SILVER SPRING, MD- Sunburst Hospitality Corp., which owns about 80 hotels in chains such as Quality Inn and Clarion, agreed to sell itself for about $380 million in cash and assumed debt to a group of its own managers and investors.
The group, which includes Chairman Stewart Bainum Jr., CFO James MacCutcheon, members of Bainums family and other managers, will pay $7.375 for each Sunburst. The company had 15.8 million shares outstanding as of June. Theyll also assume about $263 million of the companys debt.
CEO Donald Landry said in a statement that the offer from Bainum and his group was the best of a number of options that the company had considered in recent months to raise the value of its shares. Sunburst shares have lost about half of their value in the past three years.
Landry said he will step down as CEO. MacCutcheon was named co-chief executive and will become president and chief executive when an orderly transition can be completed, the company said.
The sale is conditioned on approval by holders of two-thirds of Sunbursts shares. Sunbursts board already has approved the sale on the recommendation of a committee of Sunburst directors who arent affiliated with the group that is buying the company. The independent directors were advised by Salomon Smith Barney. Chase Securities is advising Bainum and his group, and Chase Manhattan Bank agreed to finance the purchase. (9/20/00)