Lodgian to redeem 12¼% preferred stock with equity offering

New York, March 9 - Lodgian Inc. said it plans to redeem all its outstanding 12¼% cumulative series A preferred stock with part of the proceeds of a planned offering of $175 million of common stock.

The Atlanta owner and operator of full-service hotels had $142.2 million of the preferreds outstanding as of Dec. 31.

Lodgian also said it plans to reduce debt by using part of the proceeds of asset sales.

"We believe these actions will provide us with a stronger balance sheet and greater operating and financial flexibility," the company said in an S-1 registration statement with the Securities and Exchange Commission.

Pro forma for the stock offering, debt at Dec. 31, 2003 would have been $478.9 million, down 22.9% from the actual level of $621.1 million.

As part of the redemption of the preferreds, Lodgian will also pay accrued dividends and a 4% prepayment premium.

Lodgian issued 5 million shares of the preferred stock or $125 million liquidation preference on Nov. 25, 2002 when it emerged from Chapter 11. It paid the first dividend on Nov. 21, 2003 in kind.

Merrill Lynch & Co. - which is bookrunner for the stock offering - owns 473,867 shares of the preferreds while Oaktree Capital Management LLC owns 1,785,082 shares and The Blackstone Group owns 789,779 shares.

Other proceeds from the stock offering will be used for capital expenditures and general corporate purposes.

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