RED LION HOTELS CORPORATION (NYSE:RLH) Files An 8-K Completion of Acquisition or Disposition of Assets

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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 December 19, 2019, RL Salt Lake LLC, completed the sale of the Hotel RL Salt Lake City (the “Hotel”) to RL QOZB, LLC a Delaware limited liability company (the “Purchaser”). The purchase price for the Hotel was $33.0 million, which was paid in cash at closing.

RL Salt Lake LLC is a wholly owned subsidiary of RL Venture, LLC. RL 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 an $11.0 million property level mortgage, the Company expects to receive a distribution of $12.0 million in net proceeds from the sale of the Hotel. The Company expects to use the net proceeds to retire corporate level term debt of $2.4 million, and use the remaining cash for general operating purposes and reduction of the corporate line of credit.

At closing, an affiliate of the Purchaser entered into a franchise agreement with Red Lion Hotels Franchising, Inc., a wholly owned subsidiary of the Company, to continue to operate the hotel under the Hotel RL® brand. The franchise agreement provides for a one year term, renewable on a monthly basis thereafter, and requires the payment of monthly royalty and program fees based upon the Hotel’s room count. Early termination of the franchise agreement by Red Lion Franchising upon default of the franchisee, or termination of the agreement by the franchisee without cause, will require the franchisee to pay a termination fee.

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 (as amended) between the Company, Deutsche Bank AG New York Branch, as administrative agent and collateral agent (“DB”), and the lenders party thereto, $2.4 million of the net proceeds from the sale of the Hotel that are distributed by RL 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 the outstanding term loan under the Credit Agreement.

Item 7.01. Regulation FD Disclosure. 

A copy of the company’s press release, dated December 20, 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 (i) the sale of the Company’s hotel in Atlanta, GA, as previously reported and (ii) the sale of the Hotel as described in Item 2.01 of this filing:

Attached hereto as Exhibit 99.2 and incorporated by reference herein is unaudited pro forma consolidated financial information of the registrant that gives effect to (i) the sale of the Company’s hotel in Atlanta, GA and (ii) the sale of the Hotel and the repayment of principal on the property level debt as described in Item 2.01 of this Form 8-K.

99.2    Unaudited pro forma consolidated financial information


Red Lion Hotels CORP Exhibit
EX-99.1 2 d852954dex991.htm EX-99.1 EX-99.1 Exhibit 99.1   RLHC Completes Sale of Hotel RL Salt Lake City for $33 Million DENVER (December 20,…
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About RED LION HOTELS CORPORATION (NYSE:RLH)

Red Lion Hotels Corporation (RLHC) is a hospitality and leisure company. The Company is engaged in the franchising, management and ownership of hotels under the brands, including Hotel RL, Red Lion Hotel, Red Lion Inn & Suites, GuestHouse and Settle Inn & Suites (collectively the RLHC Brands). The RLHC brands represent upscale, midscale and economy hotels. The Company’s segments include company operated hotel segment, franchised hotels segment, entertainment segment and other. The hotels segment is engaged in guest room rentals, and food and beverage operations at its operated hotels. The franchised hotels segment is engaged in licensing its brands to franchisees. It offers various programs, which include its reservation system, guest loyalty program, national and regional sales, revenue management tools, quality inspections, advertising and brand standards. The entertainment segment consists of its WestCoast Entertainment and TicketsWest operations.