Pegasus Solutions Sells Two Luxury Hotel Brands to IndeCorp Corporation and Enters into a Significan

Pegasus Solutions, Inc.
announced today that it has agreed to sell its London-based Summit Hotels & Resorts and Phoenix-based Sterling Hotels & Resorts business
units to IndeCorp Corporation for an estimated $12.0 million. 
In addition, IndeCorp has signed a technology services agreement with Pegasus with an
estimated value of $40 million over its five-year term. Headquartered in
Chicago, IndeCorp is a holding company that owns and operates the luxury hotel
brand Preferred Hotels & Resorts Worldwide.  Dallas-based Pegasus Solutions is
a leading provider of hotel industry transaction processing and electronic
commerce services.
As part of the agreement, Pegasus will be the exclusive provider of reservations technology, voice and electronic reservation processing, commission processing and a host of other ancillary services to IndeCorp brands, to all Preferred Hotels & Resorts member hotels, including Summit Hotels & Resorts and Sterling Hotels & Resorts hotel members. In addition,
Preferred Hotels & Resorts will become a new central reservations system (CRS)
customer of Pegasus` Application Service Processing unit, moving its
reservation system contract to Pegasus in July 2001.  Furthermore, the agreement calls for Preferred to move its global distribution system (GDS) connectivity to Pegasus` Electronic
Distribution Switch.
The Summit and Sterling brands will join Preferred Hotels & Resorts as
wholly owned subsidiaries of IndeCorp. Summit has 167 independent luxury hotel members in 44 countries; Sterling has 141 in 30 countries. Pegasus Solutions originally acquired the Summit and Sterling representation services
as part of its acquisition of Phoenix-based REZsolutions in April, 2000.
“When IndeCorp approached us with this deal, it made perfect sense for all
parties,” said John F. Davis, III, president and chief executive officer of
Pegasus Solutions. “First, we are selling our two upscale, luxury brands to
one of the world`s best-known operators of luxury hotel marketing distribution
services, which will be of great benefit to the Summit and Sterling hotel members. Second, divesting these brands will greatly reduce Pegasus` costs in a traditionally labor-intensive portion of our business.
“Moreover, while we are selling our Summit and Sterling brand business, we
are pleased that we will retain them as clients, and gain a new one: Preferred
Hotels & Resorts Worldwide.  Not only will Summit and Sterling properties continue to use our commission
processing service, Internet and GDS distribution, NetBooker(TM) Web site hosting and private-label voice reservations service, but we are expanding our service relationship by moving
them with Preferred to our ASP reservation system services,” Davis said.
Under the terms of the transaction, IndeCorp will pay Pegasus $4.2 million
upon closing, consisting of $3.2 million is in cash at closing, and $1 million
payable in a note to Pegasus Solutions.  The balance will be payable over four
years, subject to Summit and Sterling membership contracts being renewed.
Pegasus Solutions Chief Financial Officer Jerry Galant said, “Revenues from
Summit and Sterling operations were expected to contribute between $15 and
$20 million in 2001.  However, their EBITDA margins have been beneath our
corporate goals. We believe this transaction is in the best interest of our
shareholders, and should improve our profit margins and will enable us to
focus on our core technology offerings.  As a result of this transaction, we
expect 2001 revenues for Pegasus to be in the range of $205 to $210 million,
but are still comfortable with a cash EPS projection of $0.60 to $0.65 per share for 2001.”
As part of the divestiture, 57 Summit employees currently employed by Pegasus will become IndeCorp. Employees. Summit will continue to be headquartered in London, and Sterling Hotels will be based in Chicago, Illinois, at IndeCorp headquarters.