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Previous Year's Net Income of $0.5 million; Remains in Non Compliance with its Senior Secured Loan Credit Facility, Not Sure What Actions Lenders May Take |
ATLANTA, Nov. 14, 2001 - Lodgian, Inc., (NYSE: LOD) today reported
results for its third quarter and nine months ended September 30, 2001.
RESULTS FOR THE THIRD QUARTER 2001 AND THE NINE MONTHS ENDED SEPTEMBER 30, 2001 Attached are the Company�s consolidated balance sheets as of September 30, 2001, (unaudited) and December 31, 2000, unaudited consolidated statements of operations for the three and nine months ended September 30, 2001 and unaudited consolidated statements of cash flows for the nine months ended September 30, 2001. The Company�s Form 10-Q for this period has been filed with the Securities and Exchange Commission and is available on the Company�s web site. SUMMARY OF THIRD QUARTER 2001 RESULTS Total revenues for the third quarter 2001 were $111.4 million compared to $155.2 million for the third quarter of 2000. Of this $43.8 million decrease (a 28.2% decrease), $24.9 million is due to the disposition of 9 hotels in the owned portfolio. Revenues for hotels owned as of September 30, 2001, on a same unit basis, were $111.4 million for the third quarter 2001 and $130.3 million for the third quarter 2000 (a decline of 14.5%). RevPAR for the third quarter 2001, for hotels owned as of September 30, 2001, on a same unit basis, decreased 14.1% as compared to the third quarter 2000. This primarily was as a result of a decline in occupancy of 11.3%, as well as a 3.2% decrease in average daily rates. After adjusting for $2.0 million of unusual overhead and other costs, primarily related to nonrecurring professional and legal fees, severance, one-time bonus charges, account write-offs and provisions, third quarter 2001 EBITDA was $22.3 million, a 33.5% decrease compared to third quarter 2000 EBITDA on a same unit basis. This decrease was primarily due to a general decline in the industry, particularly in certain of the Company�s markets which factors were exacerbated by the events of September 11, 2001. Also contributing to the reduction in same unit EBITDA were higher utility, property insurance and property tax costs, which assuming a constant percentage of revenues, negatively impacted same unit EBITDA by an aggregate $3.3 million. The Company incurred a loss of $18.3 million ($0.64 loss per share) for the third quarter 2001 compared to net income of $0.5 million ($0.02 per share) for the third quarter 2000. SUMMARY RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 (THE 2001 PERIOD) Total revenues for the 2001 period were $352.0 million compared to $454.6 million for the 2000 period. Of this $102.6 million decrease (a 22.6% decrease), $82.9 million is due to the disposition of 9 hotels in the owned portfolio. Revenues for hotels owned as of September 30, 2001, on a same unit basis were $346.7 million for the 2001 period and $371.7 million for the 2000 period (a decline of 6.7%). RevPAR for the 2001 period, for hotels owned as of September 30, 2001, on a same unit basis, decreased 6.2% as compared to the 2000 period. This primarily was as a result of a decline in occupancy of 7.0%, partially offset by a 0.8% increase in average daily rates. After adjusting for $7.6 million of unusual overhead and other costs, primarily related to nonrecurring professional and legal fees, severance, one-time bonus charges, account write-offs and provisions, EBITDA for the 2001 period was $72.5 million, a 22.8% decrease compared to EBITDA of $93.9 million for the 2000 period, on a same unit basis. This decrease was primarily due to a general decline in the industry, particularly in certain of the Company�s markets which factors were exacerbated by the events of September 11, 2001. Also contributing to the reduction in same unit EBITDA were higher utility, franchise fees, property insurance and property tax costs, which, assuming a constant percentage of revenues, negatively impacted same unit EBITDA by an aggregate $9.1 million. The Company realized a gain on asset dispositions for the nine months ended September 30, 2001, of $24.2 million. The Company incurred a loss of $32.0 million ($1.12 loss per share) for the nine months ended September 30, 2001, compared to a loss of $56.5 million ($2.01 loss per share) for the nine months ended September 30, 2000. SIGNIFICANT EVENTS SUBSEQUENT The Company has been notified by the New York Stock Exchange (the Exchange) that it is not in compliance with the Exchange�s continuing listing requirements because the Company�s total market capitalization has fallen below $15 million over a consecutive thirty trading day period. Pursuant to Exchange requirements relating to this listing standard, the Company is required to promptly demonstrate to the Exchange that the Company has a plan to come into compliance with the minimum market capitalization requirement. In this regard, the Company has scheduled a meeting with the Exchange to present its business plan going forward. However, in particular, because the Company�s share price has been less than $1.00, there can be no assurance that the Company�s plans will be acceptable to the Exchange. FORBEARANCE, DEBT AMENDMENTS AND COVENANTS Based on its third quarter 2001 results, the Company is not in compliance with the