Item 8.01 Other Events.
As previously disclosed, on November 6, 2021, CorePoint Lodging Inc., a Maryland
corporation ("CorePoint") entered into an Agreement and Plan of Merger (the
"Merger Agreement"), by and among CorePoint, Cavalier Acquisition Owner LP (as
assignee of Cavalier Acquisition JV LP), a Delaware limited partnership
("Parent") and Cavalier MergerSub LP (as assignee of Cavalier Acquisition Owner
LP), a Delaware limited partnership and wholly owned subsidiary of Parent
("Merger Sub"), pursuant to which, on the terms and subject to the conditions
set forth in the Merger Agreement, CorePoint will merge with and into Merger Sub
(the "Merger"), with Merger Sub continuing as the surviving entity in the Merger
as a wholly owned subsidiary of Parent. The board of directors of CorePoint has
approved the Merger Agreement and the transactions contemplated thereby,
including the Merger.
As previously disclosed, on January 14, 2022, CorePoint filed a definitive proxy
statement with the Securities and Exchange Commission relating to the special
meeting of its stockholders to be held on March 1, 2022 to consider and vote on
various proposals necessary to approve the Merger Agreement (the "proxy
statement").
In the proxy statement, CorePoint advised that the expected amount of any
additional consideration payable to holders of CorePoint common stock in
connection with the Merger was dependent on the calculation by the Internal
Revenue Services (the "IRS") of the interest payable in connection with the
settlement agreement on Form 870-AD between CorePoint and the IRS.
Following the date of the proxy statement, CorePoint has received information
from the IRS pursuant to which such additional consideration will be
approximately $0.34 per share. Based on this information, CorePoint and Cavalier
have determined that, assuming that the closing of the Merger occurs on March 3,
2022, the amount of such additional consideration will be $0.34 per share and
the total merger consideration to be paid upon completion of the Merger will be
$15.99 per share.
CorePoint hereby supplements the disclosures contained in the proxy statement
(the "Supplemental Disclosures") to reflect this determination. The Supplemental
Disclosures are set forth below and should be read in conjunction with the proxy
statement.
SUPPLEMENT TO PROXY STATEMENT
CorePoint hereby provides these Supplemental Disclosures to the proxy statement.
This supplemental information should be read in conjunction with the proxy
statement, which should be read in its entirety. Defined terms used but not
defined below have the meanings set forth in the proxy statement.
1. The section of the proxy statement entitled "The Merger-Merger
Consideration-What Stockholders Will Receive in the Merger" is hereby
supplemented as follows:
A. The fourth full paragraph on page 34 (such paragraph beginning with "IRS
Closing Agreement. The payment of any…") of the proxy statement is hereby
amended and restated to read as follows (supplemented disclosure is
bolded and underlined and deleted language is stricken through):
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IRS Closing Agreement. The payment of any such additional cash consideration, as
described in clause (ii) of the immediately preceding paragraph entitled
"Adjustments to Merger Consideration" above, is dependent on CorePoint entering
into a definitive closing agreement with the IRS prior to the closing. The
amount of such potential additional cash consideration, if any, payable to
holders of CorePoint common stock is determined based on the amount, if any, by
which the settlement amount with respect to the IRS Matter (including any
penalties and accrued interest with respect thereto) is less than $160 million.
CorePoint received a settlement offer from the IRS with respect to the IRS
Matter on November 5, 2021. On the basis of such offer, CorePoint entered into a
settlement agreement on Form 870-AD with the IRS on November 29, 2021 (the
"November 29 Closing Agreement"), which provides for total payments by CorePoint
of approximately $89.6 million plus statutory interest through the date of
payment to the IRS. Pursuant to the November 29 Closing Agreement, the total
payment amount for the settlement of the IRS Matter is dependent on the
calculation of interest by the IRS, which includes a determination by the IRS of
the applicable statutory interest rates and applicable time periods, and the
date on which the settlement payment (including interest as calculated by the
IRS) is made to the IRS. As a result, CorePoint cannot determine the total
payment amount with specificity as of the date of this proxy statement. However,
pursuant to the November 29 Closing Agreement, based on the foregoing and
assuming that CorePoint makes the settlement payment to the IRS on or about the
date of the effective time of the merger, CorePoint currently estimates that the
amount of any such additional consideration will likely be between approximately
$0.10 per share and approximately $0.35 per share, although there can be no
assurance that any such additional consideration will fall within that range.
