Patriot American is one of the largest hotel real estate investment trusts in the United States.

The action challenges the proposed transaction as a breach of fiduciary duty on part of the Board of Directors of Patriot American and names the members of the Apollo Acquisition Group as aiders and abettors of the Board of Directors' breaches of fiduciary duty.

According to Pamela S. Tikellis, named partner of Chimicles Tikellis, LLP, the litigation arises from the Board of Directors' wrongful acts in effectively selling control of the Company to the Apollo Acquisition Group for grossly inadequate consideration and without having adequately considered or explored, as required, the alternatives to this proposed sale or having taken steps to maximize value for the public stockholders.

The complaint further charges that the individual director defendants agreed to the proposed transaction because of their earlier reckless and wrongful acts in causing the Company to incur massive debt obligations including certain high risk loan obligations, the payment of which were tied to the company's stock price, called "forward equity contracts".

The complaint explains that these forward equity contracts were entered into in or about November 1997 and the stock has declined almost $20 per share since the Company was caused to enter into these contracts.

The suit also alleges that having placed the Company in this dire financial situation, the Board of Directors now seeks to rescue it by entering into the wrongful transaction with the Apollo Acquisition Group without fulfilling its fiduciary obligations.

The suit claims that on about December 16, 1998, the Company announced that it had entered into a Letter of Intent with the Apollo Acquisition Group pursuant to which the Apollo Acquisition Group would make a $1,000,000,000 equity investment in the Company.

Although the Company publicly denominated the transaction as a "financing" or "investment", the terms and conditions make clear that it is really a sale of control of the Company. Further, the Refinancing further gives the Apollo Acquisition Group such control at an inadequate price and without having paid a control premium.

The Refinancing allows the Apollo Acquisition Group to purchase control of the Company at $7.1875 per share. This, the suit charges, is far below the present net asset value of the Company's assets of approximately $21.84 per share (as of December 1998 according to Stock Realty Review) which the Apollo Acquisition Group or any other third-party purchaser would have to pay in a sale of Patriot
American's assets.

In addition, the lawsuit challenges the recent adoption of a "poison pill" which took place four days after the Company was forced to enter into the Letter of Intent and evidences a transparent attempt to secure the Apollo Acquisition Group's control, to the exclusion of others, over the Company.

The litigation demands injunctive relief with respect to the transaction and an order requiring the individual defendant directors to take all steps necessary to maximize value for the benefit of the public stockholders. Additionally, the suit seeks class action status. Goodkind Labaton Rudoff  Sucharow LLP, a New York based firm, is also representing the public stockholders in the litigation.

Chimicles Tikellis LLP has a practice which concentrates in investor, antitrust, consumer and environmental protection law. The Firm represents investors in a variety of actions relating to, among other things, the sale of control in public companies.

The Firm of Chimicles  Tikellis LLP has offices in Haverford, Pennsylvania and Wilmington, Delaware. For further information contact Chimicles Tikellis LLP by telephone at 610/642-8500 or 800/931-0528, or by E-mail: [email protected].