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NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today announced
that it has entered an agreement to purchase TravelCenters of America,
Inc. ("TA") from a group of private equity investors led by Oak Hill
Capital Partners, L.P. for total consideration of approximately $1.9
billion.
When this transaction is closed, HPT will retain substantially all
of TA's real estate and transfer TA's operating business to a
subsidiary which will be distributed to HPT's shareholders. The TA
transaction will significantly increase and diversify HPT's
investments and revenues and this transaction may provide HPT with
additional growth opportunities in the future. Moreover, the travel
center subsector of the hospitality industry in which TA operates has
historically been recession resistant and the TA transaction may
provide further stability to HPT's revenues.
Description of TravelCenters of America:
TA owns and operates a cross country network of 162 largely
irreplaceable hospitality and fuel service areas along the U.S.
Interstate Highway System. The TA network includes 161 locations in 40
states and one site in Ontario, Canada. Included in the 162 TA
locations are 13 sites which are owned and operated by TA franchisees.
The typical TA site includes:
-- Over 20 acres of land with parking for approximately 170
tractor-trailers and 100 cars;
-- An approximately 150 seat, full service restaurant and one to
three quick service restaurants operated under various well
recognized brands;
-- A truck repair facility and parts store;
-- Multiple diesel and gasoline fueling points;
-- A convenience store, game room, lounge and other amenities for
truckers and motorists; and
-- At twenty sites, a hotel operated under a well recognized
brand.
Spin Out Transaction and Lease:
The operating assets of TA, including the franchise agreements,
will be spun out to HPT shareholders in an in kind distribution to
create a separately traded, public company (New TA) with shares listed
on a national stock exchange. TA's substantial real estate will be
retained by HPT and leased to New TA.
HPT currently expects that this transaction will be immediately
accretive to HPT's Funds From Operations, or FFO, by between $0.10 and
$0.15 per share per year and that HPT shareholders may receive
additional significant value from the spin out share distribution of
New TA.
The record date for the spin out distribution, the details of the
lease from HPT to New TA and pro forma financial information for HPT
and New TA are expected to be included in SEC filings to be made in
connection with the spin out. These filings are currently anticipated
to occur within the next 60 days.
Timing and Financing:
HPT currently expects this transaction to close in early 2007. HPT
has arranged interim financing for this transaction from Merrill Lynch
& Co. HPT currently anticipates long term financing this transaction
by the issuance of both debt and equity securities.
Commentary from HPT Management:
John Murray, President of HPT, made the following statement at the
time of this announcement:
"TA owns the premier network of full service travel centers in the
U.S. TA provides an important infrastructure type service within the
U.S. transportation system, with largely irreplaceable sites along the
U.S. Interstate Highway System.
"HPT expects this transaction will be immediately accretive to
HPT's FFO. The TA network is the leader in the full service travel
center business, a very fragmented subsector of the hospitality
industry. The spin off of New TA will create a new partner with whom
HPT may work for future growth.
"The HPT lease will have the same security features which
characterize HPT's existing hotel leases and management contracts: one
long term lease for all the properties, a strong parent company
guaranty, all or none renewal options, etc. Moreover, based upon
historical experience in TA's business, we believe the percentage
rents which HPT receives from the New TA may not be subject to the
financial cyclicality which has historically affected hotels."
Conference Call and Slide Presentation:
On Tuesday, September 19, 2006, at 10:00 a.m. Eastern Time, Barry
Portnoy, Managing Trustee, John Murray, President, and Mark Kleifges,
Chief Financial Officer, will host a conference call to discuss this
transaction. Following the company's remarks, there will be a short
question and answer period.
Before the NYSE opens on Tuesday, September 19, 2006, HPT will
make available a slide presentation describing the TA transaction.
This presentation will be filed with the SEC on Form 8-K and also will
be available at HPT's web site, located at www.hptreit.com.
The conference call telephone number is (800) 289-0572.
Participants calling from outside the United States and Canada should
dial (913) 981-5543. No pass code is necessary to access the call from
either number. Participants should dial in about 15 minutes prior to
the scheduled start of the call. A replay of the conference call will
be available for about one week. To hear the replay, dial (719)
457-0820. The replay pass code is 9390457.
