WASHINGTON, D.C.— MeriStar Hospitality Corp. said it has received payment on its outstanding note receivable from Interstate Hotels & Resorts. Interstate completed a discounted repayment to MeriStar of its $56.1 million note payable, due July 31, 2007, for $42.1 million. Interstate financed the repayment with proceeds from a $40 million subordinated term loan obtained from Lehman Brothers that matures in January 2007 and carries a coupon rate of LIBOR plus 850 basis points. The remaining $2.1 million will be paid out of available cash. MeriStar said it will add the proceeds to its cash reserves, enhancing its liquidity. MeriStar, a hotel real estate investment trust, owns 106 principally upscale, full-service hotels in major markets and resort locations. Interstate Hotels & Resorts operates approximately 400 hospitality properties with nearly 86,000 rooms in 45 states, the District of Columbia, Canada and Russia, including 55 properties managed by Flagstone Hospitality Management, a subsidiary of Interstate Hotels & Resorts.
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