(By Balaseshan) Red Lion Hotels Corp. (NYSE:RLH), a hospitality and leisure company, said it has agreed to sell the Red Lion Colonial Hotel in Helena, Montana in order to pay down debt, invest in brand and increase shareholder value.
The company has entered into an agreement to sell the Red Lion Colonial Hotel to Helena Colonial L.L.C. The purchase price for the sale is $5.6 million and the close date is scheduled for July 31, 2012.
Helena Colonial L.L.C. is using Stockman Bank, based in Montana, to finance the acquisition. The buyer has indicated that after closing of the transaction, it intends to enter into a franchise license agreement with Red Lion Hotels Franchising Inc. and maintain the Red Lion brand on the hotel.
The 149-room Red Lion Colonial Hotel has 15,500 square feet of meeting space, the largest group space in the market, and underwent a major renovation in 2006. It is located about one mile from the Montana State Capitol building.
"The buyer has informed us that it intends to invest substantial additional capital in the property, and we anticipate that the hotel's enhanced appeal will be attractive to our Red Lion guests in Helena," said Jon Eliassen, Chief Executive of Red Lion Hotels.
Recently, Red Lion Hotels said it has signed a franchise license agreement with the owners of a hotel in Cathedral City, California. The hotel is owned and managed by Sang and Connie Chae of WR Management Co., based in Bellevue, Wash. In fall 2012, the Quality Inn & Suites Date Palm, 69151 E. Palm Canyon Dr., will convert to Red Lion Hotel Cathedral City.
As of March 31, 2012, the RLH hotel network was comprised of 48 hotels located in nine states and one Canadian province, with 9,010 rooms and 452,387 square feet of meeting space.
RLH is trading down 0.54% at $7.40 on Thursday. The stock has been trading between $6.00 and $8.80 for the past 52 weeks