Milberg Weiss Files Class Action Lawsuit Against Patriot American Hospitality, Inc.

Business Editors/Financial Analysts

SAN DIEGO--(BUSINESS WIRE)--Feb. 18, 2003

Milberg Weiss (http://www.milberg.com/cases/patriotamerican/) announces that a class action complaint against Patriot American Hospitality, Inc., ("Patriot American"), Wyndham International, Inc. ("Wyndham"), Paul A. Nussbaum and James D. Carreker is pending in the United States District Court for the Northern District of California on behalf of all persons who purchased or otherwise acquired the paired-shares of Patriot American and Wyndham (together "Patriot") during the period between January 5, 1998 and December 17, 1998 (the "Class Period"). This action is entitled In re Patriot American Hospitality, Inc. Securities Litigation, MDL Docket No. 1300.

If you wish to discuss the status of this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at [e-mail]. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.milberg.com/cases/patriotamerican/.

The action was originally filed on August 19, 1999 in the United States District Court for the Northern District of Texas and is one of nine lawsuits alleging securities fraud filed in the Northern District of California or the Northern District of Texas. On October 22, 1999, the Judicial Panel on Multidistrict Litigation ("JPML") transferred this action to the United States District Court for the Northern District of California and consolidated it with actions pending in that court. Prior to transfer and consolidation of these cases, several groups of plaintiffs filed motions for appointment as lead plaintiff and for appointment of their attorneys as lead counsel. The Court, however, stayed the proceedings pending the JPML's final transfer. Once the actions were transferred, they were assigned to the Honorable Vaughn R. Walker. On July 20, 2000, Judge Walker consolidated the pending actions for pre-trial purposes, and ordered the parties to litigate the sufficiency of the pending complaints. On October 19, 2000, defendants filed their motion to dismiss the complaint. After the briefing was completed, the court on August 15, 2001, granted the motion to dismiss with leave to amend the claims. The complaint was amended on October 15, 2001. Defendants again filed a motion to dismiss. This motion was granted with leave to amend on September 3, 2002. On December 2, 2002, a second amended complaint was filed.

The second amended complaint charges Patriot American, Wyndham, Nussbaum and Carreker with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Patriot American went public in 1995 as a real estate investment trust ("REIT"). In 1996, Patriot American bought the California Jockey Club and Bay Meadows Operating Co., which operated as a paired-share REIT, and adopted this advantageous tax status after consummation of the purchase. Operating as a paired-share REIT allowed Patriot American to both own and operate hotels while at the same time sheltering income and availing itself of the tax benefits, which included not paying federal taxes. To fund acquisitions, defendants borrowed a total of $354 million using three forward-equity contracts, which were structured so that, in effect, defendants sold over 13.3 million shares of Patriot's stock at approximately $26.21 per share (which over one year later the Company would be required to buy back at that price). These forward-equity contracts enabled defendants to purchase over $5.3 billion of assets within an 18-month period, including $4.5 billion during the Class Period.

The Class Period begins with Patriot American's announcement of its acquisition of Wyndham. Defendants proclaimed that they had the "necessary components ... in place to facilitate rapid growth" and had worked closely to ensure that they were "developing the best possible infrastructure to manage our growth." Throughout the Class Period, Patriot repeatedly told investors that it was successfully integrating the $4.5 billion worth of companies that it acquired during the Class Period, that it had the ability to pay its short-term debt, and that Patriot was poised for growth. However, defendants knew even before the acquisition of Wyndham was completed that Patriot would face problems integrating the companies it was acquiring, and that Patriot would not be able to provide the necessary capital to integrate and operate all the properties it was acquiring. These problems presented themselves as the absence of an integrated computer system to allow the sharing of information between the individual properties and Patriot's corporate headquarters, and a cash crisis which resulted in the cancellation of hotel improvement and renovations previously budgeted and approved, elimination of advertising and travel incentive programs, and extended payment terms with Patriot's vendors.

Ultimately, on December 16, 1998, defendants were forced to enter into a highly unfavorable contract for an "equity infusion" of $1 billion with Apollo Real Estate Advisors of New York, Apollo Management, L.P., Thomas H. Lee Company, Beacon Capital Partners, Inc. and Rosen Consulting Group ("Apollo Group"). In exchange, the Apollo Group received, for its $1 billion, 47% of the Company and half of its board seats. As investors digested the implications of the Apollo Group equity infusion, the price of Patriot stock collapsed to as low as $6.75 per share, 78% off its Class Period high of $29.50 per share.

Plaintiff seeks to recover damages on behalf of all persons who purchased or otherwise acquired the paired-shares of Patriot American and Wyndham during the Class Period (the "Class"). The plaintiff is represented by Milberg Weiss Bershad Hynes & Lerach LLP, who has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

By order dated January 29, 2003, after certain lead plaintiff motions had been renewed, the Court directed that this notice be published in accordance with 15 U.S.C. section 78u-4(a)(3)(A). Accordingly, please take notice that if you are a member of the class described above, you may, not later than sixty days from today, move the Court to serve as lead plaintiff of the Class. The Court has directed each prospective lead plaintiff to obtain a model spreadsheet from the Court's website or the courtroom deputy, and to complete and submit such spreadsheet to the Court, along with a declaration verifying the accuracy of the information and the basis for the actual (true) values per share for the transaction stated, and otherwise complying with the requirements of Civil LR 7-5. Finally, in the case of organized groups vying for appointment of lead plaintiff, the Court has directed that a spreadsheet be completed both by the group and each individual member of the group.

Milberg Weiss Bershad Hynes & Lerach LLP, a 170-lawyer firm with offices in New York, San Diego, San Francisco, Los Angeles, Boca Raton, Seattle and Philadelphia, is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of World War II and other human rights violations, and has been responsible for more than $30 billion in aggregate recoveries. The Milberg Weiss website (http://www.milberg.com) has more information about the firm.