IHR Receives Notice of Suspension of Trading from NYSE
Interstate Hotels & Resorts, a leading hotel real estate investor and the nation’s largest independent hotel management company, today announced that it had received notice from the New York Stock Exchange that its common stock, under the ticker symbol IHR, will be suspended from trading prior to the market opening on March 12, 2009.According to the March 5, 2009 notice from the NYSE, the suspension is occurring because Interstate did not meet the continued listing standard requiring maintenance of a minimum $15 million market capitalization over a consecutive 30 trading day period. The company had previously announced on December 2, 2008, that it had failed to maintain the continued listing standard which requires a $1.00 minimum average closing price over a consecutive 30 trading day period. While the $1.00 minimum average requirement allows for a company to have a six-month cure period, there is no such period available for a failure to meet the minimum market capitalization requirement.
The company will seek an appeal of the delisting determination as permitted by the NYSE though there are only limited solutions available. The company has not yet been notified as to the timing of the appeal process. Until the appeal is heard, Interstate will remain listed, but will not trade, on the NYSE.
The company’s senior secured credit facility agreement requires that the company be listed on the NYSE. KPMG LLP, the company’s external auditor, has notified the Audit Committee and management that since Interstate’s potential delisting from the NYSE creates a credit facility covenant issue, which, if not resolved, could result in acceleration of the credit facility debt, its auditor report on the consolidated financial statements for the year ended December 31, 2008 will include an explanatory paragraph related to the uncertainty of the company’s ability to continue as a going concern. The company’s credit facility also includes a covenant requiring an audit opinion without exception.
The company is in active discussions with its credit facility lenders to receive a waiver through June 30, 2009, related to the covenant requiring listing on the NYSE as well as the covenant dealing with audit opinions. While there can be no assurances that the company can obtain the waiver, a waiver of these covenants only requires a 51 percent vote by the credit facility lenders.
Thomas F. Hewitt, the company’s chief executive officer, stated that, “Interstate is working quickly to resolve these technical defaults by the end of March so that it can focus its attention on an extension of the credit facility, which the company is working to obtain prior to June 30, 2009.”
Bruce A. Riggins, chief financial officer of the company, noted that, “These technical issues relating to our credit facility do not impact the individual mortgage notes on our three wholly owned hotels.”
As previously announced, the company will distribute a press release and hold a conference call to discuss its fourth-quarter and full-year results for the year ended December 31, 2008 tomorrow, March 12th, at 10 a.m. Eastern Time. The call will be hosted by Chief Executive Officer Thomas F. Hewitt and Chief Financial Officer Bruce Riggins. Stockholders and other interested parties may listen to a simultaneous webcast of the conference call on the Internet by logging onto Interstate’s Web site, www.ihrco.com, or www.streetevents.com.
As notification from the NYSE was received only very recently, the company is continuing to evaluate the disclosures to be included in management’s discussion and analysis and the consolidated financial statements and related notes thereto to be included in its Annual Report on Form 10-K. The company intends to file for a 15-day extension to allow it to file its Annual Report on Form 10-K with the Securities and Exchange Commission not later than March 31, 2009.