GlobeSt.com UPDATE: La Quinta, Blackstone Ready to Tie $3B Knot

"All items either have been achieved or will be achieved," says Tom Ward, La Quinta's investor relations director. "We do expect to close on Wednesday." He tells GlobeSt.com that Francis W. Cash, the Dallas-based hotel company's chairman and CEO since April 2000, will exit with the hand-off to Blackstone, which had its management team recently meet with employees to tell them about the next chapter in their history. "They say they are very interested in the La Quinta brand and want to grow the company," Ward stresses. The portfolio consists of 359 company-owned hotels with 44,800 rooms and 245 franchises representing 20,700 rooms while the staff totals 225 at the headquarters and 9,000 employees overall.

Ward says the most significant final step is to tender the debt offering. "Blackstone wanted to have all the debt tendered and paid off," he explains. Shareholders have until 8 a.m. tomorrow to reap a $30 premium per note for consenting to changes in the indenture. Notes, maturing between February 2007 and August 2012, were priced from $994.24 to $1,054.78 each. As of four months ago, debt stood at $810 million and outstanding common shares totaled 202.7 million while another eight million shares were classified as preferred.

According to La Quinta's SEC filing, the New York City-based Blackstone Real Estate Partners IV LP will close the deal with $500 million of equity and a commitment letter for $2.96 billion from Bank of America, Merrill Lynch Mortgage Lending Inc. and Bear Stearns Commercial Mortgage Inc. A last-minute termination would cost $75 million.

Blackstone's upper management isn't saying what's in store for the La Quinta portfolio. But, Ward says, none of the properties is a good fit for Blackstone's recently launched luxury brand. The lock, stock and barrel buy consists of a 39-state portfolio that includes the limited-stay brands of Baymont Inn & Suites, Woodfield Suites, Budgetel and La Quinta, some of which could find their way back to market based on Blackstone's recent track record. "You can't look at Blackstone's previous transactions and say this is what they're going to do with La Quinta," Ward cautions.

Ward says the other unknown is the status of the La Quinta headquarters lease at 909 Hidden Ridge Dr. in Las Colinas. "There are a few years left to go [on the term.]," he says.

Yesterday, stockholders representing 79.9% of the outstanding common shares approved the merger out of the 99.5% attending the Dallas meeting and deemed eligible to cast ballots. Shareholders were put on notice Nov. 9, 2005, of the pending merger, with $11.25 per paired share laid on the table for their stakes in the hotel company, founded in 1968 in San Antonio. A public company since 1998, La Quinta, via Meditrust Corp., operated as a health-care REIT and returned to its roots in 2001.