PITTSBURGH Interstate Hotels Corp. received a $30 million investment from CGLH Partners I LP and CGLH Partners II LP, an investor group led by Lehman Brothers, pursuant to an agreement signed on August 31, 2000.
Under the approved agreement, Interstate issued $5 million of preferred stock to CGLH Partners I LP and $25 million in subordinated notes to CGLH Partners II LP. The preferred stock and notes each have 8.75% per annum coupon rates and are together convertible by the investor group into up to 49% of Interstate s then outstanding common stock at $4.00 per share conversion rate. Both the preferred stock and the notes mature in 2007.
The transaction was approved by Interstate s stockholders, at a stockholder s meeting held Monday, October 16, for that purpose. In connection with this investment, Interstate will acquire Wyndham International s 55% non-voting economic interest in Interstate Hotels LLC, pursuant to an agreement signed on August 31, 2000.
Interstate simultaneously entered into a joint venture agreement with the investor group whereby Interstate will invest $25 million of the new capital, along with additional capital from the investor group, to selectively acquire hotel properties that will be managed by Interstate. Interstate and the investor group believe the joint venture partnership can acquire up to $300 million of hotel assets. (10/20/00)