Wyndham International
Is Looking for a Buyer
By DENNIS K. BERMAN and RYAN CHITTUM in New York and PETER SANDERS in Los Angeles
Staff Reporters of THE WALL STREET JOURNAL
May 11, 2005; Page B4
Wyndham International Inc. has put itself on the auction block, according to people familiar with the matter. The hotel chain's stock and debt are valued at about $3.7 billion, and it wasn't clear how much of a premium a buyer would pay.
The company's common stock still trades under $1 a share, and its market capitalization is just $173 million. The chain carries debt of some $1.8 billion, which a buyer would have to pay off or assume, and its preferred stock is valued at about $1.7 billion.
Wyndham has 142 hotels and resorts in 10 countries in its franchise system, including 33 it owns and leases. The company, which reported earnings yesterday, had first-quarter revenue of $282.6 million and a loss of 14 cents a share. The move comes at a time when hotels have finally recovered from the Sept. 11, 2001, attacks, and Wyndham has completed its years-long plan to reposition the company.
A Wyndham spokeswoman said, "We're not commenting on market rumors and speculation."
Wyndham was especially hard hit during the downturn after an ill-fated acquisition spree in the 1990s left it laden with debt and owning and leasing a hodgepodge of 212 assets under a variety of brands. It also franchised or managed 105 other hotels. Then known as Patriot American Hospitality, Wyndham was a so-called paired-share real-estate investment trust. At the end of the 1990s, an investor group made up of Apollo Real Estate Advisors LP, Apollo Management LP, Thomas H. Lee Capital LLC and Beacon Capital Partners Inc. infused a billion dollars into the company to keep it afloat, and Wyndham became a C-corporation.
For the past several years, the company has been paying down debt by selling off its nonstrategic hotels, slashing administrative costs and refinancing its debt in order to slim itself down to a "branded hotel operating company" focusing on the Wyndham branded hotels.
The company also said it expected to complete its planned $1.65 billion debt refinancing this week, extending its corporate-debt maturities to 2011. "Since 1999, Wyndham has reduced its debt by over $2 billion," said Fred J. Kleisner, Wyndham's chairman, president and chief executive officer in a statement. "This refinancing, with a 2011 maturity date, gives us the running room necessary to focus on our customers and maximize the revenue potential of the Wyndham brand."
Wyndham had a deal to sell all of its noncore assets in one swoop, but it fell through after the terrorist attacks in September 2001 sent the travel industry into a tailspin. It took the company until this year to sell all of those hotels, and it used the $2.7 billion in proceeds to pay down debt.
If the larger hotel chains are interested in purchasing Wyndham, they aren't saying. Marriott International Inc. and Hilton Hotels Corp. declined to comment on Wyndham. Officials at Starwood Hotels & Resorts Worldwide Inc. didn't return calls seeking comment. Analysts say private-equity firms are involved in the bidding.
The Dallas-based company owns, leases, manages and franchises the Wyndham Hotels & Resorts, Wyndham Luxury Resorts, Summerfield Suites and Viva Wyndham Resorts.
Wyndham's shares were down two cents to 98 cents at 4 p.m. in American Stock Exchange composite trading. |
