Mercury Partners, Greenwich, Conn., has expressed concern about a recent Securities and Exchange Commission filing by Lodgian proposing the issue of $175 million of common stock. The Atlanta-based hotel operator plans to use the proceeds from the offering to aid its restructuring efforts. Mercury Partners, a merchant bank and a "significant shareholder" in Lodgian, said, in a written release, that the offering – which it is calling a "wholesale dumping of equity" – reflects "a serious error in judgment" for a company with an existing equity market capitalization of $50 million. According to Mercury, Lodgian's stock price has gone down from over $8.00 two weeks ago to $5.60 by the close of trading on March 17, a 30% decline. Mercury is recommending some alternative courses of action for Lodgian, including a smaller equity offering than is currently proposed; a hotel sales program; or an equity for preferred exchange offering. Responding to a request for comment on Mercury Partners' objections, Dan Ellis, Lodgian's general counsel, told Mortgage Wire that Lodgian's board of directors is still reviewing the letter, which they received Thursday morning, and that it is too early for them to comment.

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