RLHC (Red Lion Hotels Corporation) completed a transaction to accelerate the execution of its national growth strategy. As part of the transaction, RLHC sold a 45 percent ownership stake in 12 wholly-owned hotels wholly to a joint venture and concurrently refinancing all of the company's secured debt. Three of the hotels will be renovated and converted to the recently announced lifestyle, three-star Hotel RL brand. The remaining nine Red Lion Hotels and Red Lion Inn & Suites will also undergo renovations. All 12 hotels will continue to be managed by RLHC's wholly owned subsidiary, Red Lion Hotels Management, under an initial five-year management contract, with three five-year extensions.
RLHC will maintain a 55-percent interest in RL Venture, the joint venture that owns the 12 hotels, with the remaining 45 percent acquired by Shelbourne Falcon RLHC Hotel Investors ("Shelbourne"), an entity which is led by Shelbourne Capital and includes several other institutional real estate investors, including Columbia Pacific Real Estate Fund II, LP, an affiliate of the company's largest shareholder Columbia Pacific Opportunity Fund, LP. The joint venture also entered into a new $80 million mortgage loan from Capital Source, a division of Pacific Western Bank, secured by the 12 properties.
Total debt and equity proceeds of the transaction are approximately $99 million, of which the joint venture will use approximately $26 million for planned renovations to the 12-hotel portfolio occurring over the next 12-18 months. RLHC will use the additional proceeds to retire in full the company's current outstanding secured debt with Wells Fargo Bank with the remaining capital available to fund the company's growth strategy. In connection with Shelbourne's investment in the joint venture, RLHC issued approximately 442,000 warrants to Shelbourne.