ResortQuest International In Stock-for-stock
Transaction Valued at Approximately $177 million
|NASHVILLE, Tenn.-- Aug. 5, 2003 -- Gaylord Entertainment
Company (NYSE: GET) today announced that it has agreed to acquire ResortQuest
International (NYSE: RZT), the nation's largest vacation rental property
management company. The purchase, which will be a stock-for-stock transaction
using a fixed exchange ratio of 0.275 Gaylord Entertainment shares for
each ResortQuest share, is expected to be tax free to ResortQuest shareholders.
Based on Gaylord Entertainment's closing stock price on Aug. 4, 2003, the
acquisition is estimated at approximately $177 million, including approximately
$68 million of ResortQuest net debt ($71 million in senior debt and $3
million in unrestricted cash).
ResortQuest International holds the leading market position in the vacation rental property management industry, with an approximate 4% market share of an estimated $10 billion market in the United States. ResortQuest manages the only nationwide branded network of properties representing approximately 20,000 vacation rental homes and condominiums, primarily at beach, mountain, and desert resorts. ResortQuest also offers real estate brokerage services to both management customers and other vacation home and condominium owners.
"This acquisition will transform Gaylord Entertainment into a multi-product hospitality company that can offer a range of accommodations to convention, business and leisure travelers," said Colin Reed, president and chief executive officer of Gaylord Entertainment. "Throughout the last year, we have been building a strategic plan to accelerate our growth in non-capital intensive ways by extending offerings to customers with whom we have a captive relationship through our hospitality and leisure businesses, while exploiting the skill set of our senior management team. Our extensive research has indicated that we have a substantial existing and target customer base that chooses to vacation at either beach or mountain rental accommodations. ResortQuest's high-quality vacation properties will be a valuable complement to both our meetings-focused Gaylord Hotels brand, and our 'country lifestyle' Grand Ole Opry brand."
The transaction represents a significant opportunity to develop the ResortQuest brand more fully by leveraging the Gaylord management team's track record of building and growing brands. Gaylord will also deliver additional demand into the ResortQuest network by cross-marketing ResortQuest's vacation properties to Gaylord's millions of Gaylord Hotels convention-goers and millions of country lifestyle consumers who frequent the Grand Ole Opry, watch it on television or listen to its radio programs. This will build additional awareness for the ResortQuest brand, and generate additional occupancy and revenue for both the combined company and the individual unit owners. Additionally, Gaylord will reach new ResortQuest consumers to whom it will introduce its current array of hospitality and country lifestyle offerings.
"This is an attractive deal for all of ResortQuest's stakeholders - our rental customers, property owners and shareholders," said ResortQuest chief executive officer Jim Olin. "We believe that there are significant revenue opportunities with Gaylord, given its consumer reach. Our 1.6 million guest database will be combined with Gaylord's eight-plus million consumer reach, which should bode well for the rental income to our homeowners and provide us an additional significant competitive advantage in our resort markets. We are confident that the experienced management team at Gaylord will help ResortQuest solidify and build on our current brand. In addition, we can leverage the scale of Gaylord's financial platform to operate and grow more efficiently. With its customer base, commitment to technology and marketing and well-known hospitality reputation, Gaylord will significantly enhance the ResortQuest franchise."
Under certain circumstances Gaylord Entertainment will provide $10 million of working capital for general corporate use to be accessed by ResortQuest between signing and closing. Gaylord intends to refinance all of ResortQuest's outstanding debt.
At the completion of the transaction, ResortQuest will continue to operate as a separate brand and will continue to be led by Jim Olin and other members of the existing senior management team. Gaylord plans to have ResortQuest continue to operate in Destin, FL, which is home to ResortQuest's fastest growing and most profitable region.
"We believe ResortQuest has enormous untapped value, and with new marketing and branding initiatives along with Gaylord's strong and experienced leadership, we fully expect this acquisition to contribute significantly to the long-term financial prospects of our company," said David Kloeppel, Gaylord Entertainment chief financial officer. "While there will be cost synergies as part of this acquisition, the majority of improved profitability is expected from increased revenues. Combined, we expect the transaction to be accretive to 2004 results excluding the impact of increased revenues and expense reductions, which we expect to add EBITDA(1) of approximately $2 million in 2004 and approximately $5 million in 2005."
Both companies remain comfortable with their prior guidance.
The transaction, which is subject to government, regulatory and shareholder approvals, is expected to close in early 2004. ResortQuest has agreed to pay a break-up fee of $6 million if the proposed deal is not consummated under certain circumstances. Certain holders of Gaylord and ResortQuest common stock have agreed to vote in favor of the transaction. The transaction was approved unanimously by the boards of directors of both companies.
Deutsche Bank acted as financial advisor to Gaylord Entertainment, and Citigroup advised ResortQuest International.
About Gaylord Entertainment
About ResortQuest International
This press release contains statements as to the company's beliefs and expectations of the outcome of future events that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
David Kloeppel, 615-316-6101
|Also See:||ResortQuest International Launched as First Branded Company for Vacation Rentals and Property Management / May1998|
|ResortQuest International Merges Shoreline Rentals and Worthy Rentals, Under the New Name ResortQuest Hilton Head Island / Nov 2002|