Lodgian makes progress in ongoing strategic review process; sale of company still possible

By Lisa Kerner

Charlotte, N.C., Aug. 24 - Since announcing its plan to review strategic alternatives on Jan. 22, 2007, Lodgian Inc. has engaged in "substantive" discussions about a sale of the company and received several indications of interest, according to a company news release.

In addition, the company said it has:

• Authorized the repurchase of up to $30 million of its common stock;

• Continued with plans to sell assets, selling 23 hotels since Nov. 1, 2006 for $83.9 million net;

• Acquired 100% ownership of the Crowne Plaza in Melbourne, Fla.;

• Pursued cost-reduction initiatives, including downsizing corporate office staff and consolidating five operating regions into two regions, for savings of some $4 million to $4.5 million annually; and

• Formed an executive committee of its board of directors. The executive committee is composed of chief executive officer Edward J. Rohling and independent board members Alex Lieblong, Peter Cyrus and Mark Oei.

Lodgian said it is maintaining a strong liquidity position, despite current volatility in the debt and credit markets. As of July 31, Lodgian had consolidated long-term obligations of $376 million, including $4.1 million relating to held-for-sale assets and unrestricted cash balances and cash equivalents of $82.9 million, according to a company news release.

The company has been working to refinance its debt over the past two years. As a result, only 2% of total mortgage debt will mature within the next 12 months, assuming certain extension options are exercised. The current weighted average cost of debt is 6.85%. Lodgian said as of now, 56% of total mortgage debt is fixed-rate financing and 44% is variable-rate financing.

Lodgian management and the board are continuing to review strategic alternatives that could include a sale of the entire company.

Atlanta-based Lodgian is an independent owner/operator of full-service hotels in the United States.

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