(Read more on the debt and equity markets.)
ATLANTA-Although it will continue to explore avenues to enhance shareholder value, including the sale of the company, Lodgian Inc. is suspending talks with interested parties. The locally based hospitality cited the volatility in the debt and credit markets, and its affect on any sale.
In January, Lodgian started to review strategic alternatives, hiring Goldman, Sachs & Co. and Genesis Capital LLC to aid in the effort. In August, Lodgian's board of directors authorized the repurchase of up to $30 million if its common stock over a period ending no later than Aug. 22, 2009, as GlobeSt.com previously reported.In a statement earlier today, the company explains that its review "has reinforced the view of its board of directors that at the current market price, Lodgian's shares are undervalued and that they represent an attractive opportunity for investment of the company's available cash."
As of Dec. 21, the closing price for the Lodgian shares as reported on the American Stock Exchange was $12 per share. The company explains between May 2006 and Dec. 20, 2007 Lodgian repurchased an aggregate of 1.6 million shares of common stock at an average $11.83 per share, adding that the repurchasing will most likely continue while it continues to review strategic alternatives.
Lodgian is also continuing its selling spree. Since Nov. 1, 2006, the company has sold 24 hotels for aggregate gross proceeds of $92 million. It has now named nine more hotels to hit the selling block: a 243-room Crowne Plaza in Worcester, MA; a 191-room Hilton in Troy, MI; a 139-room Holiday in Towson, MD; a 130-room Holiday Inn in East Hartford, CT; a 217-room Holiday Inn in Frisco, CO; a 127-room Holiday Inn in Glen Burnie, MD; a 144-room Holiday Inn in Phoenix; a 214-room Holiday Inn Select in Windsor, Ontario; and a 105-room French Quarter Suites in Memphis.
"The sale of these non-strategic properties will allow us to concentrate operationally on those hotels that will generate the highest returns and produce long-term growth for the company," Ed Rohling, Lodgian's president and CEO, says in a statement. "We will be increasing our operational focus on our upscale and upper upscale properties, which will comprise approximately 66% of the remaining rooms."
According to the company, three of the for-sale hotels have net book values above net proceeds. As a result, the company will see an estimated $6-million impairment charge to be recorded in the fourth quarter of 2007. Lodgian execs add the company will reclassify these hotels to discontinued operations in the first quarter of 2008.
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