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EX-99.2 - EX-99.2 - Red Lion Hotels CORPd588975dex992.htm
EX-99.1 - EX-99.1 - Red Lion Hotels CORPd588975dex991.htm

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

May 16, 2018 (May 11, 2018)

Date of Report (Date of earliest event reported)

 

 

RED LION HOTELS CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

 

 

Washington   001-13957   91-1032187

(State or Other Jurisdiction

of Incorporation)

 

(Commission

file number)

 

(I.R.S. Employer

Identification No.)

1550 Market St. #350

Denver, CO 80202

(Address of Principal Executive Offices, Zip Code)

(509) 459-6100

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.01. Completion of Acquisition or Disposition of Assets.

On May 11, 2018 RL Post Falls, LLC completed the sale of the Red Lion Templin’s Hotel on the River, in Post Falls, Idaho, to KVA Management LLC, a Washington limited liability company (the “Purchaser”). The purchase price for the hotel was $9.25 million, which was paid in cash at closing.

At closing, an affiliate of the Purchaser entered into a franchise agreement with Red Lion Hotels Franchising, Inc., a wholly owned subsidiary of Red Lion Hotels Corporation, to continue to operate the hotel under the Red Lion® brand. The franchise agreement provides for a 20 year term and the payment of monthly royalty and program fees equal to a percentage of the hotel’s gross room revenue. Either party may terminate the franchise agreement without penalty on the 10th anniversary of the hotel’s opening date. Termination of the franchise agreement by Red Lion Franchising upon default of the franchisee, or termination of the agreement by the franchisee without cause, will require the franchisee to pay a termination fee.

RL Post Falls, LLC is a wholly owned subsidiary of RL Venture, LLC. RL Venture, LLC is a variable interest entity in which Red Lion Hotels Corporation holds a 55% interest, and therefore the registrant consolidates the assets, liabilities and results of operations of this entity.

Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement

Immediately following the sale of the hotel described in Item 2.01, RL Venture, LLC repaid $6.7 million in principal balance outstanding under its loan agreement with Pacific Western Bank, as required by the terms of that agreement.

Item 7.01. Regulation FD Disclosure.

A copy of the company’s press release, dated May 16, 2018 announcing the completion of the sale is furnished as Exhibit 99.1 hereto.

Non-GAAP Financial Measures

The following is a reconciliation of pro forma Adjusted EBITDA to amounts previously reported, to reflect (i) the sale of hotels in Eureka, CA, Redding, CA, Boise, ID, Richland, WA, Pasco, WA and Bend, OR which were previously reported and (ii) the sale of the Post Falls hotel asset as described in Item 2.01 of this filing:


     Three Months Ended
March 31,
     Year Ended
December 31,
 
     2018      2017  

Adjusted EBITDA from continuing operations – as previously reported

   $ 421      $ 22,374  

Less: Redding, Eureka, Boise, Richland Pasco, and Bend asset sales

     (179      (6,855

Less: Asset sold with this filing

     (194      (1,071
  

 

 

    

 

 

 

Pro Forma Adjusted EBITDA

   $ 48      $ 14,448  
  

 

 

    

 

 

 

EBITDA is defined as net income (loss), before interest, taxes, depreciation and amortization. We believe it is a useful financial performance measure due to the significance of our long-lived assets and level of indebtedness. Adjusted EBITDA is an additional measure of financial performance. We believe that the inclusion or exclusion of certain special items, such as gains and losses on asset dispositions and impairments, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results. Refer to our previously filed 10-K for the year ended December 31, 2017 filed on April 2, 2018 and 10-Q for the three months ended March 31, 2018 filed on May 10, 2018 for the reconciliation from net income to adjusted EBITDA and further discussion of Non-GAAP measures.

Item 9.01. Financial Statements and Exhibits.

 

(b) Pro Forma Financial Information.

Attached hereto as Exhibit 99.2 and incorporated by reference herein is unaudited pro forma consolidated financial information of the registrant that gives effect to (i) the sale of hotels in Eureka, CA, Redding, CA, Boise, ID, Richland, WA, Pasco, WA, and Bend, OR which were previously reported, (ii) the sale of the hotel as described in Item 2.01 of this Form 8-K and (iii) the repayment of principal under the registrant’s loan agreement with Pacific Western Bank described in Item 2.04 of this Form 8-K.


(d) Exhibits.

 

Exhibit

Number

  

Exhibit Title or Description

99.1    Press Release dated May 16, 2018
99.2    Unaudited pro forma consolidated financial information


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    RED LION HOTELS CORPORATION
Date: May 16, 2018     By:  

/s/ Douglas L. Ludwig

     

Douglas L. Ludwig

      Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)