A Seattle-based investment company that has amassed nearly 13 percent of the stock in Spokane-based Red Lion Hotels Corp. has sent a letter to Red Lion's board asserting that the hospitality company's growth strategy is flawed and that its assets should be liquidated to provide the best return to shareholders.

"We believe (Red Lion) should not be an independent company," wrote the investment concern, Columbia Pacific Opportunity Fund LP.

Columbia Pacific is Red Lion's single largest shareholder, owning more than 2.3 million shares, or 12.8 percent of all outstanding shares. It made news a year ago when its ownership in Red Lion exceeded 10 percent, and a few months later when it filed a disclosure saying it had a preliminary interest in acquiring the Spokane company. Red Lion said last fall that Columbia Pacific had withdrawn that interest.

The Seattle company's letter to Red Lion's directors, dated Feb. 10, was in response to Red Lion's decision to adopt a shareholder rights plan, sometimes known as a poison pill, which makes it more difficult for an unwelcome suitor to try to acquire a company. The plan, which Red Lion adopted in January, would give current shareholders the right to one extra share of Red Lion for every share they own if someone buys more than 20 percent of the company.

"The plan is designed to deter opportunistic tactics that could deprive the company's stockholders from realizing full and fair value on their investment ," Red Lion said at the time. It added that the move was especially important because the company's shares were trading at a historic low, about $2.40 a share.

Red Lion's stock currently is trading at about $2.75, having rebounded from a low of $1.49. Its 52-week high is $9.82.

In its letter, Columbia Pacific said it has always felt that Red Lion's assets were undervalued, but that the company's market capitalization (share price times the number of shares outstanding) is too small to justify it being a public company, and that it lacks the operating scale and capital base to fulfill its "current flawed growth strategy."

"The company's current growth strategy focuses on acquiring and expanding the Red Lion brand with three to four-diamond hotel properties. We do not believe the company has the expertise or capital to successfully execute this strategy," Columbia Pacific wrote.

It added, "The company's assets are now more undervalued than ever, and we believe that even in a depressed marketplace, the liquidation value of the company is well in excess of the current market capitalization. Our recommendation is for the board to immediately remove the shareholder rights plan and begin the process of liquidation or sale of the company to return value to shareholders in the timeliest manner possible."

Reached last week, Red Lion President and CEO Anupam Narayan said, "Our board welcomes input and comments from all shareholders and is focused on maximizing shareholder value."

Red Lion Hotels Corp., formerly known as WestCoast Hospitality Corp., operates a hotel network of nearly 50 properties in nine states in the western U.S., as well as the TicketsWest events ticket distribution service.