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ATLANTA-Merrill Lynch Mortgage Lending Inc. is providing a two-loan, refinancing package to Lodgian Inc. that will reduce its long-term mortgage debt to $425 million.

The locally based manager of 88 hotels housing 16,627 rooms is getting a $110-million floating rate facility secured by 29 hotels with interest priced at Libor plus 340 basis points. The two-year loan has an option for three one-year extensions.

The second loan, a fixed-rate $260-million facility, is secured by 35 hotels and carries an interest rate of 6.58%. Lodgian’s long-term debt of $425 million has a weighted average interest rate of about 6.7%.

“We have now restructured our balance sheet and attained a debt-to-total capital ratio more in line with our peer hotel companies,” Lodgian president and CEO W. Thomas Parrington says in a prepared statement. “The redemption of our preferred stock, which carries an annual coupon of 12.25%, substantially reduces our fixed charges.” Parrington adds, “We believe we now have a much stronger balance sheet and are well-positioned to respond to the opportunities ahead of us as the hotel industry recovers from a three-year downturn.”

In a related action, Lodgian has completed a public offering of $18.28 million shares of its common stock at $10.50 per share. The company says net proceeds of $177 million from the stock offering will be used to redeem Lodgian’s Series A preferred stock ($116.2 million); fund capital expenditures ($35.2 million); and for general corporate purposes and the company’s “growth strategy.”

Lodgian emerged from Chapter 11 under the US Bankruptcy Code on Nov. 22, 2002 with 78 owned hotels. The hotels were owned by Lodgian subsidiaries Impac Hotels II LLC and Impac Hotels III LLC. When the two subsidiaries filed for court protection on Dec. 5, 2001, Lodgian listed total assets of $1 million and debt of $968.7 million.

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