Holiday Stockholders Approve Recapitalization Plan
MEMPHIS, Tenn. (AP) _ Holiday Corp. stockholders on Friday overwhelmingly approved a $2.4 billion recapitalization plan expected to help protect the hotel and casino concern from hostile takeover attempts.
The plan passed without debate at a special meeting, attended by about 250 stockholders, at Holiday’s headquarters here. The company said 15.3 million shares were voted in favor of the plan, 900,000 were voted against it and there were 3.4 million abstentions.
Under the plan, expected to be completed next month, Holiday would pay stockholders a special dividend of $65 a share, or a total of $1.6 billion, and refinance $800 million of existing debt.
Holiday expects to finance the transaction with $1.23 billion in new bank loans and by issuing $1.4 billion in senior notes and subordinated debentures. The recapitalization also calls for a special class of stock to be issued to Holiday’s top executives, eventually giving them a combined 10 percent voting control of the company, and it sharply reduces the voting rights for other large stockholders.
The plan also provides $30 million in severance pay for top officers displaced by a hostile takeover.
After the meeting, Holiday’s common stock close at $80.75 a share, up $1, in New York Stock Exchange composite trading.
Holiday’s system includes four hotel-casinos and about 1,900 hotels and motels under the names Holiday Inn, Crowne Plaza and others. Holiday owns 150 of the hotels, with the rest controlled through licensing agreements.
Its recapitalization was first proposed last November when Holiday was thought to be a takeover target. For example, New York real estate developer Donald Trump acquired a 4.9 percent stake, spurring rumors he might make a bid. Trump has since sold his Holiday interest.
While the recapitalization is expected to curb future takeover threats, analysts also have said it sharply increases Holiday’s debt load, which could reduce the company’s earnings prospects and make it more vulnerable to economic downturns.
But Michael D. Rose, Holiday’s chairman and chief executive, said the plan ″not only maximizes stockholder values, but also serves our employees, franchisees and other business partners as well, since we will be able to continue our strategic programs aimed at enhancing the market leadership of our hotel and hotel-casino businesses.″
He said the plan also clears the way for Holiday to concentrate more on managing its properties while reducing its role in real estate investment.
″The strategy is also being employed by most other publicly held hotel companies, many of whom have been at it for more than a decade,″ he said.
After the meeting ended, Rose and other Holiday executives were unavailable to elaborate.
But during the meeting, Mark Atkinson, who identified himself as a representative of the Hotel Employees and Restaurant Employees International Union, told Rose that Holiday’s 6,000 employees at hotels and casinos in Nevada were afraid the recapitalization would weaken the company.
Rose said Holiday officials had met with the Nevada Gaming Commission and explained the company’s objectives. ″They have considered all of that in detail and have approved us going forward with the plan,″ Rose said.