Red Lion Hotels Adopts Poison Pill Plan

Spokane, Wash. -- Red Lion Hotels (RLH Quote) said Thursday that it adopted a poison pill plan to make it more difficult for a hostile takeover to occur.

The hotel operator said the shareholder rights plan, or poison pill, will not impact its earnings-per-share results.

Spokane, Wash.-based Red Lion said it will distribute to stockholders one right for each share held at the close of business on Feb. 2. The rights will initially be unexerciseable and will trade with its common stock.

The rights generally won't be exerciseable unless a person or group acquires 20% or more of Red Lion's stock or starts a tender or exchange offer for 20% or more of the company's stock.

The plan will be in effect for two years unless amended or redeemed.

In October, Red Lion said Columbia Pacific Opportunity Fund LP withdrew its preliminary $9.50 per share cash bid and that its strategic alternatives process concluded without another offer. The bid by Columbia Pacific had been announced in late June. After entering confidentiality agreements with Columbia Pacific and other parties, Red Lion said it did not receive a definitive takeover proposal.

At the time, Red Lion attributed the lack of action to the credit market crisis and downturn in the global economy.

Red Lion had 47 hotels in nine states and one Canadian province as of Sept. 30.

Shares of Red Lion shed 16 cents, or 6.5%, to $2.29 in afternoon trading. Over the past year, the stock has traded between $1.49 and $9.82.