Hotelier Hammons finds new buyer

The third time looks to be the charm for John Q. Hammons. And this time the Missouri-based hotel magnate has the government of Singapore on his side.

Hammons, whose company John Q. Hammons Hotels Inc. (AMEX: JQH) owns and operates the University Park Hilton Hotel in Fort Collins, recently canceled a proposed $102.7 million deal to sell the hotel chain to Barcelo Crestline Corp.

Instead, Hammons is in talks with an investment group operating as JQH Acquisition LLC — which includes the investment arm for the government of Singapore — to purchase the chain for $117.36 million.

In December, Hammons negotiated with Barcelo Crestline Corp. to merge the two companies for $13 per share, or at least $63.4 million. But in January, the deal was tweaked after shareholder uproar accused the company of undervaluing their stock. The resulting merger called for a selling price of $21 per share, or $102.69 million.

The two entities entered into a period of exclusivity, which ended on Jan. 31. When the negotiation period expired, the John Q. Hammons Hotels Inc. board of directors decided not to extend the period and canceled the transaction.

Four days later, the board decided to negotiate exclusively with JQH Acquisition LLC for a deal worth $24 in cash per share – or $117.36 million.

According to documentation filed with the U.S. Securities and Exchange Commission, JQH Acquisition LLC is a joint partnership between New York investor Jonathan Eilian and GIC Real Estate Inc., a wholly-owned subsidiary of GIC, the investment arm of the Government of Singapore with over $100 billion in assets.

The offer is not contingent on third-party financing.

In its official proposal, JQH Acquisition LLC states, “Given our high degree of familiarity with the company and with Mr. Hammons’ needs, resulting from months of due diligence review of the company and detailed negotiations with Mr. Hammons, we believe we can move extremely quickly to complete the transactions contemplated in the enclosed proposal.”

Eilian and Hammons could not be reached for comment on the acquisition.

JQH Acquisition LLC currently holds 1.1 million shares of John Q. Hammons Hotels Inc. stock, which the group purchased on January 31. The current market value of those 1.1 million shares is approximately $23 million. Hammons’ stock is not considered common stock and is not part of the sale. However, he’ll merge is shares into the newly created organization.

The acquisition will help ensure the future direction of the hotel company. Hammons is 86, and the company needed to prepare for a time without him.

“While we are excited about the recent acquisition proposal, we remain cautious as there are a number of items that remain to be negotiated, including the terms of a merger agreement and the contractual arrangements between the investor group and Mr. Hammons, before we would have a transaction to present to our stockholders, and there can be no assurance that a transaction will be consummated,´ said David Sullivan, chairman of the special committee for John Q. Hammons Hotels Inc. in a prepared statement.

The acquisition is not expected to impact construction of the proposed $35-million Embassy Suites hotel and convention center in Loveland. In that case, Hammons plans to build the hotel privately, then hire John Q. Hammons Hotels Inc. to manage the property.

Hammons recently struck a deal with Larimer County to build the 250-room hotel and an adjoining 80,000-square-foot convention center at the county fairgrounds, known as The Ranch. Groundbreaking was expected to happen in April, but has reportedly been postponed until fall.

Scott Tarwater, senior vice president of John Q. Hammons Hotels, denied troubles with negotiations between Larimer County officials and the hotelier.

“We have a few more things to iron out but dirt should be moving this summer,” Tarwater said. “It is slated for that time on our development schedule.”

If construction on the hotel begins this summer, the project should open in early 2007.

County officials said they are doubtful construction will begin before April 2006. Jay Hardy, director of The Ranch, said he has a verbal agreement from Hammons but is still waiting on a signed contract. He is giving Hammons 60 days to sign the contract, otherwise he will ask for hotel bids from other interested parties.

“We have come to the point of where we can’t continue the project and it is critical we advance,” Hardy said.

Hammons and Larimer County have been negotiating for 11 months.

“In my mind this project is a year delayed — I had hoped to be breaking ground right now,” he said.

The Hammons the sale is not expected to affect operations the 258-room University Park Hilton — formerly the University Park Holiday Inn— in Fort Collins. The hotel is undergoing renovation as part of its switch to the Hilton flag.  John Q. Hammons Inc. intends to spend about $9 million on the name change and associated remodeling.

John Q. Hammons Hotels Inc. owns 46 hotels in 20 states and manages 14 additional hotels in seven states.

The company once owned the Holiday Inn Denver Northglenn before selling it to Gholamreza Rahmani-Azar for an undisclosed price. The hotel, located at Interstate 25 and 120th Avenue, has 235 guestrooms and 14,000 square feet of meeting space. Rahmani-Azar also owns the Ramada Inn I-25 at 3836 E Mulberry St. in Fort Collins.

on Facebook on LinkedIn