8-KOther Events

MARRIOTT INTERNATIONAL INC /MD/ 8-K Report, Corporate Update (Nov 1, 2005)

Filed November 1, 2005For Securities:MAR

Summary

Marriott International, Inc. (MAR) announced a significant development regarding its synthetic fuel ventures. The company's synthetic fuel partner has exercised its option to exit their joint venture in three specific synthetic fuel facilities, known as SAFE II. Effective December 31, 2005, Marriott will fully acquire the partner's approximately 50% ownership stake in these facilities. This strategic move will result in Marriott owning 100% of these three facilities and consequently, receiving all associated tax credits starting January 1, 2006. The financial implication for Marriott is the relief from its partner's obligation to pay the remaining $8 million balance on a promissory note and all future earn-out payments related to SAFE II. This simplifies Marriott's involvement in these specific assets, removing the associated material contracts from their reporting requirements. It's important to note that Marriott will continue to hold a 50% interest in a separate synthetic fuel facility (SAFE I).

Key Highlights

  • 1Marriott International to assume full ownership of three synthetic fuel facilities (SAFE II) effective January 1, 2006.
  • 2The transaction involves the partner exercising its option to redeem its 50% ownership interest.
  • 3Marriott will receive all tax credits associated with the three SAFE II facilities post-acquisition.
  • 4The financial consideration for Marriott is the partner's relief from an $8 million promissory note balance.
  • 5Marriott will also be relieved of all future earn-out payment obligations for SAFE II.
  • 6The agreements related to SAFE II will no longer be reported as material contracts by Marriott.
  • 7Marriott maintains a 50% ownership in one other synthetic fuel facility (SAFE I).

Frequently Asked Questions

The primary financial impact is Marriott's full ownership of three synthetic fuel facilities, leading to the receipt of all associated tax credits. Additionally, Marriott benefits from its partner's assumption of the remaining $8 million on a promissory note and the termination of future earn-out payments related to these specific facilities.

No, Marriott will continue to hold a 50% ownership interest in one other synthetic fuel facility, Synthetic American Fuel Enterprises I, LLC (SAFE I). This transaction only pertains to three facilities within SAFE II.

The effective date for Marriott to own 100% of the three synthetic fuel facilities in SAFE II is January 1, 2006, following the partner's exercise of its redemption option by December 31, 2005.

The filing indicates that Marriott is acquiring the partner's stake primarily by relieving the partner of its remaining obligations on a promissory note and future earn-out payments. This suggests that Marriott is not incurring significant new upfront capital expenditures for this specific acquisition, but rather simplifying its financial commitments related to these assets.