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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) JUNE 30, 2000
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Host Funding, Inc.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Maryland 1-14280 52-1907962
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(STATE OR OTHER JURISDICTION) (COMMISSION) (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1640 School Street, Suite 100, Moraga, California 94556
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: 925/631-7929
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N/A
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 1. Change in Control of Registrant
DESCRIPTION OF TRANSACTION
On June 30, 2000, Host Funding, Inc. (the "Company") issued to Hotel
International Advisors, LLC ("HIA") 1,000,000 shares of the Company's Class A
Common Stock in exchange for the transfer to the Company of minority equity
interests in four Mexican domiciled entities which own interests in four
separate Mexican hotels. The equity interests in the Mexican entities have an
estimated fair market value of approximately $3,190,000 as described in Item
2 below.
The shares of Class A Common Stock were issued to HIA pursuant to
the terms and conditions of a letter agreement between the Company and HIA
accompanied by the execution and delivery by HIA to the Company of an
Investment Letter Agreement. As a result of the transaction, HIA owns
approximately 31% of the outstanding shares of voting stock of the Company.
DESCRIPTION OF ACQUIRING GROUP
HIA is a limited liability company that is owned by three
individuals. No individual owns more than 49.995% of HIA. The operating
agreement of HIA provides that all major decisions, including voting the
shares of the Common Stock of the Company received in the exchange, must
receive the approval of at least 80% of the members of HIA. Mr. Michael S.
McNulty, the prior president of the Company and a prior director, is the
managing member of HIA. On December 21, 1999, Mr. McNulty resigned as a
director of the Company and effective December 31, 1999 as president. Except
for Mr. McNulty, the members of HIA own varying percentage interests in over
thirty-eight hotels, through separate Mexican domiciled entities.
HIA completed the transaction through the contribution of the equity
interests in the Mexican hotel entities to the Company.
Item 2. Acquisition or Disposition of Assets
In exchange for the 1,000,000 shares of Class "A" Common Stock of
the Company, HIA transferred equity interests in the following hotel
properties to the Company:
<TABLE>
<CAPTION>
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ENTITY SHARES % EST. EQUITY FAIR MARKET VALUE DEBT
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<S> <C> <C> <C> <C>
Immobilaria Emar S.A. de C.V. 24,000 25% $825,000 0
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Coco Club Hotels y Rivera De Mexico 30 30% $200,000 625,000
S.A. de C.V.
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Meigas Hotel S.A. de C.V. 1,250 25% $1,715,000 8,125,000
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Hotelera Vigo S.A. de C.V. 120 25% $450,000 0
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</TABLE>
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Pursuant to the agreement with HIA, HIA and its affiliate, Bufete
Grupo Internacional, S.A. de C.V., guaranteed to the Company at least
$225,000 in semi-annual distributions from the Company's ownership interests
in the Mexican entities. The following is summary information, provided by
HIA on the hotels held by the respective Mexican entities:
Hermosillio, Mexico. The property is a 150-room, all suite hotel
which is in the final stages of completion. An eighty percent interest was
acquired in November 1999 by the owners of HIA, estimated at $3,200,000 or
$21,300 per room. The owner has arranged financing through a Mexican bank to
complete the project and is negotiating with two U.S. franchisors concerning
a long-term financing agreement. The hotel is owned by Immobilaria Emar S.A.
de C.V.
San Felipe, Mexico. The property is a 60-room hotel which recorded
total revenues of $990,000 and $1,001,000 in 1999 and 1998, respectively, and
net income after a 4% capital reserve and a 5% capital expenditures reserve
of $697,000 and $703,000, respectively. The hotel is owned by Coco Club
Hotels y Rivera De Mexico S.A. de C.V.
Acapulco, Mexico. The Gran Meigas Hotel contains 470 rooms and is
located in the old hotel district. The hotel has three restaurants and bars
and is located on the beach. The hotel had gross revenues of $6,670,000 and
$6,054,000 in 1999 and 1998, respectively, and net income of $2,881,000 and
$2,992,000 in 1999 and 1998, respectively. The hotel is owned by Meigas Hotel
S.A. de C.V.
Hermosillio, Mexico. The property is a full service Best Western
Hotel with 70 rooms, including a rooftop pool. The hotel will go through an
extensive renovation in 2000 and generally caters to business travelers. The
hotel recognized total revenues of $1,342,000 and $1,278,000 in 1999 and
1998, respectively, and net income of $733,000 and $565,000 in 1999 and 1998,
respectively. The hotel is owned by Hotelera Vigo S.A. de C.V.
Item 3. Bankruptcy or Receivership
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable.
Item 5. Other Events
Not Applicable.
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Item 6. Resignations of Registrant's Directors
Not Applicable.
Item 7. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Not Applicable.
(b) PRO FORMA FINANCIAL INFORMATION
Not Applicable.
(c) EXHIBITS
2.1 Letter Agreement dated effective as of June 27, 2000 by and
among Bufete Grupo Internacional, S.A. de C.V., Hotel
International Advisors, LLC and Host Funding, Inc.
2.2 Investment Letter Agreement dated effective as of June 22,
2000 executed by Hotel International Advisors, LLC.
Item 8. Change in Fiscal Year
Not Applicable
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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 hereunto duly authorized.
Host Funding, Inc.
/s/ Glen W. Fuller
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By: Glen W. Fuller, Chief Operating Officer
Date July 17, 2000
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