A live audio webcast of the conference call will also be available
in a listen only mode on HPT's web site, at www.hptreit.com.
Participants wanting to access the webcast should visit the company's
web site about five minutes before the call. The archived webcast will
be available for replay on the company's web site for approximately
one week after the call.
Merrill Lynch & Co. acted as exclusive financial adviser to HPT in
this transaction. TravelCenters of America was advised by Lehman
Brothers and Credit Suisse.
Hospitality Properties Trust is a real estate investment trust, or
REIT, which currently owns 310 hotels located throughout the United
States, Puerto Rico and Ontario, Canada. HPT is headquartered in
Newton, Massachusetts.
STATEMENT REGARDING REFERENCE TO NON-GAAP FINANCIAL MEASURES
This press release includes a reference to Funds From Operations,
or FFO, which is a non-GAAP financial measure. HPT computes FFO as net
income available for common shareholders plus FF&E deposits not in net
income, depreciation and amortization. This calculation of FFO differs
from the National Association of Real Estate Investment Trusts, or
NAREIT, definition of FFO because HPT includes FF&E deposits not
included in net income. HPT considers FFO to be an appropriate measure
of performance for a real estate investment trust, or REIT, along with
net income and cash flow from operating, investing and financing
activities. HPT believes that FFO provides useful information to
investors because by excluding the effects of certain historical
costs, such as depreciation expense and gain or loss on asset
impairment, FFO can facilitate comparisons of current operating
performance among REITs. FFO does not represent cash generated by
operating activities in accordance with generally accepted accounting
principles, or GAAP, and should not be considered an alternative to
net income or cash flow from operating activities as a measure of
financial performance or liquidity. FFO is one important factor
considered by HPT's board of trustees in determining the amount of
distributions to shareholders. Other important factors include, but
are not limited to, requirements to maintain HPT's status as a REIT,
limitations in HPT's revolving bank credit facility and public debt
covenants, the availability of debt and equity capital to HPT and
HPT's expectation of its future capital needs and operating
performance.
WARNING REGARDING FORWARD LOOKING STATEMENTS
SOME OF THE STATEMENTS IN THIS PRESS RELEASE ARE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND FEDERAL SECURITIES LAWS. FORWARD LOOKING
STATEMENTS ARE BASED UPON HPT'S CURRENT BELIEFS AND EXPECTATIONS, BUT
THEY ARE NOT GUARANTEED TO OCCUR AND THEY MAY NOT OCCUR. FOR EXAMPLE:
-- THIS PRESS RELEASE STATES THAT HPT EXPECTS ITS ACQUISITION OF
TA, THE SPIN OFF OF TA'S OPERATING BUSINESS AND THE LEASE OF
TA'S REAL ESTATE BY HPT TO NEW TA TO RESULT IN FFO ACCRETION
OF $0.10 TO $0.15 PER SHARE PER YEAR. THIS ESTIMATE IS BASED
UPON CERTAIN ASSUMPTIONS BY HPT WHICH MAY PROVE TO BE
INACCURATE. FOR EXAMPLE, HPT'S LONG TERM FINANCING MAY BE MORE
EXPENSIVE THAN HPT'S HISTORICAL COSTS SUGGEST. INCREASED COSTS
MAY RESULT FROM CHANGED MARKET CONDITIONS OR BECAUSE OF SOME
OTHER REASON. AS A RESULT OF SUCH CHANGES, HPT MAY NOT REALIZE
THE EXPECTED ACCRETION BENEFITS FROM THIS TRANSACTION AND MAY
EVEN EXPERIENCE LOSSES.
