Press Release
January 2, 2002
TORONTO, ONTARIO -- AFM Hospitality Corporation (TSE:AFM) is happy to announce that approval for management's proposed
private placement and share purchase arrangement was given by a majority of disinterested shareholders at its shareholders
meeting held on December 19, 2001.
``The completion of these transactions will greatly improve AFM's ability to renegotiate its credit facilities
and to continue to use its shares for strategic acquisitions,'' stated Lawrence Horwitz, the Chairman of the Board.
Stephen H. Phillips, Vice-Chairman and CEO, added ``Given the current economic uncertainties, management is pleased
both that existing related parties were willing to give these financial commitments to AFM at above the current
market price, and also that the disinterested shareholders were supportive of management's initiatives to find
innovative financial solutions.''
As previously disclosed, management had intended to complete the private placement and share purchase arrangement
transactions prior to the end of the current calendar year. However, given the logistics of completing such transactions
as well as other initiatives that management is presently pursuing, these transactions will likely close over a
period into the first quarter of 2002.
As an initial portion of the share purchase arrangement, AFM is also happy to announce that two of the main related
parties, Lawrence Horwitz and Andre Tatibouet completed, subject to final regulatory approval, the purchase of
249,450 common shares, 421,052 Series III Preferred Shares and 630,768 warrants exercisable within 5 years at an
exercise price of $4.75 per common share. AFM has also extended, subject to final regulatory approval, financial
assistance to such parties by way of loans in the aggregate of amount $3,184,884.50. These transactions are part
of the aggregate share purchase arrangement authorized by disinterested shareholders. The completion of the remainder
of the private placement and share purchase arrangement will likely occur in early 2002, subject to final regulatory
approval.
Subsequent to the initial portion of the share purchase arrangement, Mr. Horwitz and Mr. Tatibouet completed their
exercise of mandatory warrants that each held as a result of AFM's acquisition of the business assets of Northwest
Lodging International Inc. in December 2000. Such exercise resulted in each of Mr. Horwitz and Mr. Tatibouet paying
AFM the equivalent of $500,000.00 in Canadian funds as subscription for 222,222 common shares of AFM. Mr. Phillips,
CEO, remarked ``Management continues to be pleased with the commitments demonstrated by Mr. Horwitz and Mr. Tatibouet
and AFM continues to benefit not only financially from such individuals, but also from the wealth of business experience
and acumen that each makes available to management whenever requested.''
About AFM Hospitality Corporation
Through its subsidiaries, AFM Hospitality Corporation, which also owns HFS Purchasing Services Canada, AFM Asset
Management Inc., Northwest Lodging International (USA) Inc. and Northwest Lodging International (Canada) Inc.,
is the exclusive Canadian Master Franchiser for ASTON®, Best Inns®, Hawthorn® Suites, Howard Johnson®,
Knights Inn®, Park Plaza, Park Inn, Ramada®, Villager® Lodge and La Quinta® Inns. AFM Hospitality
Corporation operates or has open and/or executed franchise and management agreements with more than 160 hotels
in North America, representing an inventory of nearly 19,000 hotel rooms. The company's primary focus is to increase
the number of hotels franchised by the respective brands, franchise new brands, build the portfolio of hotel management
agreements, and acquire other franchise businesses related to the hospitality industry, while making available
property management services. AFM Hospitality Corporation is a publicly traded company listed on the Toronto Stock
Exchange (TSE:AFM - news). AFM Hospitality Corporation system-wide sales for branded hotels in its franchise portfolio
and properties operated by the company exceed CDN$300 million per year. AFM Hospitality Corporation may be reached
at www.afmcorp.com
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Contact:
AFM Hospitality Corporation Stephen Phillips (Media Contact) Vice Chairman and CEO Phone: (416) 202-6763 sphillips@afmcorp.com or AFM Hospitality Corporation Lawrence P. Horwitz Chairman of the Board Phone: (206) 443-2570 lhorwitz@afmcorp.com