Updated 19 July 2012
NASHVILLE, Tennessee—Gaylord Entertainment issued a statement in response to TRT Holdings' “open letter” to Gaylord's stockholders, saying the company continues to believe that the sale of rights to manage its hotels to Marriott International and the company’s subsequent conversion to a real-estate investment trust are in the best interest of its stockholders.
In its response, Gaylord claims the TRT letter contains a number of significant inaccuracies and omissions relating to the Marriott agreement, as well as gross mischaracterizations of the proposed transaction and alternatives. Gaylord will respond to each item in detail at a later date, according to the statement.
Arne Sorenson, CEO of Marriott, said, “This was an intensely competitive set of negotiations in which we agreed to a set of legal and economic terms that we believe are fair to both parties, deliver real value to both, and in Marriott’s view, represent the lengths to which we were willing to go to obtain the rights to manage an extraordinary, one-of-a-kind group of assets.”
Posted 18 July 2012
IRVING, Texas—TRT Holdings, Gaylord Entertainment's largest shareholder, said Tuesday it was opposed to the hotel operator’s plans to sell its brand and hotel management rights to Marriott International and intends to vote against the proposal.
TRT, which owns a 21.8% stake in Gaylord, issued an open letter saying the proposed deal was not in the best long-term interests of the company and its stockholders as the value and marketability of the properties would be significantly impaired by the agreement. The company said the deal is biased in favor of Marriott and appears to have been poorly negotiated.
In the letter, TRT President James Caldwell gives the following reasons for his company’s opposition:
• “The Marriott agreement is biased in favor of Marriott and appears to have been poorly negotiated by Gaylord on behalf of the REIT owner. The Marriott agreement does not fairly balance the rights of the REIT owner with the rights of Marriott.
• The REIT owner would be small and burdened by excessive overhead.
• The value and marketability of the Gaylord properties will be significantly impaired by the Marriott agreement and its potential 65-year term along with the onerous restrictions on the REIT owner’s ability to sell the Gaylord properties or terminate the Marriott agreement during this lengthy term.
• Rejecting the proposed transaction and continuing to operate in the current format, with streamlined operations and a robust growth strategy, is the best alternative for future stockholder value creation and the preservation of options for future value-creating transactions.”
During Marriott’s Q2 earnings call last week, President and CEO Arne Sorenson said Marriott is “still optimistic about the close of the Gaylord deal.”
Neither Marriott nor Gaylord returned requests for comment by press time Wednesday.
The companies announced on 31 May that Marriott was acquiring the management for the four Gaylord properties and the Gaylord brand name for $210 million. The deal from the beginning has been subject to shareholder approval. At the same time, Gaylord announced it will convert to a real-estate investment trust from its current status as a C-Corporation.
Gaylord’s Chairman and CEO Colin Reed told HotelNewsNow.com during the New York University Investment Conference in early June that he expected the shareholder vote to occur in late August or September. Gaylord’s largest shareholders had been vocal before the announcement of the Marriott deal, and were seeking removal of the company’s poison pill plan that could allow an outside group to grab control of Gaylord.
During a conference call shortly after the announcement of the deal, Reed said the company’s largest shareholders were kept abreast of the company’s plans. When asked whether a stalking horse could come in and bid for Gaylord, Sorenson said he was confident a full auction had taken place.