Red Lion Hotels Corp. has hired Bank of America Merrill Lynch to look at options the publicly traded company has to build market value, including a possible sale.
The Spokane-based company made the announcement Wednesday in a formal filing with the Securities and Exchange Commission. The filing had nothing to do with an earlier request from Red Lion’s largest shareholder that management sell properties or sell the company entirely, said Chief Executive Officer Jon Eliassen.
In February, Seattle-based investment group Columbia Pacific Opportunity Fund sent a public letter to the board, saying the company’s market value needed to be addressed. Red Lion owns or franchises 48 locations in the western U.S. and British Columbia. It also has about 350 Spokane employees, which include workers in its TicketsWest entertainment division.
Eliassen said the board had been focused on strengthening the company’s financial picture well before the Feb. 28 letter sent by Columbia Pacific. The board’s selection of BofA Merrill Lynch as a strategic adviser also preceded that letter, he added.
Columbia Pacific owns about 29 percent of Red Lion’s shares.
The job BofA Merrill Lynch has, said Eliassen, is to look at “any number of alternatives which could include partnering or even a sale.”
The announcement occurred now because Red Lion realized it needed to acknowledge publicly that it’s asking BofA Merrill Lynch to talk with investment firms, other companies in the hospitality industry and other advisers.
“If you’re going to start talking with potential investors or potential partners, you can’t do it all quietly,” Eliassen said.
A key concern has been Red Lion’s limits as a midsize hotel group, Eliassen said.
Rebuilding the brand will require more access to capital and “adding more hotels to the system,” he said.
He and company Chief Financial Officer Julie Shiflett said the board has no deadline for a decision or a date by which Merrill Lynch finishes its analysis.
Apart from mergers or sales, Red Lion management is focused on ongoing operations to generate more sales, said Shiflett.
“We’re focused on working to find more hotels or more franchises and more business for our existing hotels,” Shiflett said.