|WHITE PLAINS, N.Y., Jan. 7, 1999 - Starwood Hotels
Resorts Worldwide, Inc. (the Corporation) and Starwood Hotels Resorts (the
Trust) announced today that shareholders at their annual meetings held
yesterday overwhelmingly approved a restructuring of the two companies
in response to recently enacted federal tax legislation. As a result of
the restructuring, effective yesterday, Starwood has relinquished its grandfathered
paired-share REIT status and is now a C Corporation and the Trust has become
a subsidiary of the Corporation.
The name of the newly restructured company continues to be Starwood Hotels Resorts Worldwide, Inc. In the restructuring, each outstanding common share of the Trust was converted into a new nonvoting Class B Share of the Trust, which entitles the holder to certain dividends. The Class B Shares will be traded only as units with attached shares of common stock of the Corporation. The new combined units will continue to be traded principally on the New York Stock exchange under the symbol "HOT."
In addition, as previously announced, consistent with its structure change, Barry S. Sternlicht is Chairman and Chief Executive Officer and Richard D. Nanula is President and Chief Operating Officer of the Corporation. More than 97% of the votes cast were in favor of the restructuring. In addition, shareholders overwhelmingly approved the following two other proposals that were voted on at the meetings:
"Yet, 1998 was also a difficult year for the company and our shareholders. Our long-term strategic decision to convert to a C Corporation in light of the paired shared legislation may have had adverse short-term consequences. In converting to a C-Corp, we believed that access to capital in the REIT format was limited. Our company operates on a global basis and in many lines of business. To maintain our dividend would have most likely required us to continually reenter the equity markets, diluting current shareholders in order to take advantage of our global growth opportunities. Our shareholders voted for growth," Mr. Sternlicht said.
"But, the structural change came at a bad time," the chief executive continued. "The deletion from the SP 500 in February, the arbitrage selling related to the ITT transaction, the significant period of uncertainty relating to our new structure, and the reduction in our dividend created a year of confusion and extraordinary instability in our shareholder base. Internally, we also chose to focus on the long-term. Due at first to the structural uncertainty and later the credit market turmoil, the company chose not to refinance its five year notes at credit spreads which it felt were unattractive and instead suffered short-term earnings dilution. We also delayed the receipt of payments for Forum III shop expansion in Las Vegas and significant payments from global service vendors to maximize payment proceeds to us. The collapse of Asian markets not only hurt profits of our Asian hotel operations directly, but indirectly affected earnings by reducing Asian high roller play in our Caesars casinos.
We also endured significant delay, primarily relating to environmental issues, in the opening of our Indiana riverboat, the world's largest, which is now fully operational. In addition, due to the decline in our stock price and our decision to direct available funds to the repurchase over $700 million of stock, we did not complete any major acquisitions in the final six months of 1998. Despite these setbacks, our company should post FFO for 1998 that places it among the fastest growing companies in our industry and among all REITs. At the end of the day, our performance came in very close to original estimates established in the midst of the ITT takeover battle. This was a year of achievement, but also a year of tumult.
"1999 should be a year of structural stability for Starwood and set the stage for future growth. This resounding vote ends an important chapter in our corporate history," Mr. Sternlicht concluded.
Note: This release contains certain statements that may be deemed "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated at the time the forward-looking statements are made, including, without limitation, risks and uncertainties associated with the following: the pending restructuring of Starwood and Starwood Hotels and Resorts (the "Trust"); the Trust's continued ability to qualify for taxation as a REIT; Starwood's integration of the assets and operations of ITT and Westin; completion of future acquisitions and dispositions; the availability of capital for acquisitions and for renovations; execution of hotel and casino renovation and expansion programs; the ability to maintain existing management, franchise or representation agreements and to obtain new agreements on current terms; competition within the lodging industry and the gaming industry; the cyclicality of the real estate business, the hotel business and the gaming business; foreign exchange fluctuations; general real estate and national and international economic conditions; political, financial and economic conditions and uncertainties in countries in which Starwood owns property or operates; the ability of Starwood, owners of properties it manages or franchises and others with which it does business to address the Year 2000 issue, and the costs associated therewith; the adoption by several European countries of the euro as their national currency; and the other risks and uncertainties set forth in the annual, quarterly and current reports and proxy statements of the Trust and Starwood. Starwood undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Hotels, which operates ITT Sheraton, Westin and Caesars subsidiaries, Announces
Management / March 1998
|Starwood Reports Third Quarter ADR Increase of 7% With Occupancy Rates Remaining Constant / Oct 1998|