13D Filing: Paulson & Co and Extended Stay America Inc. (STAY)

(1) See Note 1 to Item 5 below.

(2) See Item 5(a).

The following constitutes Amendment No. 7 to the Schedule 13D filed by the undersigned (“Amendment No. 7”).  This Amendment No. 7 amends the Schedule 13D as specifically set forth herein.

The “Explanatory Note” is amended and restated in its entirety to read as follows:

EXPLANATORY NOTE: Each of Extended Stay America, Inc., the Blackstone Entities (collectively, “Blackstone”), Centerbridge Entities (collectively, “Centerbridge”), and Paulson Entities (collectively, “Paulson”), listed in Item 4 (Blackstone, Centerbridge and Paulson, collectively, the “Sponsors”), is a party to a Stockholders’ Agreement, dated as of November 18, 2013 (the “Stockholders’ Agreement”) that is described in Item 4. Given the terms of the Stockholders’ Agreement, Extended Stay America, Inc. and each of the Sponsors and certain of their respective affiliates may be deemed to be a member of a group that owns, as of the date hereof and after giving effect to distributions in kind by certain Sponsors, 27,955,780 Paired Shares, or approximately 14.5% of the outstanding Paired Shares, 250,493,583 Class A Shares, or 100% of the outstanding Class A Shares, which are convertible into 250,493,583 Class B Shares, or approximately 56.4% of all Class B Shares (in each case, calculated in accordance with Rule 13d-3(d) of the Act) and 21,202 shares of voting preferred stock of Extended Stay America, Inc., or 100% of the outstanding voting preferred stock of Extended Stay America, Inc.

Item 4.

Purpose of Transaction.

Item 4 is hereby amended to add the following:

On May 1, 2017, Extended Stay America, Inc. and ESH Hospitality, Inc. filed a prospectus supplement dated April 27, 2017, contemplating the sale by each of the Sponsors of Paired Shares totaling, together with Paired Shares sold by the other Sponsors, in the aggregate 30,000,000 Paired Shares (the “Secondary Offering”). The Secondary Offering closed on May 3, 2017.

In connection with the Secondary Offering, the Issuer and the Sponsors entered into an underwriting agreement (the “Underwriting Agreement”) with the underwriters named therein (the “Underwriters”). Pursuant to the Underwriting Agreement, the Sponsors sold in the aggregate 30,000,000 Paired Shares to the Underwriters. The foregoing description of the terms and conditions of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such document, which is attached as Exhibit 99.1 hereto, and is incorporated herein by reference.

In connection with the Secondary Offering, the Sponsors have also entered into a lock-up agreement (the “Lock-Up Agreement”) with the Issuer and the Underwriters, pursuant to which and subject to specified exceptions, they have agreed not to, among other things and subject to certain exceptions, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly any of the Paired Shares or securities convertible into or exchangeable for Paired Shares, for a period of 30 days after April 27, 2017 except with the prior written consent of Citigroup Global Markets Inc. and Barclays Capital Inc. The foregoing description of the terms and conditions of the Lock-Up Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such document, a form of which is attached as Exhibit 99.2 hereto, and is incorporated herein by reference.

Concurrent with the closing of the Secondary Offering, Extended Stay America, Inc. and ESH Hospitality, Inc. repurchased 250,000 Paired Shares from the Reporting Person at a price of $17.23 per Paired Share (the “Share Repurchase”).  Extended Stay America, Inc. and ESH Hospitality, Inc. repurchased, in aggregate, 750,000 Paired Shares from the Sponsors.

Item 5.

Interest in Securities of the Issuer.

Item 5 is hereby amended and restated to read as follows:

                        (i) Sole power to vote or direct the vote: 9,836,590 (see Note 1).

                       (ii) Shared power to vote or direct the vote: 0

                       (iii) Sole power to dispose or direct the disposition: 9,836,590 (see Note 1).

                       (iv) Shared power to dispose or direct the disposition: 0

Note 1: Paulson, an investment advisor that is registered under the Investment Advisers Act of 1940, furnishes investment advice to and manages the Funds.  In its role as investment advisor, or manager, Paulson possesses voting and investment power over the securities of the Issuer described in this Schedule that are owned by the Funds.  The pecuniary interest of all securities reported in this Schedule is owned by the Funds. Except for the purpose of determining beneficial ownership under Section 13(d) of the Securities Exchange Act of 1934, as amended, Paulson disclaims beneficial ownership of all securities reported in this Schedule.

For reporting purposes, the aggregate amount of Common Shares deemed to be beneficially owned by the Reporting Person is calculated based on an aggregate of 193,330,121 Paired Shares outstanding (which accounts for 750,000 Paired Shares acquired in the aggregate by Extended Stay America, Inc. and ESH Hospitality, Inc. through the Share Repurchase), which is the total number of Paired Shares outstanding as of May 4, 2017 as reported to Extended Stay America, Inc. and ESH Hospitality, Inc. by their stock registrar.

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Item 6 is hereby amended to add the following:

Reference is made to the Underwriting Agreement and the Lock-Up Agreement defined and described in Item 4 above, which are attached as Exhibits 99.1 and 99.2 hereto, respectively, and are incorporated herein by reference.

Item 7.

Material to be Filed as Exhibits.

Item 7 is hereby amended to add the following exhibits:

99.1

Underwriting Agreement, dated as of April 27, 2017, by and among Extended Stay America, Inc., ESH Hospitality, Inc., the selling stockholders named therein, Citigroup Global Markets Inc. and Barclays Capital Inc. (incorporated herein by reference to Exhibit 1.1 of Extended Stay America, Inc.’s Current Report on Form 8-K filed on May 3, 2017) (File No. 001-36190).

99.2

Form of Lock-Up Agreement (incorporated herein by reference to Exhibit A to the Underwriting Agreement, dated as of April 27, 2017, by and among Extended Stay America, Inc., ESH Hospitality, Inc., the selling stockholders named therein, Citigroup Global Markets Inc. and Barclays Capital Inc. and filed as Exhibit 1.1 of Extended Stay America, Inc.’s Current Report on Form 8-K filed on May 3, 2017) (File No. 001-36190).

SIGNATURES

After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information with respect to it set forth in this statement is true, complete, and correct.

Dated:

May 5, 2017