/NOT FOR DISTRIBUTION ON U.S. WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
HALIFAX, Dec. 9, 2014 /CNW/ - Holloway Lodging Corporation (TSX: HLC, HLC.DB, HLC.DB.A) ("Holloway") is pleased to announce that it has entered into an agreement with Pacrim Hospitality Services Inc. ("Pacrim") to internalize all of its hotel management (the "Internalization Agreement").
Holloway currently manages 17 hotels internally and has outsourced the management of 19 hotels to Pacrim under hotel management agreements entered into between 2006 and 2012. Following completion of this transaction, Holloway will manage all of its hotels internally.
Under the terms of the Internalization Agreement, Holloway has agreed to make a cash payment to Pacrim of $1.0 million and settle the principal amount outstanding under Pacrim's loan payable to Holloway for nil consideration. The aggregate cash impact associated with the termination of Pacrim's management will be $1.0 million. Holloway anticipates completing the internalization by January 30, 2015.
The complete internalization of hotel management functions offers several benefits to Holloway. First, Holloway anticipates that it will save an aggregate of $3.0 million between 2015 and 2017 by internalizing hotel management. Second, Holloway believes that it will be able to better manage all of its hotels by having a single hotel management platform whose personnel are committed solely to the performance of Holloway's hotels. Third, having a single internal hotel management platform may allow Holloway to secure third party management agreements; this is a high margin business that would complement Holloway's current operations and skill set.
ABOUT HOLLOWAY LODGING CORPORATION
Holloway is a real estate corporation focused on acquiring, owning and operating select and limited service lodging properties and a small complement of full service hotels primarily in secondary, tertiary and suburban markets. Holloway owns 36 hotels with 4,260 rooms. Holloway's shares and debentures trade on the TSX under the symbols HLC, HLC.DB and HLC.DB.A.
FORWARD LOOKING INFORMATION
This press release contains forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to Holloway's future outlook and anticipated events or results and may include statements regarding Holloway's future financial position, business strategy, financial results, plans and objectives. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information is subject to certain factors, including risks and uncertainties, that could cause actual results to differ materially from what Holloway currently expects and there can be no assurance that such statements will prove to be accurate. Some of these risks and uncertainties are described under "Risk Factors" in Holloway's annual information form for the year ended December 31, 2013 which is available on Holloway's profile on the SEDAR website at www.sedar.com. Holloway does not intend to update or revise any such forward-looking information should its assumptions and estimates change.
SOURCE: Holloway Lodging Corporation
For further information: please contact Michael Rapps, Chairman, at (416) 855-1925 or Jane Rafuse, Chief Financial Officer, at (902) 443-5101.