Allstar Inns Inc. completes master lease agreement.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Oct. 4, 1995--Allstar Inns Inc. (OTC:ALST) Wednesday announced that it signed the contemplated master lease agreement by and among Allstar, Motel 6 Operating L.P., Motel 6 G.P. Inc. and IBL Ltd. Inc. at a closing that took place between Sept. 28 and Oct. 3, 1995.

Allstar also announced that it also consummated its loan- agreement amendments with Wells Fargo Bank that were necessary to the closing of the master lease agreement.

Under the master lease agreement, the existing management contract under which Motel 6 operates the 72 motels owned or leased by Allstar was terminated effective Jan. 1, 1995. Instead, Motel 6 will lease the properties on a ``net, net, net'' basis from Allstar for a 15-year term starting as of Jan. 1, 1995.

In addition, Motel 6 will have an option to purchase the motels from Allstar prior to the end of 1998 at a fixed price of $40 million plus the debt secured by the motels. Upon such purchase, Motel 6 would receive $3 million representing a furniture, fixture and equipment reserve.

Annual rent under the contemplated lease will cover Allstar's debt service on the motels plus $3.5 million for Allstar. In the event Motel 6 does not exercise the option to purchase the properties, rent under the lease will increase starting in 1999, to include debt service plus $5 million (adjusted for cost-of-living increases subsequent to 1995) plus satisfaction of Allstar's indebtedness to Motel 6 in the approximate amount of $37.1 million as of Sept. 30, 1995.

CONTACT: Allstar Inns Inc., Santa Barbara

Edward J. Gallagher, 805/730-3383