* Board forms strategic alternatives committee
* Co has authorized Bank of America Merrill Lynch to explore
* Shares up 13 pct in after-market trade
By Meenakshi Iyer
March 28 Red Lion Hotels Corp on
Wednesday said it is looking at its strategic alternatives,
including a sale of the company or a strategic combination with
a third party, sending its shares up 13 percent in after-market
The hotel operator's largest shareholder Columbia Pacific
Opportunity Fund has been pushing for a sale, writing to the
board in February urging the directors to sell the company in
its entirety or in parts.
Red Lion, which had outstanding debt of $101.3 million at
the end of last year, has been selling assets to reduce debt and
looking to improve its owned and leased hotels. Last June, the
company sold the Red Lion Hotel in Seattle, Washington for $71
Seattle-based Columbia Pacific, which holds a near 29
percent share in the company, said last November that it may be
a potential buyer for Red Lion.
The fund, which is managed by investment firm Columbia
Pacific Advisers LLC, in mid-2008 made an unsolicited bid of
$9.50 per share for Red Lion but later withdrew the offer,
blaming difficult markets during the financial crisis.
However, Keefe, Bruyette & Woods analyst Smedes Rose, who
has covered Red Lion for the past six years, reckons Columbia
Pacific may not be interested this time around.
"It does not sound like Columbia Pacific is necessarily
interested in buying the company now ... If Columbia were
interested, they would have just made an offer."
Red Lion's board has hired Bank of America Merrill Lynch to
help the company with the strategic alternatives.
The Spokane, Washington-based company, which was founded in
1937 under the name Goodale & Barbieri Cos, owns and runs about
48 hotels spread across nine states in the United States and in
British Columbia under its Red Lion brand.
Red Lion shares have gained about 15 percent of their value
since the beginning of this year. They were trading up at $9.19
in after-market trade and closed at $8.07 on Wednesday on the