Shares of Extended Stay America climbed more than 17 percent on Wednesday after the Charlotte-based hotel chain debuted on the New York Stock Exchange in the latest initial public offering for an area company.
Extended Stay said it sold 28.3 million shares at a price of $20, raising $565 million. The shares, which closed at $23.55, were priced in the previously disclosed range of $18 to $21.
Extended Stay, which trades under the symbol STAY, joins Charlotte-based healthcare company Premier Inc. and Hickory-based cablemaker CommScope in holding IPOs in the past two months.
In Extended Stay’s offering, shareholders receive a share of Extended Stay and a share of a real estate investment trust, or REIT, called ESH Hospitality, which will trade together.
The company said it expects net proceeds of $531.1 million after underwriting discounts and commissions. Most of the proceeds will be used to repay debt owed by ESH.
The underwriters, which include Bank of America Merrill Lynch, also have an option to buy an additional 4.2 million shares at the $20 price.
Extended Stay’s offering is the latest twist in a turbulent corporate history. Founded in 1995, the once-publicly traded company went private in 2004 when it was bought by the Blackstone Group private equity firm. Then Extended Stay was sold in 2007 to a real estate firm for $8 billion, but it filed for bankruptcy in 2009 under a heavy debt load.
A group of private equity firms, including Blackstone, bought the company out of bankruptcy in 2010. In 2011, Extended Stay announced it was moving its headquarters to Charlotte from Spartanburg, S.C.
After the offering, Extended Stay has 200.5 million shares outstanding, meaning the company is valued at more than $4.7 billion at Wednesday’s close. Jim Donald, the former chief executive of the Starbucks coffee shop chain, has been Extended Stay’s CEO since February 2012.
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