Extended Stay America, Inc. (NYSE:ESA), a leading provider of extended stay lodging, today reported that it has increased availability under it`s bank credit facility from $800 million to $1 billion with the addition of a $200 million Tranche D Term Loan which will mature on June 30, 2007. The proceeds from the new term loan will be used to reduce amounts outstanding under the Company`s revolving loan facility. As a result, approximately $300 million will be available under the revolving loan facility. The Company expects to use the availability under the revolving loan facility to continue the development of extended stay lodging facilities and for other corporate purposes as permitted under the credit facility.

In addition to increasing aggregate borrowings and availability under the credit facility from $800 million to $1 billion, certain other terms of the credit facility were modified in connection with an amendment and restatement of the credit facility. The credit facility was amended to allow the Company to purchase up to $75 million of its common stock and/or subordinated notes, with a sub-limit of $25 million for the subordinated notes. The credit facility was also amended to expand the Company`s ability to issue its common stock to effect certain investments. In addition, certain conditions to each borrowing of revolving loans were eliminated and the permitted ratio of senior debt to earnings before interest, taxes, depreciation and amortization was increased to 4.25:1.00 through September 2001 and to 4.00:1.00 thereafter.

Interest on the new Tranche D Term Loan will be calculated, at the Company`s option, using either the prime rate plus 2.5% or the LIBOR rate plus 3.5%. In connection with the issuance of the new Tranche D Term Loan and the amendments discussed above, the interest rate on the revolving loans and the Tranche A Term Loan, which previously varied based on the amount of loans outstanding relative to earnings before interest, taxes, depreciation and amortization, will now be calculated, at the Company`s option, using either the prime rate plus 1.0% or the LIBOR rate plus 2.0%. The commitment fee on the unused revolving loan capacity will be 0.5% per annum on the unused amount. The Company paid an amendment fee of 0.25% of the amounts previously committed under the credit facility. Morgan Stanley Senior Funding, Inc. acted as sole book runner and sole lead arranger on the financing.

In connection with these revisions to the credit facility, the Company has also acquired an interest rate cap contract with Bank of America which will limit the Company`s exposure to future increases in the LIBOR rate. The Company has acquired a contract on a total of $800 million that will limit exposure to LIBOR increases to a maximum LIBOR rate of 7.88% from June 16, 2000 through June 16, 2001 and to a maximum LIBOR rate of 8.88% from June 17, 2001 through June 16, 2002.

George D. Johnson, Jr., Chief Executive Officer, commented: “We are pleased that we have been able to obtain additional financing which will allow us to continue to execute our development plans. We believe that our ability to obtain this financing in a difficult financing environment confirms the strength of our business concept and recognizes the contribution of all of our employees in executing that concept. We believe that the amended credit facility, along with the related interest rate caps, will continue to provide financing at cost effective rates which will allow us to expand our business while maintaining a prudent financial position. The amendments to our credit facility also provide us additional flexibility to acquire our stock and to execute other transactions on an opportunistic basis.”

Certain statements and information included in this release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management`s projections, forecasts, estimates and expectations is contained in the Company`s SEC filings.

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