Extended Stay Hotels Exits Chapter 11 with Strengthened Balance Sheet and Renewed Outlook for the Future
October 12, 2010
SPARTANBURG, SC – October 8, 2010 – Extended Stay Inc. (the Company) announced today that it has successfully emerged from Chapter 11 protection. An investment group including Centerbridge Partners, L.P., Paulson & Co. Inc. and Blackstone Real Estate Partners VI, L.P. (collectively, the Sponsors) has purchased 100 percent of the Company for $3.925 billion in connection with the Plan of Reorganization confirmed by the Bankruptcy Court in July.
A spokesperson for the Sponsors said, We are enthusiastic about the opportunity to invest in Extended Stay Inc., which has maintained market leadership throughout the challenges of the past two years. After reducing its debt burden by nearly $5 billion, Extended Stay will have the flexibility to improve its customer experience and offerings. We all look forward to a successful partnership with Gary DeLapp and the entire management team as they lead the Company to future growth.
Gary DeLapp, president and CEO of HVM, L.L.C., the separately owned company that manages the hotels throughout the U.S. and Canada, said he was extremely gratified that all hotels remained open and operating during the restructuring process.
I am particularly grateful to our associates, suppliers and travel partners for their support during this process, especially in light of the difficult circumstances in which we and the entire industry have been operating, Mr. DeLapp said, adding that HVM would continue to manage the portfolio of 685 properties despite the change in ownership.
Mr. DeLapp said, I am excited that we can now focus all of our efforts on serving our guests and giving them a comfortable, convenient and affordable experience whether they stay for a night, a week, a month or longer, adding that the Company’s near-term capital plan includes significant investment in major property improvements and renovations.
With the close of the transaction, Doug Geoga becomes non-executive chairman of the Board. Mr. Geoga previously served as president of Global Hyatt Corporation. The board will also include Will Kussell, former president and chief brand officer of Dunkin’ Donuts.
The law firm of Weil, Gotshal & Manges LLP served as lead bankruptcy counsel for Extended Stay, and Lazard Ltd. served as its financial advisor. Fried, Frank, Harris, Shriver & Jacobson LLP and Houlihan Lokey served as legal and financial advisors to the Sponsors, respectively. Simpson Thacher & Bartlett LLP provided additional legal advice to Blackstone and Centerbridge, and Gibson, Dunn & Crutcher and Kleinberg, Kaplan, Wolff & Cohen provided additional legal advice to Paulson.
About Extended Stay Inc.
Based in Spartanburg, S.C., Extended Stay Hotels has 685 locations in the U.S. and Canada. It is the largest company-owned and operated chain of extended stay hotels in North America and employs approximately 9,000 in its headquarters and hotel properties. For more information on Extended Stay, please visit www.extendedstayhotels.com.
About Centerbridge
Centerbridge Partners, with approximately $12 billion in capital under management, was established in 2006 and invests across multiple strategies, including private equity and credit investments. The firm is dedicated to partnering with world-class management teams to help companies achieve their operating and financial objectives. Centerbridge’s limited partners include many of the world’s most prominent financial institutions, university endowments, pension and sovereign wealth funds, and charitable trusts.
About Paulson & Company
Paulson & Co. is an SEC registered investment management firm founded in 1994 and is headquartered in New York with offices in London and Hong Kong. The firm has approximately $32 billion under management across multiple products with a specialty in event arbitrage, including merger arbitrage, bankruptcy and distressed credit, recapitalizations, restructurings and other corporate events globally.
About Blackstone
Blackstone (NYSE: BX) is one of the world’s leading investment and advisory firms. Blackstone seeks to create positive economic impact and long-term value for its investors, the companies it invests in, the companies it advises and the broader global economy. The firm accomplishes this through the commitment of its extraordinary people and flexible capital. Blackstone’s alternative asset management businesses include the management of private equity funds, real estate funds, funds of hedge funds, credit-oriented funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com.
