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Public Stock - Formal Tender Offer Launched After Interstate Scorns Shaner Proposals; Goal is to Restructure Management and Boost Shareholder's Value |
| PITTSBURGH - March 27, 2002 - Shaner Hotel Group (SHG) today announced
it is initiating an all-cash tender offer for 2,472,822 shares of Class
A common stock of Interstate Hotels (Nasdaq:IHCO). Shaner, headquartered
in State College, Pa., currently holds approximately 326,000 Class A shares,
a 5.94 percent stake in Interstate. The tender offer is for about 45 percent
of the Class A common stock and would result in Shaner owning approximately
51 percent. Shaner has been attempting amicable negotiations with Interstate
since January.
Shaner is offering $3 per share. Interstate closed yesterday, March 26, at $2.14. Shaner has sufficient cash for the offer, which is not contingent on financing. Pittsburgh-based Interstate is one of the largest independent hotel management companies in the United States. The Interstate and Shaner hotel management contracts that may be combined after the deal would represent more than 150 properties and about 32,000 rooms in nearly all 50 states and several international destinations. "We are making this tender offer because we believe in the viability of owning and operating hotels and motels," said Lance Shaner, chairman and CEO of Shaner Hotel Group. "The acquisition of the common stock is a first step. Shaner Hotel Group's ultimate goal is to restructure management and combine the businesses to provide synergies and operating efficiencies that will boost the long-term value of the company for its shareholders." The offer includes some standard conditions, including a minimum of 2,472,822 shares of Class A common stock required for the tender; and that Interstate's "poison pill" provision, which would dilute shares and prevent the Shaner majority, must not be triggered by the transaction. "We are hoping that Interstate's Board of Directors will waive the poison pill provision, so that shareholders are not blocked from realizing the value of their investments," said Shaner. The expiration date of the tender offer is 5 p.m. Pittsburgh time on May 7, 2002 unless Shaner offers an extension. In this transaction, Shaner will not purchase more than the 2,472,822 shares required to complete the acquisition. On February 13, Interstate Hotels Corporation announced a fourth-quarter loss of $3.1 million and a loss of $8 million for 2001. Interstate has not posted a winning quarter or paid a common stock dividend for several years. Since January 2002, Shaner Hotel Group has submitted three different restructuring and acquisition proposals, including an all-cash offer earlier in March, to acquire Interstate and reset a course for profitability and shareholder value. Interstate Blocked Shaner Plan from Shareholders Interstate Chairman and CEO Thomas F. Hewitt has refused to meet with Shaner for the past six weeks, and all Shaner's proposals have been rejected. Shaner first attempted to buy struggling Interstate in October 2000, when Interstate instead ratified a $25 million credit line from Lehman Brothers Holdings Inc. Shaner contends the Lehman deal has not boosted Interstate's position, as evidenced by Interstate's subsequent financial performance. Interstate has refused to provide Shaner, one of its largest shareholders, with a list of other shareholders, prohibiting Shaner from communicating its offer directly to Interstate investors. Stockholders are encouraged to read the tender offer statement when it's available as it contains important information affecting their holdings. The tender offer statement and other documents filed by Shaner with the Securities and Exchange Commission will be available on the Commission's Web site (www.sec.gov) soon. About Shaner Hotel Group The Shaner Hotel Group (SHG), with over $260 million in assets, is a privately held fully integrated hotel company that specializes in the acquisition, refurbishment, repositioning, development and long-term ownership of full-service hotels. SHG also has extensive limited-service and extended-stay experience. The company owns 22 hotels, representing 10 different hotel brands in 15 states. Formed in 1983, SHG is headquartered in State College, Pa. This press release may contain information that could constitute forward-looking statements made within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. |
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Lance T. Shaner Chairman and Chief Executive Officer Shaner Hotel Group |