Suburban Lodges of America, Inc. (NASDAQ: SLAM) and InTown Suites Management, Inc. today jointly announced that they have entered into a definitive merger agreement providing for the acquisition of all of Suburban Lodges` outstanding common stock for $8.25 per share in cash, plus a proportionate interest in a liquidating trust.

Under the terms of the agreement, Suburban Lodges and its subsidiaries will become subsidiaries of InTown Suites.

Prior to closing of the merger, Suburban Lodges will continue with its previously announced plan to dispose of real estate it had been holding for future hotel development, and will transfer any remaining unsold parcels, as well as the net cash proceeds from any such sales and certain other assets, to the liquidating trust for the benefit of its shareholders. The trust will be responsible for selling any assets transferred to it, and after the first anniversary of closing, distributing any available sales proceeds to the shareholders.

Suburban Lodges currently estimates, based on the per share cash consideration in the merger and the value of assets and cash expected to be distributed to shareholders through the liquidating trust, that shareholders may receive up to $9.04 per share as total consideration for their shares. This figure is based on Suburban Lodges` preliminary estimate that the liquidating trust will distribute up to $0.79 per share; the actual amount distributed by the liquidating trust will likely differ, perhaps materially, from the estimate based on market conditions for sales of the remaining unsold land, future liabilities and other factors.

Consummation of the merger, which is expected to occur in the second quarter of 2002, is subject to various customary conditions, including the adoption and approval of the merger agreement by Suburban Lodges` shareholders. The directors, an affiliate of certain directors and several executive officers of Suburban Lodges, who in the aggregate have the power to vote approximately 29% of Suburban Lodges` outstanding shares, have agreed to support and to vote in favor of the merger at the shareholders` meeting.

Suburban Lodges` CEO, David Krischer, said, “Since late 1998, most small public hotel companies, including Suburban Lodges, have been mired in a quandary of limited growth opportunities, limited funding and stagnant stock prices. Since the fall of 2000, we have considered numerous strategic alternatives and we are pleased to be able to announce this transaction today which, based on our current estimate of the cash to be received from the liquidating trust, offers our shareholders the highest per share value on the company`s stock since the first quarter of 1999. Moreover, this announcement ends a period of uncertainty that has been surrounding our company as we have reviewed alternatives to maximize value for our shareholders.”

 

 

David Vickers, President of InTown Suites, added, “Over the past few years, hotel industry consolidation has proven to be a successful formula for improving service to guests, providing additional opportunities for associates and creating new growth opportunities. We are truly excited to join forces with two highly regarded hotel brands.”

Salomon Smith Barney is acting as sole financial advisor to Suburban Lodges. Andersen Corporate Finance LLC is acting as sole financial advisor to InTown Suites.

 

About Suburban Lodges:
Suburban Lodges of America, Inc. owns, franchises and manages Suburban Lodges hotels, including 65 Company-owned Suburban Lodge hotels with 8,587 rooms, and franchises GuestHouse International hotels, a mid-market nightly stay hotel chain.

About InTown Suites:

InTown Suites Management, Inc. is a privately held corporation based in Atlanta, Georgia, that develops extended stay hotels and currently owns and manages 53 hotels with more than 6,800 rooms in 13 mo states and 24 major cities.

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