Pegasus hangs up a for-sale sign

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DALLAS -- Pegasus Solutions, which provides a hotel commission settlement service for agents and reservations services for hotels, told the investment community that it was looking at merger possibilities or other strategies to enhance shareholder value.

In the same statement, it lowered its projected revenue and earnings forecast for the first quarter, citing the conversion from monthly to weekly commission processing. It said the change affects how and when the income is accounted for.

On the first point, Pegasus said it retained Bear Stearns & Co. as its financial advisor as the company explores any of the following alternatives: joint ventures, divestitures, strategic alliances, taking the company private, selling the business or merging.

A spokesperson advised the time frame for this effort would be a matter of months.

Regarding the effects of the new weekly commission-processing cycle, Pegasus revised its first-quarter revenue projections from $45 million to $47 million to $43 million to $44 million.

A spokesperson explained that accounting rules require the company to recognize its revenue in different ways, so that the companys statements will take a short-term hit when returns will be seen to have dropped. However, she said given that the same amount of money is being moved from hotels to Pegasus and to agents, the company will come out even in the end.

Hotel groups participating in the new weekly cycle include Adams Mark, Hilton, Jurys Doyle, Marriott, Omni, Rosewood, Thistle and Utell.

Separately, the company said another factor in the lowered projections is lower-than-expected revenue from the companys reservations and financial services.

A spokesman said Pegasus expects to be collecting lower fees because the competition is fierce.

To contact the reporter who wrote this article, send e-mail to Nadine Godwin at [email protected].

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