MeriStar to call most 10½% notes with asset sale proceeds

By Jennifer Chiou

New York, Feb. 1 - MeriStar Hospitality Corp. said it will use the majority of $367 million in asset sales to reduce debt, including the redemption of most of its $206 million of 10½% senior unsecured notes.

The company first announced it intended to call between $100 million and $150 million of the notes on Nov. 1.

The 10½% notes, MeriStar's most expensive debt, become callable in December.

The company said it signed a definitive agreement to sell 10 of its Florida assets to an affiliate of The Blackstone Group for about $367 million. MeriStar said it expects the transaction to close by the end of the first quarter.

"We expect this portfolio sale to generate significant benefits for our shareholders by allowing us to accelerate our business plan objectives of repaying our more expensive debt and completing property upgrades," chairman and chief executive officer Paul Whetsell said in a news release.

Bethesda, Md.-based MeriStar Hospitality owns full-service hotels and resorts.

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