Following receipt by CorePoint of the determination by the IRS of the applicable
statutory interest rate and calculation by the IRS of the interest payable,
CorePoint expects to inform the holders of CorePoint common stock of the
expected amount of any additional consideration as determined based on such
calculation by the IRS. In connection with the closing, CorePoint expects to
inform the holders of CorePoint of the definitive amount of any such additional
consideration. There can be no assurances that any additional consideration will
be received by the holders of CorePoint common stock. CorePoint's entry into any
IRS settlement is not a condition to the closing of the merger. Following the
date of the proxy statement, CorePoint has received information from the IRS
reflecting the IRS' calculation of the applicable statutory interest rates,
pursuant to which such additional consideration will be approximately $0.34 per
share, with the exact amount depending on the date of the closing and the fully
diluted number of shares of CorePoint common stock outstanding at the time of
the closing. Based on this information, CorePoint and Cavalier have determined
that, assuming that the closing of the merger occurs on March 3, 2022, the
amount of such additional consideration will be $0.34 per share and the total
merger consideration to be paid upon completion of the merger will be $15.99 per
share.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements often contain words such as "assume," "will,"
"anticipate," "believe," "predict," "project," "potential," "contemplate,"
"plan," "forecast," "estimate," "expect," "intend," "is targeting," "may,"
"should," "would," "could," "goal," "seek," "hope," "aim," "continue" and other
similar words or expressions or the negative thereof or other variations
thereon. Forward-looking statements are made based upon management's current
expectations and beliefs and are not guarantees of future performance. Such
forward-looking statements involve numerous assumptions, risks and uncertainties
that may cause actual results to differ materially from those expressed or
implied in any such statements. Our actual business, financial condition or
results of operations may differ materially from those suggested by
forward-looking statements as a result of risks and uncertainties which include,
among others: completion of the proposed transaction is subject to various risks
and uncertainties related to, among other things, its terms, timing, structure,
benefits, costs and completion; required approvals to complete the proposed
transaction by our stockholders and the receipt of certain regulatory approvals,
to the extent required, and the timing and conditions for such approvals; the
stock price of the Company prior to the consummation of the proposed
transaction; and the satisfaction of the closing conditions to the proposed
transaction; business, financial and operating risks inherent to the lodging
industry; macroeconomic and other factors beyond our control, including without
limitation the effects of the ongoing COVID-19 pandemic or other pandemics or
outbreaks of contagious disease; the geographic concentration of our hotels; our
inability to compete effectively; our concentration in the La Quinta brand; our
dependence on the performance of LQ Management L.L.C. and other third-party
hotel managers and franchisors; covenants in our hotel management and franchise
agreements that limit or restrict the sale of our hotels; risks posed by our
disposition activities, including our ability to contract with qualified buyers
and the risk that purchasers may not have the access to capital or meet other
requirements; risks resulting from significant investments in real estate; cyber
threats and the risk of data
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breaches or disruptions of technology information systems; the growth of
internet reservation channels; disruptions to the functioning or transition of
the reservation systems, accounting systems or other technology programs for our
hotels, and other technology programs and system upgrades; and our substantial
indebtedness, including restrictions imposed on our ability to access our cash.
Additional risks and uncertainties include, among others, those risks and
uncertainties described under "Risk Factors" in our Annual Report on Form 10-K
for the year ended December 31, 2020, as such factors may be updated or
superseded from time to time in our periodic filings with the Securities and
Exchange Commission (SEC). You are urged to carefully consider all such factors
and we note that the COVID-19 pandemic may have the effect of heightening many
of the risks and uncertainties described. Although it is believed that the
expectations reflected in such forward-looking statements are reasonable and are
expressed in good faith, such expectations may not prove to be correct and
persons reading this communication are therefore cautioned not to place undue
reliance on these forward-looking statements, which speak only to expectations
as of the date of this communication. We undertake no obligation to publicly
update or review any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as required by law. If we
make any future public statements or disclosures which modify or impact any of
the forward-looking statements contained in or accompanying this Current Report
on Form 8-K, such statements or disclosures will be deemed to modify or
supersede such statements in this Current Report on Form 8-K.
Additional Information and Where to Find It
This Current Report on Form 8-K does not constitute an offer to buy or sell or
the solicitation of an offer to buy or sell any securities or a solicitation of
any vote or approval. This Current Report on Form 8-K relates to a proposed
acquisition of CorePoint by Cavalier Acquisition Owner LP. In connection with
this proposed acquisition, CorePoint has filed one or more proxy statements or
other documents with the SEC. This Current Report on Form 8-K is not a
substitute for any proxy statement or other document that CorePoint has or may
file with the SEC in connection with the proposed transaction. INVESTORS AND
SECURITY HOLDERS OF COREPOINT LODGING INC. ARE URGED TO READ THE PROXY STATEMENT
AND OTHER DOCUMENTS THAT HAVE BEEN (OR MAY BE) FILED WITH THE SEC CAREFULLY AND
IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION. The definitive
proxy statement has been mailed to stockholders of CorePoint. Investors and
security holders may obtain free copies of these documents and other documents
filed with the SEC by CorePoint through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by CorePoint are
available free of charge on CorePoint's internet website at www.corepoint.com or
upon written request to: Investor Relations, CorePoint Lodging Inc., 125 E. John
Carpenter Freeway, Suite 1650, Irving, Texas 75062 or by telephone at (214)
501-5535.
Participants in Solicitation
CorePoint, its directors and certain of its executive officers may be considered
participants in the solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive officers of CorePoint
is set forth in the proxy statement filed with the SEC on January 14, 2022 and
its proxy statement for its 2021 annual meeting of stockholders, which was filed
with the SEC on April 14, 2021.
Additional information regarding the participants in the proxy solicitation and
a description of their direct and indirect interests, by security holdings or
otherwise, is contained in the proxy statement and other relevant materials
filed with the SEC. These documents can be obtained free of charge from the
sources indicated above.
CorePoint Lodging Inc.
125 E. John Carpenter Freeway, Suite 1650
Irving, Texas 75062
Tel. (972) 893-3199
www.corepoint.com
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