Cavanaughs Airs Plans To Go Public Company To Buy Two More Hotels In Kalispell And Portland
Cavanaughs Hospitality Corp., which owns and operates 11 Cavanaughs hotels in the Pacific Northwest, plans an initial public offering of stock that could raise as much as $61.7 million after expenses.
The Spokane-based company announced Monday the acquisition of Templin’s Resort in Post Falls.
Cavanaughs intends to offer new investors 5.18 million shares - about 42 percent of the 12.27 million shares that will be outstanding after the stock offering, according to a filing with the U.S. Securities and Exchange Commission.
It intends to sell shares at $12 to $14 each. Based on a midpoint price of $13 per share and the total shares outstanding, the offering will give the company an implied market value of $159.5 million.
In addition to owning hotels in Spokane, Seattle, Yakima, Kennewick, Idaho Falls, Post Falls and Kalispell, Mont., Cavanaughs operates entertainment services, management companies and retail and office properties. The company’s G&B; Select-a-Seat unit sells event tickets, and G&B; Presents offers Broadway productions and special events.
Upon completion of the stock offering, Cavanaughs intends to grow by buying and renaming full-service hotels, building new ones and expanding hotels it already owns. The company, which will continue to focus on the Northwest, has acquired three hotels since Oct. 31 and agreed to purchase two additional hotels in Kalispell and Portland for a total $15.6 million after the stock offering.
Chairman Don Barbieri said Tuesday he cannot discuss which hotels the company will acquire or other details of the offering during a “quiet period” that follows filing.
He said the offering statement should be available next month.
The company and its predecessors have been run by the Barbieri family since the company was founded in 1937. In 1976, the company built its first hotel in Spokane after focusing on property management services and real estate development.
Barbieri, 52, will remain the single largest shareholder. He will control about 3.6 million shares, or a 29.3 percent stake. His brothers, Richard and Thomas Barbieri, also hold executive positions.
Donald Barbieri’s son, Stephen Barbieri, who handles investor relations for the company, referred questions on the public offering to Jeremy Schwimmer, a spokesman for underwriter CIBC Oppenheimer. Schwimmer declined to comment.
Cavanaughs intends to use the net proceeds from the offering to repay debt, including $850,000 incurred in connection with a recent hotel acquisition.
If the full underwriters’ overallotment is exercised because demand for the offering is high, Cavanaughs could raise an additional $9.4 million.
Any remaining proceeds after repaying $61.7 million of debt will be used to fund future investments in, or acquisitions of, other hotels, as well as other general corporate purposes, the filing said.
Although the company competes with national hotel chains as well as other regional hotel companies in the Northwest, Cavanaughs “believes there is an absence of a dominant, Northwest-based, regionally focused hotel company,” the filing said.
For the fiscal year ended Oct. 31, Cavanaughs reported that net income increased to $1.8 million from $1.4 million the year earlier. On an adjusted basis to reflect recent acquisitions and the public offering, the company reported net income of $5.6 million in fiscal 1997.
Revenue for the year ended Oct. 31 was $52 million, compared with $45.2 million a year earlier. On an adjusted basis, revenue was $77.4 million for the last fiscal year.
NationsBanc Montgomery Securities LLC will join CIBC Oppenheimer as an underwriter of the offering.
Cavanaughs has applied for its shares to trade on the New York Stock Exchange under the symbol CVH, according to the S-1 registration statement filing.