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).