Press Release: AFM Hospitality Corporation
May 2, 2002
TORONTO, ON -- AFM Hospitality (TSE:AFM) Corporation yesterday announced that through its subsidiary Northwest
Lodging International (USA) Inc., it has successfully acquired a significant portfolio of ten new management agreements
from Heyde Hospitality Inc. of Chippewa Falls, Wisconsin, U.S.A. The deal includes the management agreements of
ten hotels with more than 1,000 rooms located in Minnesota and Wisconsin, with eight operating under the Park Plaza
and Park Inns brands, plus one independent resort and one Victorian Inn.
AFM's Northwest Lodging International (USA) Inc. now has 21 hotels under management contract with more than 2,500
rooms. Northwest Lodging International's growing number of managed properties is strongly complemented by over
20 properties under contract by its sister company Northwest Lodging International (Canada) Inc. With the conclusion
of this acquisition, Northwest Lodging International has more than 48 hotels open and or signed under contract
throughout North America.
"Our rapid expansion in recent months has helped AFM and Northwest Lodging become a significant hotel management
company in North America, in keeping with our plan to reach the 60 property benchmark at end of 2002. The Heyde
management agreements alone will increase our fees by more than US $800,000 per year and further extends AFM's
presence in the American hospitality sector," said Stephen Phillips, Vice-Chairman and CEO of AFM Hospitality
Corporation. "In addition, this acquisition creates strong synergy for us with Park Inn and Park Plaza since
AFM is the exclusive Master Franchisor of those brands in Canada."
This agreement will take effect May 1, 2002 and has been approved by AFM's Board of Directors and the Toronto Stock
Exchange. Under the terms of the acquisition agreement, in exchange for a new master management agreement, Dennis
and Carol Heyde will receive approximately CDN $3,840,000 in the form of up to 698,182 shares of AFM common stock
(based on CDN $5.50 per share). The shares will be held in escrow and released per a performance formula over five
years as well as 698,182 warrants exercisable within five years on a 1-for-1 basis for common shares of AFM at
CDN $5.50 per share.
"Our transaction with AFM is a strong win-win for both companies," said Dennis Heyde, President and CEO
of Heyde Hospitality. "By working together we will provide our visitors with some of the best lodging experiences
in the upper Mid-West United States. We look forward to our management team continuing as the newest regional center
for Northwest Lodging International. I am pleased that all Heyde Hospitality employees will continue to provide
their services under the new management. In the past five years Heyde Hospitality has grown from one facility to
a system of ten facilities employing over 850 employees and system wide sales in excess of $20 million."
"AFM continues to demonstrate its ability to partner with property owners to deliver superior hotel management
services," stated Lawrence P. Horwitz, Chairman of AFM Hospitality Corporation, ". Our mission is to
make our hotel owners more competitive, to help them build market share, and also to enable them to attract and
recruit the best available people. We look forward to expanding our management services throughout the Midwest
United States. This acquisition provides us with an excellent base of operations to assist our growth in the Midwest
U.S."
About AFM Hospitality Corporation
Through its subsidiaries, AFM Hospitality Corporation, which also owns AFM Preferred Alliance Group (formerly known
as HFS Purchasing Services Canada), AFM Asset Management Inc., Northwest Lodging International (USA) Inc. and Northwest
Lodging International (Canada) Inc., is the exclusive Canadian Master Franchisor for ASTON(R), Best Inns(R), Hawthorn(R)
Suites, Howard Johnson(R), Knights Inn(R), Park Plaza, Park Inn, La Quinta, Ramada(R), Traveller's Inn(R) and Villager(R)
Lodge. AFM Hospitality Corporation operates or has open and/or executed franchise and management agreements with
more than 205 hotels in North America, representing an inventory of nearly 21,512 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). 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
Forward Looking Information
This Press Release contains certain forward-looking statements and information from AFM Hospitality Corporation's
third quarter 2001 relating, but not limited, to the company's operations, anticipated financial performance, business
prospects and strategies. Forward-looking information typically contains statements with words such as "anticipate",
"believe", "plan" or similar words suggesting future outcomes. The results or events predicted
in these statements may differ materially from actual results or events. By its nature, AFM Hospitality Corporation's
forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not
limited to the following factors: changes in business strategies; general global economic and business conditions;
the effects of competition and pricing pressures; hotel industry overcapacity; shifts in market demand; changes
in laws and regulation; uncertainties of litigation; labour disputes; timing of completion of capital or maintenance
projects by both franchised and managed hotels; currency and interest rate fluctuations; various events which disrupt
operations; and technological changes. AFM Hospitality Corporation undertakes no obligation to update publicly
or otherwise revise forward-looking information, whether as a result of new information, future events or otherwise.
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Contact:
Contact: Stephen Phillips
Company: AFM Hospitality Corporation
Title: Vice-Chairman, CEO
Voice: 416-202-6763
Email: sphillips@afmcorp.com
Title: Media Contact
Contact: Dennis Heyde
Company: Heyde Companies
Title: President
Voice: 715-726-9094
Email: dennis@heydecompanies.com
Title: Media Contact
Contact: Lawrence P. Horwitz
Company: AFM Hospitality Corporation
Title: Chairman of the Board
Voice: 206-443-2570
Email: lhorwitz@afmcorp.com
Title: Investor Relations