Marriott International Obtains Major Financing Commitments In Connection With Planned Spin-Off And M

12th Jan 1998

Marriott International, Inc. (NYSE / MAR) today announced that it has launched a $1.5 billion syndicated bank financing for the new hospitality company which it plans to spin off. Marriott International and Sodexho Alliance also have obtained $1.4 billion of bank financing commitments for Sodexho Marriott Services, Inc. In addition, Marriott International announced that the waiting period has expired under the Hart-Scott-Rodino Antitrust Improvements Act with respect to the pending merger of Marriott`s food service and facilities management business (Marriott Management Services) with Sodexho Alliance`s North American operations.

On October 1, 1997, Marriott International reported it had entered into a definitive agreement to merge Marriott Management Services with the North American operations of Sodexho Alliance. Prior to the merger, Marriott International plans to spin off to its shareholders, on a tax-free basis, a new company comprised of its lodging, senior living and distribution services businesses. This new company will adopt the Marriott International name, and the present Marriott International will change its name to Sodexho Marriott Services, Inc.

The $1.5 billion syndicated bank financing will be a revolving credit facility for the new Marriott International. Citibank, N.A. is Administrative Agent; Citicorp Securities, Inc. is Arranger; The Bank of Nova Scotia is Documentation Agent and Letter of Credit Agent; and, The Chase Manhattan Bank and The First National Bank of Chicago are Managing Agents. Collectively, the four banks already have committed to $550 million of the total facility.

The $1.4 billion in financing commitments for Sodexho Marriott Services have been arranged by Societe Generale and J.P. Morgan. The proceeds from this financing will be available to fund the planned refinancing of a substantial portion of Marriott International`s outstanding debt, which totaled approximately $1.9 billion on January 2, 1998.

William J. Shaw, president and chief operating officer of Marriott International, said that the company expects to complete the spin-off and merger transactions by the end of the 1998 first quarter.


“In addition to completing the sale, to Sodexho Alliance, of our food service and facilities management business in the United Kingdom, we have made substantial progress toward meeting the legal and regulatory requirements of these transactions,” Mr. Shaw explained. “We are targeting a closing date in March 1998, following a special shareholders` meeting to be held for the purpose of approving the spin-off and related items.”

Marriott International said it had received initial comments from the Securities and Exchange Commission on its preliminary proxy material filed in mid-November 1997, and tentatively is planning to mail final proxy material to its shareholders around the end of January 1998. Copies of the preliminary proxy material are now available. Marriott International also said that its request for a ruling that the spin-off transaction will be tax-free to the company and its shareholders has been filed with the Internal Revenue Service.

On the spin-off date, as described further in the preliminary proxy material, Marriott International shareholders will receive one share of common stock and one share of Class A common stock of the new Marriott International for each Marriott International share owned as of the record date of the distribution. The common stock of the new Marriott International will have one vote per share, and the Class A common stock will have 10 votes per share. Both classes of common stock are expected to be listed on the New York Stock Exchange. It is anticipated that cash dividends will be paid on each class of common stock, with the aggregate combined payout at least equal to the aggregate dividends currently paid by Marriott International.

Mr. Shaw said that the new bank financing commitments, together with the dual class common equity structure, will provide the new Marriott International with significant flexibility to pursue growth opportunities.

“The global lodging industry is undergoing a period of rapid consolidation, and we expect to see similar activity in the U.S. senior living industry over the next few years,” Mr. Shaw stated. “Most of the larger mergers announced in the last 12 months have involved a combination of cash and stock consideration. In the past, we have been reluctant to use our common stock for acquisitions, primarily because of the dilutive effect it would have on the voting interests of our shareholders, including the founding Marriott family. The close association with the Marriott family has been very important to the company, and will continue to be very important to the new Marriott International—because the name is synonymous with high quality, service, consistency and integrity. Our history of growth, profitability and financial strength, over more than 70 years, is due in large part to the continuous, stable leadership provided by Marriott family members, including their long-term commitment to the business. Our added flexibility in being able to issue lower-voting common stock for acquisitions and other corporate purposes will enable the new Marriott International to be a major participant as our industries consolidate, without significantly diluting the voting interests of today`s shareholders or jeopardizing our anticipated strong investment grade credit rating.”

Mr. Shaw said that he expects the new Marriott International to create significant value for its shareholders and expanded opportunities for its associates by aggressively growing its businesses.

“Our growth targets include adding more than 140,000 hotel rooms and 200 senior living communities over the five-year period 1998-2002,” Mr. Shaw said. “We plan to double the cumulative number of vacation club timeshare intervals sold, and to gain market share in our limited line food distribution business. Our goal is to be the preeminent hospitality company of the 21st century.”



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