DALLAS, April 1,
2024 /PRNewswire/ -- Ashford Inc. (NYSE American:
AINC) ("Ashford" or the "Company") today announced that a Special
Committee of independent and disinterested directors has
recommended, and its Board of Directors has approved, a plan to
terminate the registration of the Company's common stock under the
federal securities laws following the completion of a proposed
reverse stock split transaction (the "Reverse Stock Split")
immediately followed by a forward stock split transaction and to
delist its shares of common stock from trading on the NYSE American
LLC (the "NYSE American") (the "Proposed Transaction"). It is
expected that this plan would be initiated in the summer of 2024,
subject to Ashford's stockholders approving the Proposed
Transaction at a Special Meeting of Stockholders to be held for
that purpose, as described below.
Ashford is taking these steps to avoid the substantial cost and
expense of being a public reporting company and to focus the
Company's resources on enhancing long-term stockholder value. The
Company anticipates savings exceeding $2,500,000 on an annual basis as a result of the
Proposed Transaction.
The proposed reverse stock split is a 1-for-10,000 split, in
which holders of less than 10,000 shares of the Company's common
stock in any one account immediately prior to the reverse stock
split would be cashed out at a price of $5.00 per each pre reverse stock split share.
Such price represents a 125.2% premium above the common stock's
closing price on April 1, 2024 and is
supported by a fairness opinion provided by Oppenheimer and Co.
Inc. ("Oppenheimer"), whom the Special Committee engaged for such
purpose. Stockholders owning 10,000 or more shares of the Company's
common stock in any one account immediately prior to the reverse
stock split would not have any shares cashed out and would remain
stockholders in Ashford, which would no longer be encumbered by the
expenses and distraction of being a public reporting company. The
number of shares they would own following the Proposed Transaction
would be unchanged, as immediately after the reverse stock split, a
forward split of 10,000-for-1 would be applied to the continuing
stockholders, negating any effects to the number of shares held by
them. Ashford estimates that approximately 1.1 million shares
(representing approximately 31% of the shares of common stock
currently outstanding) would be cashed out in the Proposed
Transaction and the aggregate cost to the Company of the Proposed
Transaction would be approximately $5.5
million, plus transaction expenses, which are estimated to
be approximately $6.7 million.
Ashford intends to fund such costs using cash-on-hand.
Ashford's Special Committee and its Board of Directors have
determined that the costs of being a U.S. Securities and Exchange
Commission ("SEC") reporting company outweigh the benefits and,
thus, it is no longer in the best interests of the Company and its
stockholders, including its unaffiliated stockholders (consisting
of stockholders other than executive officers, directors and
stockholders who own more than 10% of the Company's outstanding
common stock) for Ashford to remain an SEC reporting company.
Without its public company status, Ashford would have an ongoing
cost structure befitting its current and foreseeable scale of
operations, and its management would be able to focus on long-term
growth without an undue emphasis on short-term financial results.
The purpose of the reverse stock split is to (i) help Ashford
reduce and maintain below 300 record holders of its common stock,
which is the level at which SEC public reporting obligations are
required, (ii) offer liquidity to smaller stockholders at
$5.00 per share without a brokerage
commission, and (iii) provide all stockholders the opportunity to
vote on this matter. Among the factors considered by Ashford's
Board of Directors were:
- the significant ongoing costs and management time and effort
involved in the Company remaining a public company, including the
preparation and filing of periodic and other reports with the SEC
and compliance with Sarbanes-Oxley Act and other applicable
requirements;
- the limited trading volume and liquidity of the Company's
common stock;
- the business and operations of the Company are expected to
continue substantially as presently conducted, except without the
burden of public company costs;
- enabling the Company's stockholders with the smallest holdings,
who represent a large number of the record holders of Company's
common stock, to liquidate their holdings in the Company's common
stock and receive a premium over current market prices without
incurring brokerage commissions;
- the determination of Oppenheimer, independent fairness opinion
provider to the Special Committee, that the Proposed Transaction
consideration for the fractional shares is fair from a financial
point of view to the unaffiliated stockholders; and
- as a result of the deregistration and delisting, the ability of
the Company's management and employees to focus their time, effort
and resources on the Company's long-term growth and increasing
long-term stockholder value.
Subject to regulatory clearance of the Company's proxy statement
to be filed relating to the Proposed Transaction and stockholder
approval thereof, it is anticipated that the Company would initiate
its plan to terminate the registration of its common stock shortly
after the Special Meeting of Stockholders, which is expected to be
held in the summer of 2024. Approval of the Reverse Stock Split
requires a majority vote cast of the Company's common stock (taking
into account the Company's Series D Convertible Preferred Stock on
an as-converted basis) at the Special Meeting. (A "majority vote"
means that more votes have been cast for a proposal than against
it, and abstentions and broker non-votes, if any, will not be
considered as votes cast.)
