Reuters: Hotel Chain Extended Stay Files for $100 million IPO


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(Reuters) – Hotel chain Extended Stay America Inc ESAIN.UL has filed with regulators to raise up to $100 million in an initial public offering less than three years of emerging from bankruptcy protection.

The chain was sold for $3.9 billion at a bankruptcy auction in October 2010 to a group that included hedge funds Paulson & Co and Centerbridge Partners, and private equity firm Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz), who each own about a third of the company.

Extended Stay has hired Starbucks Corp’s (SBUX.O: Quote, Profile, Research, Stock Buzz) former chief executive James Donald to lead the company as it looks to revitalize itself.

The U.S. lodging industry generated revenue of more than $162 billion in 2012, according to Smith Travel Research.

Private equity owners have been looking to take advantage of the recent rise in the stock market to exit investments made during the financial crisis.

Other recent large deals involving private equity-backed companies include SeaWorld Entertainment (SEAS.N: Quote, Profile, Research, Stock Buzz) Inc and Norwegian Cruise Line Holdings Ltd (NCLH.O: Quote, Profile, Research, Stock Buzz).

Extended Stay has not indicated the number of shares on offer or the price it intends to sell them at. (link.reuters.com/rys79t)

Deutsche Bank Securities, Goldman Sachs & Co and JP Morgan are the lead underwriters on the offering.

Blackstone formed Extended Stay through a series of investments and teamed with Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) in 2007 to sell the chain of about 680 hotels for $8 billion to David Lichtenstein, a little-known private equity investor.

Extended Stay filed for bankruptcy protection in 2009 as the economic downturn took a toll on its business.

Photo courtesy of Shutterstock

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