WHITE PLAINS, N.Y.--(BUSINESS WIRE)--Feb. 17, 2004--
-- Urges Unitholders to Tender into Starwood's $735 per Unit Offer
-- Starwood's Offer Scheduled to Expire on Friday, February 20,
2004
Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today
responded to misleading statements made by Kalmia Investors, LLC, a
holder of units of limited partnership interest in the partnership
that owns the Westin Michigan Avenue Hotel in Chicago. Starwood also
stated that it questioned certain statements made last week by Kalmia
that appear inconsistent with statements made by Kalmia in connection
with its recently expired tender offer.
Starwood stated that it believes that Kalmia's statements are a
transparent attempt to disrupt Starwood's own tender offer for the
partnership's units at a purchase price of $735 per unit in cash,
which is $10 more per unit than the price in Kalmia's recently expired
tender offer. Starwood is also soliciting consents to proposals that
would expedite the transfer of units in Starwood's offer and
Starwood's ability to promptly effect a back-end merger.
Starwood encourages unitholders not to be swayed by Kalmia's
misleading statements and to tender their units and consent to the
proposals promptly. Starwood's offer and consent solicitation are
scheduled to expire at 5:00 p.m., Eastern time, on Friday, February
20, 2004 (the "Expiration Date"), and Starwood does not intend to
further extend the offer period or increase its offer price.
Starwood Responds to Misleading Statements By Kalmia Investors,
LLC
Starwood noted that on February 13, 2004 Kalmia filed with the SEC
and apparently mailed to unitholders a letter in which Kalmia referred
to "obvious conflicts of interest" between Starwood and the general
partner of the partnership and Kalmia's "belief that the present
General Partner is breaching its fiduciary duty to the Unitholders by
failing to maximize the Unitholders' value." Starwood stated that it
believes these statements by Kalmia are self-serving and misleading.
As Starwood and the partnership have repeatedly disclosed in SEC
filings and as Starwood has made clear in letters to unitholders,
Starwood and the partnership have taken a number of steps to minimize
or eliminate any conflict of interest between Starwood and the
partnership's general partner in connection with Starwood's tender
offer and consent solicitation and competing transactions. Although
the general partner is a wholly owned subsidiary of Starwood, Starwood
believes that the actions of the general partner in connection with
the tender offers by Starwood, Kalmia and other parties demonstrate
the independence of the general partner in connection with these
matters.
Starwood noted the following as indicative of the independence of
the partnership for purposes of its pending tender offer and consent
solicitation as well as the recent tender offers by Kalmia and others:
-- The partnership adopted a neutral position regarding
Starwood's initial offer (the same position the partnership
took with respect to Kalmia's three tender offers and the
tender offer by Windy City Investments LLC); Houlihan Lokey
Howard & Zukin Financial Advisors, Inc., the partnership's
independent financial advisor, opined that Starwood's initial
offer was not fair to unitholders and the general partner
refused to meet with Starwood to discuss its offer;
-- The partnership has retained Houlihan Lokey as its independent
financial advisor to evaluate Starwood's offer as well as
competing offers and a leading international law firm as its
legal counsel to provide independent legal advice regarding
these matters;
-- Starwood instituted an information screen between the people
at Starwood who are involved in its offer and the directors of
the general partner to prevent the unintended exchange of
information between Starwood and the partnership regarding
Starwood's offer and competing offers;
-- Neither Starwood nor the general partner has prevented any
other party from making a competing offer for the partnership
or the Westin Michigan Avenue Hotel and there are no legal or
structural impediments to such an offer. Anyone is free to
make a competing offer at a higher price for either the
partnership or the hotel, yet no one has. While Kalmia has
criticized Starwood's offers, the only offers by Kalmia were
at lower prices;
-- In its Schedule 14D-9 filed with respect to Starwood's initial
offer and amended $700 and $735 per unit offers, the general
partner disclosed its intention to implement a discretionary
40% transfer limitation contained in the partnership agreement
in connection with Starwood's offer. In the event that units
exceeding the 40% threshold are tendered to Starwood, Starwood
has repeatedly stated that it does not intend to exercise
control over the general partner's consideration of whether to
implement the 40% limitation. Instead, Starwood has structured
its offer on the assumption that the general partner will
implement the 40% limitation as it has stated; and
-- The general partner has assisted Kalmia in its most recent
offer by urging Kalmia to make changes to its offer, even
though such changes would be directly against Starwood's
interest. Specifically, on January 19, 2004, counsel to the
board of directors of the general partner sent a letter to
Kalmia's counsel urging Kalmia to commit to a back-end merger
or to seek consents to render the transfer restrictions in the
partnership agreement inapplicable to Kalmia's offer.
