Postponed CNL IPO Could Be Costly Long Term: Report

ORLANDO, FL— CNL Hotels & Resorts’ decision to postpone its IPO due to “market conditions” could save shareholders millions now but might cost them millions more over the long term. At its annual meeting shareholders approved the merge of the companys external adviser, CNL Hospitality Corp. in preparation for the IPO; however, according to The Orlando Sentinel, the proxy vote had a contingency clause indicating that the IPO and listing on the New York Stock Exchange would have to occur by Nov. 30, or the acquisition of the adviser might not be completed. The company could attempt the IPO by the end of November, the report indicated, adding if it does not meet that deadline, the company might exercise a waiver that would allow it to proceed with acquiring the adviser. If the acquisition fails , shareholders initially would save the $300 million sale price but the delay might end up costing millions more in fees, and the shareholders also would have to absorb costs of the delayed IPO. CNL Hotels is required as part of its commitment to shareholders to list its common shares on a national exchange by Dec. 31, 2007, or liquidate. CNL had planned to sell 35 million shares at a range of $19 to $21 per share, to raise more than $700 million. Institutional buyers typically buy the shares, at a discount, and then the public market sets the trading price for secondary buyers and sellers, said the report. SOURCE: The Orlando Sentinel