-- THIS PRESS RELEASE STATES THAT HPT INVESTORS MAY RECEIVE
SIGNIFICANT VALUE FROM THE SPIN OUT DISTRIBUTION OF NEW TA
SHARES. THE VALUE OF NEW TA SHARES WHICH ARE DISTRIBUTED TO
HPT SHAREHOLDERS WILL DEPEND UPON THE MARKET PRICE OF THOSE
SHARES, WHICH IN TURN WILL DEPEND UPON THE RELATIVE NUMBER OF
BUYERS AND SELLERS OF NEW TA SHARES ABOUT THE TIME OF THE SPIN
OUT DISTRIBUTION. SPIN OUTS OFTEN RESULT IN AN EXCESS OF
SHAREHOLDERS INTERESTED TO SELL THE SECURITIES THEY RECEIVE
BECAUSE THOSE SECURITIES DO NOT MATCH THE SHAREHOLDERS'
INVESTMENT GOALS. ACCORDINGLY, HPT SHAREHOLDERS WHO DECIDE TO
SELL NEW TA SHARES WHICH ARE DISTRIBUTED TO THEM MAY BE UNABLE
TO REALIZE A FAIR VALUE FOR THE NEW TA SHARES THEY RECEIVE.
-- THIS PRESS RELEASE STATES THAT THE SHARES OF NEW TA WILL BE
SEPARATELY TRADED ON A NATIONAL STOCK EXCHANGE. NO APPLICATION
HAS BEEN MADE YET TO LIST NEW TA SHARES ON ANY SECURITIES
EXCHANGE. WHEN AN APPLICATION IS MADE IT MAY BE DENIED. IF THE
NEW TA SHARES ARE NOT ACCEPTED FOR LISTING ON A NATIONAL STOCK
EXCHANGE, THOSE SHARES MAY BE ILLIQUID AND DIFFICULT TO SELL,
WHICH COULD REDUCE THE VALUE OF ANY NEW TA SHARES DISTRIBUTED
TO HPT SHAREHOLDERS.
-- THIS PRESS RELEASE STATES THAT HPT EXPECTS TO MAKE FILINGS AT
THE SEC WHICH WILL CONTAIN ADDITIONAL DETAILS OF THIS
TRANSACTION. THE PREPARATION OF THESE SEC FILINGS IS A COMPLEX
PROCESS. HPT CURRENTLY BELIEVES THIS PROCESS CAN BE COMPLETED
WITHIN 60 DAYS. HOWEVER, THIS PROCESS MAY BE DELAYED FOR
NUMEROUS REASONS, INCLUDING COMPILATION OF THE REQUIRED
FINANCIAL DATA IN THE FORMAT REQUIRED FOR SEC FILINGS.
ACCORDINGLY, THESE FILINGS MAY BE DELAYED.
-- THIS PRESS RELEASE STATES THAT HPT EXPECTS THE TRANSACTION
DISCUSSED TO CLOSE IN EARLY 2007. THE CLOSING OF THIS
TRANSACTION REQUIRES ANTI-TRUST CLEARANCE, SEC CLEARANCE OF A
REGISTRATION STATEMENT FOR THE DISTRIBUTION OF NEW TA SHARES
TO HPT SHAREHOLDERS, VARIOUS STATE AND LOCAL REGULATORY
APPROVALS AND VARIOUS APPROVALS FROM THIRD PARTIES TO TA
CONTRACTS. HPT CAN PROVIDE NO ASSURANCE THAT ALL THESE
APPROVALS WILL BE OBTAINED. SOME OF THESE APPROVALS MAY BE
DELAYED OR DENIED AND THE EFFECT MAY BE TO DELAY OR VOID THIS
TRANSACTION.
-- THIS PRESS RELEASE IMPLIES THAT HPT WILL ACQUIRE ADDITIONAL
TRAVEL CENTERS WHICH WILL BE LEASED TO TA. IN FACT, HPT AND
NEW TA MAY BE UNABLE TO LOCATE ADDITIONAL SITES TO INVEST IN
OR AGREE UPON TERMS FOR SUCH INVESTMENTS. THERE ARE NO
ASSURANCES THAT HPT WILL INCREASE ITS INVESTMENTS IN TRAVEL
CENTERS OR IN PROPERTIES LEASED TO NEW TA.
INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD
LOOKING STATEMENTS.
Hospitality Properties Trust Timothy A. Bonang, 617-796-8149
www.hptreit.com
© Business Wire , 2010 - 09/18/2006 07:55 AM
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