financial covenants related to its Senior Secured Loan Credit Facility (the senior facility), on which, as of November 14, 2001, the Company has outstanding borrowings of $196.2 million. However on November 13, 2001, the Company reached an agreement in principle with the lenders of this facility (the senior lenders) with respect to the financial covenant violations, pursuant to which the senior lenders agreed to forbear from the exercise of their default-related remedies against the Company until December 31, 2001 (unless an additional event of default occurs earlier). The Company expects to formally execute the forbearance agreement within the next few days. The forbearance agreement also reduced the commitment on the working capital revolver from $25.0 million to $13.4 million leaving the Company with $3.0 million of unused availability on the working capital revolver portion of the senior facility. The forbearance agreement also requires that the remaining $3.0 million be used only to pay the interest in respect of the senior facility due on November 15, 2001, and that the Company make semimonthly interest payments on the senior facility. The Company also anticipates that it will not be able to make the remaining $36.0 million of required special amortization payments to its senior lenders due December 31, 2001, and is working with its senior lenders to seek an acceptable resolution of these problems. There can be no assurance that the Company will be successful in such negotiations and there is no certainty as to what actions the senior lenders may take if the Company is unable to negotiate a resolution. The Company anticipates that because of limited liquidity it will not be making the $12.3 million interest payment due January 15, 2002, to the holders of the Company�s Senior Subordinated Notes. In addition, as a result of the events of noncompliance with respect to its Senior Secured Loan Facility, the Company�s Senior Subordinated Notes and the CRESTS are also in noncompliance due to cross-default provisions in those agreements. The Company intends to attempt to negotiate a debt restructuring with both the holders of the Senior Subordinated Notes and the holders of the CRESTS. There can be no assurances that the Company will be successful in such negotiations and there is no certainty as to what actions the lenders may take if the Company is unable to negotiate a resolution. 2001 OUTLOOK UPDATE Since the start of 2001, the Company has sold six hotel properties for gross proceeds of $76.4 million and used $65.5 million of these proceeds to reduce debt. Between January 1, 2000 and November 14, 2001, the Company sold 29 properties for gross proceeds of $285.2 million and used $216.6 million of these proceeds to reduce debt. Currently the Company is exploring the possibility of restructuring its outstanding debt. However, there can be no assurances that the Company can complete a restructuring nor can there be any assurances that, if completed, the restructuring will be on more favorable terms. Amidst the challenges of the current economic environment and the specific challenges peculiar to the Company, particularly those adversely impacting the hospitality industry and the Company since the events of September 11, 2001, management considers the restructuring of its debt obligations to be critical if the Company is to have sufficient liquidity to fund its operating, capital expenditure and debt service obligations beyond December 31, 2001. If the Company is unsuccessful in obtaining waivers or amendments to cure existing or probable future events of noncompliance with its debt covenants and is unsuccessful in achieving a restructuring of its current debt obligations on terms sufficient to provide the Company with the liquidity necessary to fund its operating capital expenditure and debt service obligations, the auditors� report on financial statements for the year ending December 31, 2001, will likely contain a modification as to the Company�s ability to continue as a going concern. As a result of the Company�s noncompliance with the financial covenants related to its Senior Secured Loan Credit Facility, the Company�s uncertainty regarding its future operating results and liquidity and the probable associated implications for its debt obligations, the Company has classified all of its outstanding debt and the CRESTS as current liabilities. MANAGEMENT CHANGES On October 12, 2001, Thomas Gryboski, the Company�s Vice President of Legal Affairs and Secretary resigned to pursue other opportunities. The resignation takes effect on November 15, 2001. On November 13, 2001, Richard Cartoon was appointed Executive Vice President
and Chief Financial Officer, Michael Amaral was appointed Senior Vice President
of Operations and Daniel Ellis was appointed Vice President of Legal Affairs
and Secretary.
Lodgian, Inc. owns or manages a portfolio of 106 hotels with approximately 19,893 rooms in 32 states and Canada. The hotels are primarily full service, providing food and beverage service, as well as meeting facilities. Statements in this press release that are not strictly historical are �forward-looking� statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. |
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David E. Hawthorne Chief Executive Officer +1-404-365-3800 [email protected] WWW.LODGIAN.COM |