Starwood also questioned Kalmia's belief that an auction of the
Westin Michigan Avenue Hotel and a liquidation of the partnership will
result in a higher value for the unitholders than Starwood's $735 per
unit offer. In particular, Starwood emphasized that, as the
partnership noted in a recent SEC filing, the fact that the
partnership is essentially up for sale is well known in the real
estate investment community. Sophisticated investors know they can
submit a bid for either the units or the Westin Michigan Avenue Hotel
itself, yet no offer superior to Starwood's offer has been made.
Starwood Questions Kalmia's Recent Statements Regarding Its Plans
For the Partnership
In its offer to purchase, dated January 8, 2004, as amended,
Kalmia repeatedly stated that:
-- Kalmia was making the offer "as a speculative investment based
upon (its) continued belief that the Units represent an
attractive investment at the price offered"; and
-- Kalmia had "no current plans or proposals that would result in
an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Partnership, the
sale or transfer of any material amount of assets of the
Partnership, any material change in the capitalization or
dividend policy of the Partnership or any other material
change in the Partnership's company structure or business."
Kalmia indicated, however, that it was evaluating whether to
call for a vote of the limited partners to remove the general
partner and reserved its right to change its plans and
intentions.
However, on February 13, 2004, just three days after Kalmia
announced that its tender offer had expired, Kalmia apparently mailed
a letter to unitholders and issued a press release, both of which it
filed with the SEC on that date, in which it stated that "after much
consideration," Kalmia "intend(s) in the near future to call for a
vote by the Unitholders to":
-- Remove the present general partner and replace it with a new
general partner; and
-- Instruct the new general partner to auction the Westin
Michigan Avenue Hotel and to conduct an orderly liquidation of
the partnership.
Starwood stated that it is not aware of any significant external
events between the time of the expiration of Kalmia's tender offer on
February 9, 2004 and Kalmia's letter to unitholders and press release
dated February 13, 2004, that could explain Kalmia's abrupt reversal
of its plans regarding its investment in the units and the
partnership. Starwood stated that Kalmia's abrupt about face was at
best significantly misleading to unitholders and the investing public
and was at worst a potential violation of the federal securities laws.
In addition, Starwood noted that Kalmia has not provided any support
for its belief that an auction of the Westin Michigan Avenue Hotel
will result in a higher value for the unitholders.
Starwood Urges Unitholders to Tender Their Units and Deliver Their
Consents
Starwood stated its belief that if unitholders do not tender in
Starwood's offer and consent to the related proposals, they may not
have another opportunity to receive such a substantial premium for
their units. Starwood urged unitholders to tender their units and
consent to the proposals after consulting with their tax, legal and
other advisors. In considering Starwood's offer and consent
solicitation, Starwood encouraged unitholders to consider the
following:
-- Starwood's offer is at a premium over prior offers. Starwood's
$735 per unit offer represents a $10 premium over the most
recent offer by Kalmia and at least a $150 per unit premium
over other recent offers for units. Starwood's offer provides
unitholders with short-term liquidity at this substantial
premium;
-- The partnership's independent financial advisor deemed
Starwood's offer to be fair. Although the general partner
remained neutral regarding Starwood's $735 per unit offer
price, the partnership's independent financial advisor
rendered an opinion included in the partnership's amended
Schedule14D-9 relating to Starwood's offer to the effect that,
as of the date of the opinion, and based upon and subject to
the considerations and limitations set forth therein,
Starwood's $735 per unit offer price was fair to a limited
partner from a financial point of view;
-- Starwood's offer provides unitholders with a prompt way to
receive cash for their units. Starwood will pay unitholders
for units tendered in its offer promptly after the expiration
of the offer except that (i) in limited circumstances
described in Starwood's press release dated February 4, 2004,
Starwood may delay payment for up to 10% of the tendered units
until the partnership recognizes the transfers of those units
to Starwood and (ii) Starwood will not accept for payment
units that cannot validly and effectively be transferred to
Starwood under the partnership agreement. In contrast, Kalmia
has stated that it expects to delay payment for all units
accepted in its offer until at least March 31, 2004;
-- The market for the units is limited. Because the units are
thinly traded, if unitholders do not tender their units in
Starwood's offer they may not otherwise be able to sell them
at an attractive price; and
-- The partnership's financial results have been uneven. Although
the partnership's financial results have generally improved
during the past year, those results have been uneven, due in
large part to weakness during the year in the overall Chicago
hotel market, and particularly the convention segment of the
market, compared to other major United States cities with
comparable hotel and convention dynamics.
How to Accept Starwood's Offer
Unitholders who wish to tender their units to Starwood in its
offer and receive the $735 per unit offer price must complete the
Agreement of Assignment and Transfer previously sent to unitholders
and deliver it to the Depositary, American Stock Transfer & Trust
Company, by facsimile (718-234-5001) or by mail, hand or other
delivery (59 Maiden Lane, New York, NY 10038) on or before the
Expiration Date. For the Agreement of Assignment and Transfer, both a
medallion signature guarantee and the original document are necessary.
