LodgeNet Agrees To $60 Million Recapitalization With Global Investor Colony Capital

 LodgeNet Agrees To $60 Million Recapitalization With Global Investor Colony

Colony to Become Controlling Shareholder and Partner with DIRECTV to Build on
LodgeNet's Leadership in the Hospitality and Healthcare Markets

PR Newswire

SIOUX FALLS, S.D., Dec. 31, 2012

SIOUX FALLS, S.D., Dec. 31, 2012 /PRNewswire/ --LodgeNet Interactive
Corporation (Nasdaq: LNET) ("LodgeNet" or the "Company") today announced that
it has entered into a definitive agreement with a syndicate formed by an
affiliate of Colony Capital (herein "Colony Syndicate"), a global investment
firm with $38 billion in assets under management and a broad range of
hospitality and media industry investments, pursuant to which the Colony
Syndicate will provide $60 million of new capital to support a proposed
recapitalization of the Company. In addition, the Company has received
support from a steering committee of its lenders holding its debt for a
multi-year extension of its existing $346 million secured credit facility.

(Logo: http://photos.prnewswire.com/prnh/20080115/AQTU120LOGO)

The transaction will be implemented through an expedited Chapter 11 bankruptcy
process, at the conclusion of which the Colony Syndicate would become the
controlling stockholder of the Company. The plan of reorganization envisions
that unsecured creditors of LodgeNet will be paid in full for any pre-petition
claims at the conclusion of the Chapter 11 process.

Colony has also executed a memorandum of understanding with DIRECTV, LLC.,
setting forth certain terms pursuant to which LodgeNet and DIRECTV intend to
operate as strategic partners within the hospitality and healthcare markets.
As part of the expanded partnership between the two companies, DIRECTV will
provide its world-class operational, technological and marketing capabilities
to help deliver new and improved LodgeNet services to the industry.

Importantly, throughout this process, LodgeNet's current hospitality and
healthcare customers will continue to receive LodgeNet's entertainment and
connectivity services, as well as ongoing maintenance and support, without

Under the terms of these agreements, the Colony Syndicate will receive new
common stock representing 100 percent ownership of LodgeNet. The Colony
Syndicate's investment and the new credit agreement provide added financial
flexibility, while Colony Capital's industry experience and DIRECTV's new
contributions will ensure LodgeNet's continued market leadership as it works
with customers to offer the best in-room entertainment and connectivity
services available today.

The Company has also entered into a plan support agreement with a steering
committee of its lenders holding its outstanding senior debt, pursuant to
which the lenders have agreed to support the Colony Syndicate's transaction
and the proposed amendment and extension of the credit agreement with its
lenders, and to vote in favor of the Company's proposed plan of
reorganization. The Company has also received a commitment for a
debtor-in-possession (DIP) loan from certain of its lenders that would provide
up to $15 million in financing, providing additional liquidity during this

In order to provide LodgeNet time to solicit votes on the proposed Chapter 11
plan, DIRECTV, HBO and the steering committee of lenders have agreed to
extensions of their existing forbearance agreements.

"As one of the largest investors in hospitality and media enterprises around
the globe, and with a strong track-record of success, Colony Capital brings an
unmatched combination of strategic acumen and financial resources to LodgeNet
and its industry-leading footprint of 1.5 million hotel rooms," said LodgeNet
Interactive chairman Doug Bradbury. "Under Colony's leadership, LodgeNet is
poised to transform its business through renewed financial strength, the
introduction of new and innovative products and services, and strengthened
industry relationships, thus re-affirming its position as the leading provider
of interactive services to the hospitality and healthcare industries."

LodgeNet and the Colony Syndicate have agreed to implement this transaction
via an expedited Chapter 11 proceeding which would commence once the requisite
consents of its lenders have been obtained. Concluding the recapitalization
in a controlled, court-supervised environment will allow LodgeNet to continue
operating without interruption, address short-term liquidity issues, complete
the Colony Syndicate's transaction, and amend the credit agreements with its

"As evidenced by our investments in hospitality, media and entertainment, we
believe in these markets, and with LodgeNet positioned at the crossroads of
all three, this opportunity is tailor-made for Colony Capital," commented
Richard Nanula, Principal at Colony Capital. "We look forward to leveraging
our experience and key industry relationships to drive change at a critical
time for the company and the industries it serves. Together with DIRECTV and
our hospitality and healthcare customers, we are committed to building on the
company's position as the preeminent provider of commercial entertainment and
connectivity services, as we believe strongly that for LodgeNet, the future is

Pursuant to the contemplated Chapter 11 filing, holders of the existing Series
B Preferred Stock and common stock issued by LodgeNet Interactive will have
their interests cancelled and will not receive any distributions.

The recapitalization is designed to enable a restructured LodgeNet Interactive
to emerge from Chapter 11 on a standalone basis with strong cash flow and a
solid balance sheet.

Key terms of the recapitalization include:

  oThe Colony Syndicate will invest $60 million in exchange for all of the
    new shares of common stock of LodgeNet Interactive;
  oLodgeNet's existing Credit Agreement will be amended to provide an
    extension in the form of a 5-year term loan in an aggregate amount equal
    to (i) $346.4 million plus (ii)the amount of accrued and unpaid interest
    that was capitalized prior to the Closing Date;
  oBased on the terms of the recently executed memorandum of understanding
    between Colony and DIRECTV, LodgeNet and DIRECTV will enter into a new
    agreement pursuant to which they will work under an expanded new strategic
    partnership, far exceeding the scope of the parties' current free-to-guest
    programming agreement, to include DIRECTV branding, programming and
    content, advertising, and support across all facets of operations,
    infrastructure and technology. This strategic partnership is expected to
    enhance the experience for new and existing hotel and healthcare
    customers, improve service capabilities and provide additional promotional
    options that will reduce or eliminate capital requirements within the

Closing of the transaction is subject to various closing conditions, including
Bankruptcy Court confirmation of a Chapter 11 Plan. Accordingly, no
assurances can be given that the transaction will be consummated.

