AFM Hospitality To Sell Royal Connaught Hotel, Ontario

TORONTO— AFM Hospitality Corp.’s wholly-owned subsidiaries, Kelloryn Holdings and Kelloryn Hotels , executed an agreement on December 31, 2001 with Canmac Hotels Corp. for the sale of the Royal Connaught Hotel in Hamilton, Ontario. This transaction marks the completion of AFMs strategic decision in 1997 to divest real estate in order to focus exclusively on hotel franchising, management and related services as a relatively low risk, less capital-intensive business model. AFM Hospitality intends to continue the growth of its service areas through acquisitions of complementary businesses. AFM had been carrying the Hamilton hotel on its consolidated statements as an asset held for sale since 1997 and had been actively seeking a buyer capable of renovating the property into a preeminent Hamilton hotel. After pursuing various other alternatives, management has concluded that the offer from Canmac contains the best available terms for sale, including retention of the AFM flag and management of the hotel. Canmac is a Nova Scotia unlimited liability company and an affiliate of American Motels Acquisition Company LLC.