LodgeNet completes On Command acquisition

5th Apr 2007

Entertainment Corporation has completed the acquisition of Ascent Entertainment
Group, Inc., the owner of all of the capital stock of On Command
Corporation, for a purchase price of $380 million. The combination of
LodgeNet and On Command creates a network that delivers interactive
solutions to more than 1.8 million hotel rooms throughout the United
States, Canada and Mexico.
  “A great interactive experience is a key differentiator for hotel
guests,” said Scott C. Petersen, LodgeNet President and CEO. “Over the past
several years we have grown from a company that primarily focused on video
on demand to a company that delivers a wide variety of interactive
solutions that connect, inform and entertain customers of visitor and
guest-based businesses. The On Command and recent StayOnline acquisitions
are transforming events for our company and major steps forward in our
strategic plan that will significantly enhance our ability to serve our
customers and their guests now and in the future.”
  “The combination of the three companies provides scale and resources
that will enhance LodgeNet’s capability to innovate in developing new
interactive solutions for hotels and other guest-based businesses,”
continued Petersen. “We will be better able to pool talent and resources to
meet the specific needs of these businesses with solutions that include:

  —New content and connectivity opportunities

  —New branding and marketing applications

  —New revenue opportunities

  —Unique interfaces that support customer brands.
  “The acquisitions also position LodgeNet to create greater shareholder
value by realizing strategic and operating synergies in addition to new
revenue opportunities,” said Mr. Petersen. “We are and will be highly
focused on the integration of these businesses to drive both customer and
shareholder value creation, and we remain committed to our disciplined
financial approach to our business.”
  LodgeNet purchased Ascent Entertainment Group, Inc. from Liberty Media
and its Liberty Satellite & Technology, Inc. subsidiary (the
“Transaction”). The purchase price was paid with $332 million in cash and
by the issuance of 2.05 million shares of LodgeNet common stock which were
valued at $23.35 per share by the parties at the time of the stock purchase
agreement in December of 2006, making Liberty a 9.2% shareholder in
  LodgeNet also announced today that it closed the previously announced
Stock Purchase Agreement with PAR Capital Management, under which it
purchased 1,000,000 shares of LodgeNet common stock for $23.35 million in
cash, with proceeds going to support the acquisition of On Command.
purchase increased PAR’s ownership position in LodgeNet to 9.7%.
  In further support of the Transaction, LodgeNet also completed today a
$675 million secured credit facility arranged by Bear Stearns & Co. and
Credit Suisse. In addition to providing financing for the Transaction, the
new credit facility was used to refinance LodgeNet’s outstanding bank debt
of approximately $68,000,000, and will be used to fund LodgeNet’s pending
offer to purchase up to $200,000,000 aggregate principal amount of its
outstanding 9 1/2% Senior Subordinated Notes due 2013, the tender offer for
which was launched on March 26, 2007. The facility also provides a $50
million revolving credit facility for general corporate purposes. The new
credit facility carries an interest rate based on LIBOR plus 200 basis
points with a rate reduction to LIBOR plus 175 basis points when the total
consolidated leverage ratio is below 3.25x.


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