S&P: MeriStar ratings unaffected

Standard & Poor's said Monday that its ratings and outlook on MeriStar Hospitality Corp. (B-/negative/--) were not affected by the company's announcement of a series of capital market transactions.

These transactions are expected to completely retire the remaining $83 million outstanding of MeriStar's 8.75% senior subordinated notes due 2007, to pay down a portion of its senior unsecured notes, and to reduce the interest rate on its $309 million commercial mortgage backed securities due 2009. Pro forma for these transactions, MeriStar's debt balance was approximately $1.5 billion as of Dec. 31, 2003. The company expects to save annualized interest of $16 million.

S&P said it believes that it would be premature to revise the outlook or ratings at this time, given MeriStar's weak credit measures and the still early stage of the lodging industry recovery. Pro forma for these capital market transactions and raised guidance, total debt to EBITDA is expected to be around 9.0x at the end of 2004, still very weak for the rating.

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