Group accuses board of mismanagement
A Seattle investment group critical of Red Lion Hotels has demanded that the Spokane company start selling hotels.
Columbia Pacific Opportunity Fund, which owns 29 percent of outstanding common shares, wrote in a letter released Friday and filed with the U.S. Securities and Exchange Commission that if change is not undertaken, it will push to replace board members.
The same investment group in February wrote a pointed request to Red Lion directors urging them to sell all or part of the hotel chain. They claimed the business has been mismanaged and its properties are worth more sold off than operated together.
Columbia Pacific’s letter Friday said that the board has so far failed to produce a strategic plan for Red Lion.
Attempts to reach managers of Columbia Pacific on Friday were not successful.
Red Lion, formerly WestCoast Hospitality, became a publicly traded hotel chain in 1989. Based in downtown Spokane, the company operates 47 hotels in nine Western states and one Canadian province.
Its single largest shareholder is founder and former CEO Donald Barbieri, who owns about 1 million shares.
A month after Columbia Pacific’s February letter, New York investment firm Somerset Capital issued a similar request for action by Red Lion officials. Somerset owns about 3 percent of the firm’s stock.
Following that request, Red Lion announced it hired Merrill Lynch Bank of America to present options to move the company forward. The options have not been disclosed.
A Red Lion spokesperson said the company had no comment on Friday’s request from Columbia Pacific.
The letter Somerset sent in March told the directors it believed CEO Jon Eliassen and board members Richard and Donald Barbieri should be replaced.
In an email, Somerset Chief Investment Officer Ross Taylor wrote, “We will support any and all shareholders who work to this end. And as Columbia Pacific is currently doing, we support their efforts to, if necessary, take power away from those directors we believe are working out of self-interest, and give control of this issue back to the shareholders, where it belongs.”
Earlier this week Red Lion sold its Sacramento hotel for $9 million and arranged a new franchise deal in the same city on a larger hotel.
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