However, a tender by facsimile will be accepted if the original is
subsequently mailed to the Depositary.
How to Consent to Starwood's Proposals
Limited partners who wish to consent to any or all of the
proposals in the related consent solicitation must deliver their
Consent Form to the Depositary at the address listed above on or
before the Expiration Date. The limited partner's signature is all
that is needed; no medallion signature guarantee is necessary on the
Consent Form.
Whom to Call with Questions
Unitholders who have any questions about Starwood's offer and/or
consent solicitation, need help or would like additional copies of the
Offer to Purchase and Solicitation Statement, the Supplement thereto,
the Agreement of Assignment and Transfer, the Consent Form or the
other documents disseminated to unitholders should contact D.F. King &
Co., Starwood's Information Agent, at (888) 605-1957.
STARWOOD STRONGLY ADVISES ALL PARTNERSHIP UNITHOLDERS TO READ THE
OFFER TO PURCHASE AND SOLICITATION STATEMENT, THE SUPPLEMENT TO THE
OFFER TO PURCHASE AND SOLICITATION STATEMENT, THE AGREEMENT OF
ASSIGNMENT AND TRANSFER AND THE CONSENT FORM THAT STARWOOD MAILED TO
ALL UNITHOLDERS AND FILED WITH THE SEC, AS WELL AS ALL AMENDMENTS TO
ITS SCHEDULE TO AND SCHEDULE 14A THAT HAVE BEEN FILED WITH THE SEC.
THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT
AN OFFER TO PURCHASE ANY UNITS, THE SOLICITATION OF AN OFFER TO SELL
ANY UNITS, THE SOLICITATION OF THE CONSENT OF ANY LIMITED PARTNER OR A
RECOMMENDATION TO ANY UNITHOLDER TO TAKE ANY ACTION WITH RESPECT TO
ANY OFFER. THE SOLICITATION AND OFFER TO BUY UNITS OF THE PARTNERSHIP
AND THE SOLICITATION OF UNITHOLDER CONSENTS ARE BEING MADE PURSUANT TO
THE OFFER TO PURCHASE AND SOLICITATION STATEMENT, THE SUPPLEMENT TO
THE OFFER TO PURCHASE AND SOLICITATION STATEMENT, THE AGREEMENT OF
ASSIGNMENT AND TRANSFER, THE CONSENT FORM AND RELATED MATERIALS THAT
STARWOOD HAS SENT TO UNITHOLDERS AND FILED WITH THE SEC. STARWOOD
STRONGLY ADVISES ALL UNITHOLDERS TO READ THE OFFER TO PURCHASE AND
SOLICITATION STATEMENT AND THE SUPPLEMENT TO THE OFFER TO PURCHASE AND
SOLICITATION STATEMENT CAREFULLY BECAUSE THESE MATERIALS CONTAIN
IMPORTANT INFORMATION, INCLUDING RISK FACTORS AND THE TERMS AND
CONDITIONS OF THE OFFER AND THE CONSENT SOLICITATION. UNITHOLDERS MAY
OBTAIN COPIES OF THE OFFER TO PURCHASE AND SOLICITATION STATEMENT AND
THE SUPPLEMENT TO THE OFFER TO PURCHASE AND SOLICITATION STATEMENT AND
RELATED MATERIALS FOR FREE FROM THE SEC'S WEBSITE AT WWW.SEC.GOV OR
FROM THE INFORMATION AGENT, D.F. KING & CO., AT (888) 605-1957
(TOLL-FREE). INFORMATION RELATING TO THE PARTICIPANTS IN THE PROXY
SOLICITATION IS CONTAINED IN THE OFFER TO PURCHASE AND SOLICITATION
STATEMENT.
Starwood Hotels & Resorts Worldwide, Inc. is one of the leading
hotel and leisure companies in the world with more than 740 properties
in more than 80 countries and 105,000 employees at its owned and
managed properties. With internationally renowned brands, Starwood is
a fully integrated owner, operator and franchiser of hotels and
resorts, including: St. Regis(R), The Luxury Collection(R),
Sheraton(R), Westin(R), Four Points(R) by Sheraton, W(R) brands, as
well as Starwood Vacation Ownership, Inc., one of the premier
developers and operators of high quality vacation interval ownership
resorts. For more information, please visit www.starwood.com.
(Note: This press release contains forward-looking statements
within the meaning of federal securities regulations. Forward-looking
statements are not guarantees of future performance or actions and
involve risks and uncertainties and other factors that may cause
actual results or actions to differ materially from those anticipated
at the time the forward-looking statements are made. Starwood
undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.)
CONTACT: Starwood Hotels & Resorts
Allison Reid, 914-640-8514
SOURCE: Starwood Hotels & Resorts Worldwide, Inc.
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