AFM Hospitality Corporation Announces Private Placement.Business Editors TORONTO--(BUSINESS WIRE)--Nov. 13, 2001 Expanding Multi-Brand Franchiser Moves to Strengthen Financial Position AFM (Atomic Force Microscope) A device used to image materials at the atomic level. AFMs are used to solve processing and materials problems in electronics, telecom, biology and other high-tech industries. Hospitality Corporation (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :AFM.), a global hotel franchising and management services company, today announced its intention to complete a share purchase arrangement with various parties, some of whom are related to AFM. Seven of AFM's directors and senior management body have agreed to participate in a share purchase arrangement including Lawrence P. Horwitz, Chairman of the Board; Andre S. Tatibouet, Director; Stephen H. Phillips, Vice-chair and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. ; Warren Adamson, President; Alan Raffan, CFO See Chief Financial Officer. ; Glen Blake, COO and Tom Matthews, President of Northwest Lodging International (Canada), a wholly-owned subsidiary of AFM. AFM is considering this transaction as a means to secure long-term financial commitments from certain director/shareholders and to demonstrate management's commitment to AFM's future. "These commitments show the confidence of management and directors to the future of AFM and send a strong message to our clients and service providers," said Stephen Phillips
Stephen Phillips (28 July 1864 – December 9, 1915) was an English poet and dramatist, who enjoyed considerable popularity in his lifetime. , Vice-Chairman and CEO of AFM. "AFM senior management is working pro-actively to position the company to prosper despite the present economic uncertainty. All shareholders of AFM will benefit from the more stable financial position that these transactions give the company." The seven participants have agreed to subscribe for a total of up to 835,025 common shares, 421,052 preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. and 722,346 warrants. Each preferred share may be converted for one common share and each warrant may be exercised within 5 years for one common share at the exercise price of $4.75. Common and preferred shares will be subscribed for $4.75 per share. All common shares will be placed in escrow for 10 years. All preferred shares for 3 years, and warrants into escrow from 3 to 10 years. All escrowed securities will be released on a proportionate basis over the respective escrow term. AFM is also discussing with various third parties to participate in purchasing up to an aggregate of 185,760 common shares and 185,760 5-year warrants at a subscription price of $4.75 per share, although a discount may apply. As part of this share purchase arrangement, AFM intends to grant financial assistance to participating directors and management by way of loans to facilitate the purchases. Collectively, management has proposed that AFM lend approximately $5,966,386 to participating related parties on terms up to 10 years subject to the following terms: variable interest rate at the prescribed rate under the Income Tax Act (Canada - currently 5% per annum Per annum Yearly. ), 10 year amortization, annual equal blended payments of principal and interest on or before December 31st in each year, collateral security COLLATERAL SECURITY, contracts. A separate obligation attached to another contract, to guaranty its performance. By this term is also meant the transfer of property or of other contracts to insure the performance of a principal engagement. to be put in place within 30 days of closing, and the loans to Mr. Horwitz and Mr. Tatibouet will be full recourse Full recourse No matter what risk event occurs, the borrower or its guarantors guarantee to repay the debt. This is not a project financing unless the borrower's sole asset is the project. . The loans to other related parties will be limited in recourse to the collateral security. In compliance with regulatory requirements and as instructed by AFM's board, management will be seeking disinterested shareholder approval for these transactions as a special meeting of the shareholders of AFM which has been called for December 19th, 2001. If approved and completed, these proposed transactions permit AFM to clearly capture in its financial statements the long term financial commitments of the participating directors and senior officers. AFM will continue to receive the benefit of future cash streams of principal and interest over the duration of the loans. Management is confident that such financial commitments will also strengthen the Company's ability to both negotiate more cost-effective bank financing as well as to use its capital stock for future strategic acquisitions. If approved at the upcoming shareholders meeting, management anticipates these transactions will be closed by the end of December 2001. About AFM Hospitality Corporation Through its subsidiaries, AFM Hospitality Corporation, which also owns HFS (Hierarchical File System) The file system used in the Macintosh. The first version, known as "Mac OS Standard," was introduced in 1985. HFS+, an enhanced version, came out in 1998 in preparation for the upcoming Mac OS X operating system. Purchasing Services Canada, AFM Asset Management Inc., Northwest Lodging International (USA) Inc. and Northwest Lodging International (Canada) Inc., is the exclusive Canadian Master Franchiser for ASTON(R), Best Inns(R), Hawthorn(R) Suites, Howard Johnson(R), Knights Inn(R), Park Plaza, Park Inn, Ramada ra·ma·da n. Southwestern U.S. 1. a. An open or semienclosed shelter roofed with brush or branches, designed especially to provide shade. b. An open porch or breezeway. 2. (R), Villager(R) Lodge and La Quinta(R) Inns. AFM Hospitality Corporation operates or has open and/or executed franchise and management agreements with more than 160 hotels in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , representing an inventory of nearly 19,000 hotel rooms. The company's primary focus is to increase the number of hotels franchised by the respective brands, franchise new brands, build the portfolio of hotel management agreements, and acquire other franchise businesses related to the hospitality industry, while making available property management services. AFM Hospitality Corporation is a publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (TSE:AFM). AFM Hospitality Corporation system-wide sales for branded hotels in its franchise portfolio and properties operated by the company exceed CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $300 million per year. AFM Hospitality Corporation may be reached at www.afmcorp.com Forward Looking Information This Press Release contains certain forward-looking statements and information about AFM Hospitality Corporation relating, but not limited, to the company's operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains statements with words such as "anticipate", "believe", "plan" or similar words suggesting future outcomes. Management believes that the Company should continue to perform better than the overall industry because the downturn in travel resulting from the September 11, 2001 event in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , along with the current economic decline, particularly within the airline and hospitality industries, is more concentrated to upper scale hotels in larger metropolitan markets and hotels close to airports. The results or events predicted in these statements may differ materially from actual results or events. By its nature, AFM Hospitality Corporation's forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not limited to the following factors: changes in business strategies; general global economic and business conditions; the effects of competition and pricing pressures; hotel industry overcapacity; shifts in market demand; changes in laws and regulation; uncertainties of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; labor disputes; timing of completion of capital or maintenance projects by both franchised and managed hotels; currency and interest rate fluctuations; various events which disrupt operations; and technological changes. AFM Hospitality Corporation undertakes no obligation to update publicly or otherwise revise forward-looking information, whether as a result of new information, future events or otherwise. |
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