Current Report Filing (8-k)
February 13 2020 - 4:02PM
Edgar (US Regulatory)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
Current
Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
February 13, 2020 (February 7, 2020) Date of Report (Date of earliest event reported)
RED LION HOTELS CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Washington
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001-13957
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91-1032187
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(State or Other Jurisdiction
of Incorporation)
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(Commission
file number)
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(I.R.S. Employer
Identification No.)
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1550 Market St. #350
Denver, CO 80202
(Address
of Principal Executive Offices, Zip Code)
(509) 459-6100
(Registrants Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol
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Name of each exchange
on which registered
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Common Stock
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RLH
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New York Stock Exchange
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of
1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.01. Completion of Acquisition or Disposition of Assets.
On February 7, 2020, RLH DC LLC completed the sale of the Hotel RL Washington D.C. (the Hotel) to UIP Acquire, LLC a District of Columbia
limited liability company (the Purchaser). The purchase price for the Hotel was $16.35 million, which was paid in cash at closing.
RLH
DC LLC is a wholly owned subsidiary of RLS DC Venture, LLC. RLS DC Venture, LLC is a variable interest entity in which Red Lion Hotels Corporation (the Company) holds a 55% interest, and therefore the Company consolidates the assets,
liabilities and results of operations of this entity.
Proceeds from the sale of the Hotel, combined with the release of a loan
reserve, were used to pay closing costs and repay a property level mortgage, including an accrued exit fee, and a prepayment penalty to the lender. See Item 2.04 below for additional information. No additional funds will be available for
distribution to the members of RLS DC Venture, LLC, including the Company, as a result of the sale of the Hotel.
At closing, the Purchaser entered into a
franchise agreement with Red Lion Hotels Franchising, Inc., a wholly owned subsidiary of the Company, to continue to operate the hotel under the Hotel RL® brand. The franchise agreement
provides for a five (5) year term, and requires the payment of monthly royalty and program fees based upon the Hotels room count, with a minimum payment of $300,000 in royalty and program fees during the term. In the event the franchise
agreement is terminated prior to the end of the license term for any reason, the Purchaser is required to pay to the Company the difference between $300,000 and the royalty and program fees paid at the date of termination. In addition, early
termination of the franchise agreement by Red Lion Franchising upon default of the franchisee, or termination of the agreement by the franchisee without cause, will require the franchisee to pay a termination fee. Purchaser will not be required to
pay a termination fee, and may cancel the franchise agreement upon 90 days written notice, in the event that the Hotel is converted to a different use (e.g. extended stay hotel and/or multi-family property).
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement
Pursuant to the terms of the mortgage loan agreement between RLH DC LLC and CP
Business Finance I, LP (the Lender), upon the sale of the Hotel the net proceeds from the sale, together with a release of $2.3 million in a loan reserve held by the Lender, were used to pay the outstanding $17.7 million
principal balance on the loan, including an accrued exit fee, plus a prepayment penalty of $568,198, which was the amount of the remaining cash and PIK interest that would have been payable from the prepayment date through May 31, 2020.
Item 7.01. Regulation FD Disclosure.
Non-GAAP Financial Measures
The following is a reconciliation of pro forma Adjusted EBITDA to amounts previously reported, to reflect (i) the sale of the Companys hotels in
Atlanta, GA, and Salt Lake City, UT, as previously reported and (ii) the sale of the Hotel as described in Item 2.01 of this filing:
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Nine Months ended
September 30, 2019
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Year Ended
December 31,
2018
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Adjusted EBITDA from continuing operations- as previously reported
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$
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10,624
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15,766
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Less: Red Lion Airport Hotel Atlanta asset sale
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(191
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)
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(3,613
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Less: Hotel RL Salt Lake City asset sale
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(1,617
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(2,397
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Less: Asset sold with this filing
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(777
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(893
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Pro Forma Adjusted EBITDA
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$
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8,039
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8,863
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EBITDA is defined as net income (loss), before interest, taxes, depreciation and amortization. We believe it is a useful
financial performance measure due to the significance of our long-lived assets and level of indebtedness. Adjusted EBITDA is an additional measure of financial performance. We believe that the inclusion or exclusion of certain special items, such as
gains and losses on asset dispositions and impairments, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results. Refer to our previously filed
10-K for the year ended December 31, 2018 filed on March 8, 2019 and 10-Q for the nine months ended September 30, 2019 filed on November 12, 2019 for
the reconciliation from net income to adjusted EBITDA and further discussion of Non-GAAP measures.
Item 9.01. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
Attached hereto as
Exhibit 99.1 and incorporated by reference herein is unaudited pro forma consolidated financial information of the registrant that gives effect to (i) the sale of the Companys hotels in Atlanta, GA and Salt Lake City, UT and (ii) the
sale of the Hotel and the repayment of principal on the property level debt as described in Item 2.01 of this Form 8-K.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned
hereunto duly authorized.
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RED LION HOTELS CORPORATION
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Date: February 13, 2020
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By:
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/s/ Julie Shiflett
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Julie Shiflett
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Executive Vice President and Chief Financial Officer (Principal Financial Officer)
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