Highland Signs Agreement to be Acquired by JER
MCLEAN, VA, April 24, 2007. Highland Hospitality Corporation ("Highland") (NYSE: HIH), today announced that it has entered into a definitive agreement to be acquired by affiliates of JER Partners Acquisitions IV, LLC ("JER"). The all-cash transaction is valued at approximately $2.0 billion, including the assumption by JER of approximately $260 million of Highland's existing indebtedness.
Under the terms of the agreement, JER will acquire all of Highland's outstanding common stock and operating partnership ("OP") units for $19.50 per share and per OP unit in cash. The purchase price represents a premium of approximately 15% over Highland's three-month average closing share price. Also, pursuant to the terms of the agreement, no future dividends will be paid on the common stock. In addition, JER has agreed that, as promptly as practicable after the completion of the merger, it will liquidate the surviving corporation in the merger. In the liquidation, each holder of a share of Highland's 7.875% Series A Cumulative Redeemable Preferred Stock will receive $25.00 per share in cash plus any then accrued but unpaid dividends.
Completion of the transaction, which is subject to shareholder and regulatory approvals as well as other customary closing conditions, is currently expected to occur in the third quarter of 2007. The transaction is not subject to a financing condition. Highland's board of directors has unanimously approved the merger agreement and has recommended the approval of the transaction by the company's common shareholders at a special meeting that will be held on a date to be announced.
James L. Francis, Highland's President and Chief Executive Officer, stated, "The proposed merger reflects our commitment to deliver value to our shareholders. We have built a portfolio of high-quality hotels and resorts and believe that the price offered by JER fairly reflects the underlying value of these assets. JER is a well-respected firm with a strong track record in our industry. We look forward to working together to gain shareholder approval and consummate this merger."
"Highland has assembled a premium portfolio of upscale properties," added Cia Buckley, President of JER's U.S. Fund Business. "JER intends to undertake a focused capital investment program to position the portfolio for further growth. We view this as a key strategic investment for our organization."
Bear, Stearns & Co. Inc. and Merrill Lynch & Co. acted as financial advisors to Highland, and Hogan & Hartson L.L.P. acted as its legal advisor. Wachovia Securities and Citi acted as financial advisors to JER, acquisition financing is being provided by Wachovia Bank and O'Melveny & Myers LLP and Allen & Overy LLP acted as JER's counsel.
Additionally, Highland announced today that it will release its earnings for the quarter ended March 31, 2007 after the market closes on Wednesday, May 2, 2007.
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