Miller Buckfire & Co. LLC, a wholly-owned subsidiary of Stifel Financial
Corp., FTI Consulting, Inc. and Moorgate Securities LLC served as financial
advisors to LodgeNet, Weil, Gotshal & Manges LLP acted as restructuring legal
counsel and Leonard, Street and Deinard acted as corporate legal counsel to
the Company. Guggenheim Securities, LLC served as financial advisor to Colony
Capital, and Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP
and Sullivan & Cromwell LLP provided legal counsel. Akin Gump Strauss Hauer &
Feld LLP and CDG Group, LLC acted as advisors to the agent for the lenders.

About LodgeNet

LodgeNet Interactive is the leading provider of interactive media and
connectivity services to hospitality and healthcare businesses and the
consumers they serve. Recently named by Advertising Age as one of the Leading
100 US Media Companies, LodgeNet Interactive serves approximately 1.5 million
hotel rooms worldwide in addition to healthcare facilities throughout the
United States. The Company's services include: Interactive Television,
Broadband and Advertising Media Solutions along with nationwide technical and
professional support services. LodgeNet Interactive owns and operates
businesses under the industry leading brands: LodgeNet, The Hotel Networks and
LodgeNet Healthcare. LodgeNet Interactive is listed on NASDAQ and trades under
the symbol LNET. For more information, please visit www.lodgenet.com. 

LodgeNet and the LodgeNet logo are registered trademarks of LodgeNet
Interactive Corporation. All rights reserved.

About Colony Capital LLC

Founded in 1991 by Chairman and Chief Executive Officer Thomas J. Barrack,
Jr., Colony Capital is a private, international investment firm focusing
primarily on debt and equity investments in real estate-related assets and
operating companies. The firm has invested $48 billion in over 19,000
assets/loans through various corporate, portfolio and complex property
transactions. Colony has been one of the largest owners of hospitality assets
in the world with investments in Fairmont Raffles Hotels International, Accor,
Amanresorts and dozens of individual hotels globally. Colony's investments
have also included the legendary integrated resort Costa Smeralda on Sardinia,
the award-winning hospitality platform sbe, the conversion of the Mayfair
Hotel in New York to the luxury condo 610 Park Avenue, the Savoy Hotel Group's
five-star hotels in the UK, the five-star Stanhope Hotel in New York, The
Orchid at Mauna Lani in Hawaii and the La Tour private hospital group.

Colony is also an active investor in the media and entertainment space and the
firm's portfolio currently includes Miramax, the global film and television
studio with a 700-plus film library that holds some of the world's most
original and acclaimed independent films. Colony has a team of more than 250
and is headquartered in Los Angeles, with offices in New York, Boston,
Scottsdale, London, Madrid, Paris, Rome, Beirut, Hong Kong, Seoul and Taipei.
For more information, visit www.colonyinc.com.

Special Note Regarding Forward-Looking Statements –

Certain statements in this press release constitute "forward-looking
statements," including, without limitation, statements regarding the Company's
investment agreement with the Colony Syndicate and the Company's proposed
recapitalization, the Company's ability to continue operations during the
pendency of the bankruptcy case, the agreement with DIRECTV, and the effect of
actions of the Bankruptcy Court on the Company's assets and operations.

Such forward-looking statements are subject to risks, uncertainties and other
factors that could cause the actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the Company's ability to comply with the terms of the
investment agreement with the Colony Syndicate, including the conditions to
closing, which require, among other things, that the Company maintain a
certain minimum amount of liquidity, maintain certain material contracts, and
obtain the Bankruptcy Court's approval of its Chapter 11 plan of
reorganization; the Company's ability to obtain Bankruptcy Court approval with
respect to its motions in the Chapter 11 proceedings; risks associated with
third party motions in the Chapter 11 proceedings, which may interfere with
the Company's ability to consummate its plan of reorganization; the potential
adverse effects of the Chapter 11 proceedings on the Company's business,
customer relationships, liquidity or results of operations; continued
compliance with conditions for funding under the debtor-in-possession
financing facility; the ability to execute the Company's business and
restructuring plan to achieve desired cost savings and additional capital to
improve liquidity; the Colony Syndicate's ability to reach a definitive
agreement with DIRECTV; and other factors detailed, from time to time, in our
filings with the Securities and Exchange Commission. For any of the foregoing
reasons, our anticipated results may not meet our expectations. These
forward-looking statements speak only as of the date of this press release. We
expressly disclaim any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to
reflect any change in our expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.

SOURCE LodgeNet Interactive Corp.

Website: http://www.lodgenet.com
Contact: To contact LodgeNet, Ann Parker, Director, Investor Relations,
+1-605-988-1000, ann.parker@lodgenet.com, or Mike Smargiassi, Brainerd
Communicators, +1-212-739-6729, smarg@braincomm.com, or To contact Colony
Capital, Kristin Celauro, Owen Blicksilver Public Relations, Inc.,
+1-732-264-1131, Kristin@blicksilverpr.com
Press spacebar to pause and continue. Press esc to stop.