Interstate has the option of further increasing the facility--which is in the form of a $53-million term loan and a $55-million revolving credit line--by as much as $50 million. SG Americas Securities LLC acted as the lead arranger.

"This new credit facility gives us significant flexibility and is expected to result in annual interest savings in excess of $1 million," Interstate Hotels CFO Bill Richardson says. "The facility also extends our maturities and provides us with sufficient capacity to execute our strategic business plans, including acquiring interests in hotels through joint ventures."

Much of the facility will be directed toward paying off a $40-million loan and an outstanding debt of $43.5 million under the existing facility. In November 2003, the hotel management company used the $42.3 million in proceeds from a common stock offering to repay debt under the same facility.