SIOUX FALLS, S.D.—LodgeNet Interactive Corporation announced that it will file for bankruptcy as part of an agreement with a syndicate formed by an affiliate of Colony Capital (the Colony Syndicate), a global investment firm with $38 billion in assets under management and a broad range of hospitality and media industry investments. Colony Syndicate will provide $60 million to support LodgeNet's recapitalization and will become the controlling stockholder of the company.
"As one of the largest investors in hospitality and media enterprises around the globe, and with a strong track-record of success, Colony Capital brings an unmatched combination of strategic acumen and financial resources to LodgeNet and its industry-leading footprint of 1.5 million hotel rooms," said LodgeNet Interactive chairman Doug Bradbury . "Under Colony's leadership, LodgeNet is poised to transform its business through renewed financial strength, the introduction of new and innovative products and services, and strengthened industry relationships, thus re-affirming its position as the leading provider of interactive services to the hospitality and healthcare industries."
Colony has also agreed to a deal with DIRECTV and intends to operate LodgeNet and DIRECTV as partners in the hospitality market. As part of the expanded partnership between the two companies, DIRECTV will provide its operational, technological, and marketing capabilities to help deliver new and improved LodgeNet services to the industry.
Under the terms of these agreements, the Colony Syndicate will receive new common stock representing 100 percent ownership of LodgeNet. The plan of reorganization also envisions that unsecured creditors of LodgeNet will be paid in full for any pre-petition claims at the conclusion of the Chapter 11 process.
"As evidenced by our investments in hospitality, media and entertainment, we believe in these markets, and with LodgeNet positioned at the crossroads of all three, this opportunity is tailor-made for Colony Capital," commented Richard Nanula , principal at Colony Capital. "We look forward to leveraging our experience and key industry relationships to drive change at a critical time for the company and the industries it serves. Together with DIRECTV and our hospitality and healthcare customers, we are committed to building on the company's position as the preeminent provider of commercial entertainment and connectivity services, as we believe strongly that for LodgeNet, the future is now."
In order to provide LodgeNet time to solicit votes on the proposed Chapter 11 plan, DIRECTV, HBO and the steering committee of lenders have agreed to extensions of their existing forbearance agreements.
Throughout this process, LodgeNet's current hospitality customers will continue to receive LodgeNet's entertainment and connectivity services, as well as ongoing maintenance and support, without interruption.