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Capital Lodging's $300 million IPO Completion Date
 Unkwnown; Plans to Acquire 22 of 27
Crown American Hotels
By Jeff McCready, The Tribune-Democrat, Johnstown, Pa.
Knight Ridder/Tribune Business News

June 22, 2004 - Crown American Hotels of Johnstown said there will be minimal job losses at its downtown corporate headquarters when 22 of its 27 properties are sold to Capital Lodging of Dallas for $146 million in cash.

Two of the five hotels Crown will retain are in the Johnstown area -- Holiday Inn, 250 Market St. in downtown Johnstown, and Holiday Inn Express, 1440 Scalp Ave. in Richland Township.

U.S. Securities and Exchange Commission filings said Capital plans to use a portion of the $300 million it hopes to raise through an initial public offering of stock to purchase the Crown hotels, including Holiday Inn in Indiana.

The sale could be completed by July 9, but Capital has yet to say when it will initiate the initial public offering or how many shares will be offered.

Crown executives are not saying how many jobs could be lost at the Johnstown headquarters, where 50 people work. Last year, 134 people were laid off when its privately held sister company, Crown American Realty Trust, was sold to Pennsylvania Real Estate Investment Trust of Philadelphia.

"There are still some negotiations going on, but the number will be minimal," Crown spokeswoman Allison Troy Finui said in a telephone interview when asked about the number of jobs that will be retained at Crown's headquarters, Pasquerilla Plaza in downtown Johnstown.

Finui said she had no information about what direction the remaining Crown operation would be taking.

"I don't know what Mark's (Chairman Mark E. Pasquerilla) plans are with the company he is taking forward," she said.

The smaller company will continue to operate Frank J. Pasquerilla Conference Center, 301 Napoleon St. in downtown Johnstown, named for the late Crown chairman.

Pasquerilla became chairman after the April 1999 death of his father.

The conference center is close to Crown's downtown Holiday Inn, allowing the two to be marketed together.

Johnstown Mayor Don Zucco said in a telephone interview that he probably will continue to work for Pasquerilla.

Zucco is executive vice president and chief administrative officer of Crown American Enterprises, which oversees Crown's holdings, including the multi-story building at Pasquerilla Plaza.

Crown also operates a travel agency in the headquarters, but a woman who answered the telephone said the agency will be closing.

Zucco had worked for publicly traded Crown American Realty Trust, a sister company that was sold last year to Pennsylvania Real Estate Investment Trust of Philadelphia for $381 million in stock.

Crown American Realty had owned and operated 26 malls. Crown Hotels, formed in 1965, is privately held.

Zucco came under criticism last year because of the loss of jobs when Crown realty was sold. Zucco argued that while he is trying to bring jobs to the city, his job as a trustee was to act in the best interest of shareholders.

Pasquerilla will become a trustee of Capital once the sale is complete, Capital SEC filings said. He also became a PREIT trustee after the sale.

Crown has more than 2,200 employees in its seven-state operation stretching from Pennsylvania to Georgia. Many of those employees likely are to be hired by Prism Hotels, which is slated to oversee the 22 properties once the sale is completed. Prism now oversees 40 hotels in the United States and Caribbean.

In response to a telephone call last week to his office, Pasquerilla declined to discuss the transaction.

Capital Lodging executives also have remained mum on the purchase because it ties in with the plan to become a publicly traded hospitality real estate investment trust. The Crown deal was announced shortly after Capital filed that intention with the SEC in April.

In a March interview Pasquerilla said that taking the hotel operation public made sense because business was improving along with the economy.

A call to Capital's office in Dallas was answered by a recording that said no information other than what was in the SEC filings was available.

Federal regulations limit what a company can say once it signals an intention to go public.

Completion of the deal will give Capital 34 hotels with 6,829 rooms in 13 states. The hotels are located throughout the nation.

"We believe that the current investment environment for hotels is generally favorable," Capital says in the filing.

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