or an equity interest in the acquiring entity,
Sunstone owns 59 luxury, upscale and midpriced hotels throughout 8 states in the
Mountain and Pacific regions and Rochester, Minnesota, containing 10,531 guest
rooms.
The agreement is subject to the vote of the Sunstone common shareholders and
unitholders, as well as certain other conditions, including receipt of consents
from certain major franchisors of Sunstone's hotels and closing of SHP's
financing. A firm commitment for debt financing for the transaction has been
received. The transaction is expected to close during the fourth quarter of
1999.
The agreement provides for a breakup fee and expenses of up to $25 million to be
paid to SHP in the event that Sunstone wishes to accept a superior proposal to
acquire the company. Under such circumstances, Sunstone has the right to
purchase all the shares of Sunstone Hotel Properties, Inc, the lessee and
operator of the hotels, and Sunstone Hotel Management, Inc, the management
company, for a total amount of $30 million in cash.
Sunstone will not pay a dividend between now and the closing; however, the
aggregate purchase price will be increased by an amount equal to 50% of the
increase in Sunstone's cash balance between July 1,1999 and five business days
prior to closing, but a minimum of 6 cents per common share. The agreement also
provides for a
903 Calle Amanecer
[logo] San Clemente, CA
92673-6212
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possible price reduction of up to a maximum of 16 cents per share in connection
with certain contingent payments,
The consideration to be paid by SHP at closing corresponds to an enterprise
value of Sunstone of approximately $880 million, or $83,600 per room subject to
the third party lessee and management company contracts and represents a 36.9%
premium to the last closing price of Sunstone prior to the announcement of SHP's
proposal.
SHP announced its initial proposal to acquire Sunstone for $9.50 - $10.00 in
cash per share on April 5. "We immediately formed a special committee and hired
advisors in order to evaluate SHP's proposal and Sunstone's alternatives," said
Laurence S. Geller, Chairman of the Special Committee of Sunstone, "We ran an
exhaustive process to explore all alternatives available to us. What ensued was
close to three months of discussions and negotiations with a number of
interested parties. We are very pleased with the outcome and we consider this
agreement to be in the best interests of the company and our shareholders."
Sunstone management estimates second quarter funds from operations to be
approximately $0.32 to $0.33 per share.
The Special Committee of Sunstone was advised by Goldman, Sachs & Co. and
Altheimer & Gray,
The acquiring entity is SHP Acquisition L.L.C., which is a partnership between
an affiliate of Westbrook Partners and Robert A. Alter, Chairman and CEO of
Sunstone, and other senior management personnel of Sunstone. Westbrook Partners
is an international private real estate investment firm which, through three
separate real estate funds, controls over $7 billion in real estate assets
worldwide. Westbrook is an existing 9.6% shareholder in the Company and Paul D.
Kazilionis, Managing Principal of Westbrook, is a director of Sunstone, Mr.
Alter, through a privately owned company, leases and operates each of Sunstone's
59 hotels.
Commenting on the transaction, Mr. Kazilionis stated, "through our involvement
with Sunstone since our October 1997 sale of Kahler Realty to Sunstone, we have
been impressed with the management team of Sunstone and believe it to be an
excellent platform for Westbrook's strong interest in the hospitality business,"
Mr. Alter will be Chairman and CEO of the acquired entity.
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results and the timing of certain events could
differ materially from those set forth in the forward-looking statements.
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