RED LION HOTELS CORPORATION (NYSE:RLH) Files An 8-K Completion of Acquisition or Disposition of Assets
Item 2.01. Completion of Acquisition or Disposition of Assets.
On November 15, 2019, RLH Atlanta LLC completed the sale of the Red Lion Hotel Atlanta Airport (the Hotel) to YC Atlanta Hotel LLC, a Georgia limited liability company (the Purchaser). The purchase price for the Hotel was $12.25 million, which was paid in cash at closing.
RLH Atlanta, LLC is a wholly owned subsidiary of RLS Atla Venture, LLC. RLS Atla Venture, LLC is a variable interest entity in which Red Lion Hotels Corporation (the Company) holds a 55% interest, and therefore the Company consolidates the assets, liabilities and results of operations of this entity.
After payment of closing costs, and after the repayment of property level mortgage, the Company expects to receive a payment of $4.8 million from RLS Atla Venture. As the Companys preferred equity position and accounts receivable balance with RLS Atla Venture exceeds the net proceeds from the sale of the Hotel, no distributions will be made to the joint venture partner.
At closing, the Purchaser entered into a franchise agreement with Red Lion Hotels Franchising, Inc., which is intended to allow the Purchaser to continue to operate the Property under the Red Lion Brand for ninety (90) days following closing, after which the Purchaser may elect to terminate the franchise agreement.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Under the terms of the Credit Agreement dated May 14, 2018 between the Company, Deutsche Bank AG New York Branch, as administrative agent and collateral agent (DB), and the lenders party thereto, all net proceeds from the sale of the Hotel that are distributed by RLS Atla Venture, LLC to the Company are required to be maintained by the Company in a cash collateral account controlled by DB, as administrative agent, and may be used by the Company to prepay any outstanding term loans under the Credit Agreement. $1.8 Million of the proceeds from this sale are considered distributions subject to the Credit Agreement.
Item 7.01. Regulation FD Disclosure.
A copy of the companys press release, dated November 18, 2019 announcing the completion of the sale is furnished as Exhibit 99.1 hereto.
Non-GAAP Financial Measures
The following is a reconciliation of pro forma Adjusted EBITDA to amounts previously reported, to reflect the sale of the Hotel as described in Item 2.01 of this filing:
|99.2||Unaudited pro forma consolidated financial information|