Sunburst Hospitality Note Prepayment
SILVER SPRING, Md. (November 24, 2003) – Choice Hotels International, Inc. (NYSE:CHH) today announced Sunburst Hospitality has given its notice to prepay the outstanding senior subordinated note. Upon redemption, Choice will receive approximately $45 million. The company currently carries the note on its balance sheet at approximately $41 million. Closing is expected to occur prior to the end of the year.
“The prepayment of the note will enhance our balance sheet and also provide Choice with additional funds for its overall program to return value to shareholders,” said Charles A. Ledsinger, Jr., president and chief executive officer.
Choice intends to use the cash proceeds to pay down debt, repurchase shares and invest in strategic initiatives.
The prepayment will add approximately $0.09 to diluted earnings per share for 2003, of which $0.06 will be as a result of the gain on the prepayment and $0.03 due to the related tax benefits. Because of the prepayment, the company anticipates that interest income for 2004 will be reduced by $4.7 million or $0.08 per diluted share, assuming the existing diluted share count of approximately 36.9 million.
On September 4, 2003, the two companies agreed to amend the prepayment and yield maintenance provisions prior to redemption to permit the prepayment of the note, which was originally scheduled for maturity in 2007. As part of the agreement, Sunburst will pay a premium on the amount of the note. The company’s Board of Directors has engaged an investment adviser, which will provide an opinion on the fairness of the transaction to the Board.
Choice Hotels International is the second largest hotel franchisor in the world, with 4,773 hotels open, representing 384,814 rooms, in the United States and 41 other countries and territories.
Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities law.
Tel: (301) 592-5075
|Also See:||Sunburst Hospitality Amends Bank Credit Facility, Pays Down Debt Early in Wake of Leveraged Buy-out / Sept 2002|