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IRVING, TX-FelCor Lodging Trust Inc. has a go-ahead for $500-million loan facility to help fuel its $2.7 billion takeover of MeriStar Hospitality Corp.

The Irving-based FelCor has earmarked the standby funds to buy MeriStar’s existing 9% senior notes, due in 2008, or its 9 1/8% note that mature in 2001. Deutsche Banc Alex. Brown Inc. and J.P. Morgan Securities Inc. have arranged the $500-million commitment.

Thomas J. Corcoran Jr., FelCor’s president and CEO, says the merger is on track and the loan facility is one more step toward meeting a third quarter closing on the transaction. Shareholders of both firms have yet to vote on the takeover of the Washington, DC-based MeriStar, which had been announced in early May.

The deal calls for FelCor to put up $240 million in cash and the balance in stock. FelCor also will assume $1.6 billion of MeriStar debt. Under the takeover, FelCor will swap $4.60 and 0.784 of a share for each MeriStar share.

FelCor is buying the real estate and bringing the operation to its Irving headquarters. In a previous GlobeSt.com interview, Corcoran had said an extra 10 to 12 people will come on board in Irving when the deal closes. MeriStar Hotels & Resorts, a separate operating company, will remain in Washington, DC.

Post-merger, FelCor will have 299 hotels, up from 186 now in the portfolio. The deal also beefs up FelCor holdings in upscale facilities such as Hilton, Sheraton and Embassy Suites. MeriStar has a 12-year contract, with three five-year options, to manage the hotels. More importantly, Corcoran says FelCor will now own eight significant brands of multiple holdings. At present, FelCor owns Embassy Suites, Crowne Plaza, Holiday Inn and independently owned Doubletree-branded hotels. Some FelCor hotels carry banners for Sheraton Suites, Sheraton and Weston.

Corcoran will be chairman and CEO for the combined company while Paul W. Whetsell, MeriStar chairman and CEO, and Steven D. Jorns, vice chairman, will be placed on the combined company’s board. Whetsell will stay in Washington, DC whereas Jorns already lives in Ft. Worth.

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