Ashford, a Dallas-based hospitality real estate company, said dark clouds are gathering.
The Company's Board of Directors has approved a plan to deregister its common stock and delist its shares from the New York Stock Exchange following the proposed reverse stock split transaction.
The company is led by dallas express Publisher Monty Bennett is taking these steps to avoid the costs of being a publicly traded company and focus Ashford's resources on increasing long-term shareholder value, according to a news release.
The company's directors and executives own nearly 40% of Ashford's stock.
Ashford expects the proposed deal, if completed, to save the company more than $2.5 million annually. The company expects the plan to take effect this summer.
According to Ashford's fiscal 2023 financial results, Ashford lost $40.8 million ($13.69 per share) last year, but had total sales of nearly $340 million, a 20% year-over-year growth rate. .
Ashford Hospitality Trust began handing over some of its hotels to lenders in December after the company defaulted on mortgage payments on 19 of its hotels.
The default hotel portfolio includes two hotels in North Texas (Courtyard Plano Legacy Park and Residence Inn Plano) and other hotels in cities such as Las Vegas and Atlanta.
Ashford's proposed reverse stock split would be 1 in 10,000 shares, followed by a forward stock split. This is a sequencing strategy that companies use to eliminate shareholders with fewer than a outlined number of shares.
Holders of less than 10,000 Ashford shares prior to the reverse stock split will be cashed out at $5 per share. This price represents a 125% premium to the stock's closing price on April 1st.
Ashford expects more than 1 million shares, nearly a third of its common stock, to be converted into cash. Including transaction costs, the transaction will cost the company more than $12 million. According to Ashford's fourth-quarter results, the company had more than $30 million in corporate cash as of Dec. 31.
After the consolidation, shareholders who own 10,000 or more shares of the Company's common stock will have their shares subject to a 10,000-to-1 forward split.
The goal of Ashford's stock split strategy is to reduce the number of shareholders to less than 300, eliminate SEC reporting requirements and provide liquidity to smaller shareholders without brokerage fees, the statement said.
If things go according to Ashford's wishes, the company will be deregistered with the SEC and delisted from the NYSE after the reverse stock split is approved at a shareholder meeting this summer.
