WASHINGTON, DC— MeriStar Hospitality Corp. has completed the sale of $170 million principal amount of 9.50% convertible subordinated notes due 2010. This sale includes the underwriter’s over-allotment of $15 million, pursuant to its effective shelf registration statement filed under the Securities Act of 1933. The convertible notes will bear interest at a rate of 9.50% per annum and are convertible into MeriStar common stock at a conversion rate of 98.2318 shares per $1,000 principal amount of the convertible notes (equal to a conversion price of $10.18 per share of MeriStar common stock), subject to adjustment in certain circumstances. MeriStar may not redeem the newly issued convertible notes. It was noted the hotel REIT intends to use a portion of the net proceeds from the offering to repurchase or redeem substantially all of its outstanding 4.75% convertible subordinated notes due 2004 as soon as practicable after the closing of the offering. MeriStar similarly expects to use the remaining net proceeds to repurchase or redeem other debt.