A "Rule 13e-3 transaction" is any transaction or series of
transactions (involving a securities purchase, tender offer, or
specified proxy solicitation) by an issuer or an affiliate of the
issuer, which has a reasonable likelihood or purpose of directly or
indirectly (i) causing any registered class of equity securities to
be eligible for termination of registration, or eligible for
termination or suspension of reporting obligations; or (ii) causing
any listed class of equity securities to cease to be listed on a
national securities exchange. Because the Proposed Transaction
constitutes a Rule 13e-3 transaction, stockholders will be asked to
consider and vote upon a proposal to approve a waiver of the
prohibition on Rule 13e-3 transactions contained in Section 3.03 of
a certain Investor Rights Agreement entered into as of November 6, 2019 by and among the Company,
Archie Bennett, Jr., Monty J. Bennett and certain other parties. As
of March 25, 2024, the Company's
directors and executive officers owned approximately 37.9% of the
issued and outstanding shares of the Company's common stock
(including the Series D Convertible Preferred Stock on an
as-converted basis and the associated accrued and unpaid dividends)
and are expected to vote "FOR" the Proposed Transaction.
After the Special Meeting, the Company expects to terminate the
registration of its common stock with the SEC and delist its common
stock from the NYSE American. As a result, subject to applicable
waiting periods for deregistration under the federal securities
laws, (i) the Company will cease to file annual, quarterly, current
and other reports and documents with the SEC, and stockholders will
cease to receive annual reports and proxy statements, and (ii) the
Company's common stock will no longer be listed on the NYSE
American.
If consummated, the Proposed Transaction would apply directly to
record holders of the Company's common stock. Persons who hold
shares of common stock in "street name" are encouraged to contact
their bank, broker or other nominee for information on how the
Proposed Transaction may affect any shares of the Company's common
stock held for their account. If you hold in "street name" fewer
than 10,000 shares in any one account, the Proposed Transaction may
apply indirectly to your shares as described in the proxy statement
to be filed in connection with this Proposed Transaction.
The Board reserves the right to change the ratios of the reverse
stock split and forward stock split to the extent it believes it is
necessary or desirable in order to accomplish the Company's goal of
reducing and maintaining below 300 record holders. The Board may
also abandon the Proposed Transaction at any time prior to the
completion of the Proposed Transaction if it believes the Proposed
Transaction is no longer in the best interests of the Company and
its stockholders.
Additional Information and Where to Find
It
THIS PRESS RELEASE IS ONLY A BRIEF DESCRIPTION OF THE
PROPOSED TRANSACTION. IT IS NOT A REQUEST FOR OR SOLICITATION OF A
PROXY OR AN OFFER TO ACQUIRE OR SELL ANY SHARES OF COMMON STOCK.
THE COMPANY INTENDS TO FILE A PROXY STATEMENT AND OTHER REQUIRED
MATERIALS, INCLUDING A SCHEDULE 13E-3, WITH THE SEC CONCERNING THE
PROPOSED TRANSACTION. A COPY OF ALL FINAL PROXY MATERIALS WILL BE
SENT TO STOCKHOLDERS PRIOR TO A SPECIAL MEETING OF STOCKHOLDERS AT
WHICH THE COMPANY'S STOCKHOLDERS WILL BE ASKED TO VOTE ON THE
PROPOSALS DESCRIBED IN THE MATERIALS PROVIDED BY THE COMPANY. THE
COMPANY URGES ALL STOCKHOLDERS TO READ THE PROXY STATEMENT WHEN IT
BECOMES AVAILABLE, AS WELL AS ALL OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, BECAUSE THOSE DOCUMENTS WILL INCLUDE IMPORTANT
INFORMATION. A FREE COPY OF ALL MATERIALS THE COMPANY FILES WITH
THE SEC, INCLUDING THE COMPANY'S SCHEDULE 13E-3 AND PROXY
STATEMENT, WILL BE AVAILABLE AT NO COST ON THE SEC'S WEBSITE AT
WWW.SEC.GOV. WHEN THOSE DOCUMENTS BECOME AVAILABLE, THE PROXY
STATEMENT AND OTHER DOCUMENTS FILED BY THE COMPANY MAY ALSO BE
OBTAINED WITHOUT CHARGE BY DIRECTING A REQUEST TO ASHFORD INC.,
14185 DALLAS PARKWAY, SUITE 1200, DALLAS,
TEXAS 75254, ATTENTION: SECRETARY.
The Company and its directors and executive officers may be
deemed to be participants in the solicitation of proxies in
connection with the Proposed Transaction. Information concerning
such participants will be set forth in the proxy statement to be
filed by the Company in connection with the special meeting of
stockholders to vote on the Proposed Transaction. To the extent
that holdings of the Company's securities by the Company's
directors and executive officers have changed since the amounts to
be printed in the Company's proxy statement, such changes will be
reflected on Statements of Change in Ownership on Form 4 filed with
the SEC. Additional information regarding the interests of such
participants in the solicitation of proxies in connection with the
Proposed Transaction will be included in the proxy statement to be
filed by the Company with the SEC in connection with the Proposed
Transaction.
The Company's Chief Executive Officer and Chairman of the Board,
Monty J. Bennett, and other members
of senior management of the Company may purchase or sell shares of
common stock of the Company in the open market following the public
announcement of the Proposed Transaction. Any such purchases
or sales will be reported on Form 4 and Schedule 13D as required by
law. These purchases and sales may increase or decrease the
price of the Company's common stock.
Forward Looking Statements
Certain
statements and assumptions in this press release contain or are
based upon "forward-looking" information and are being made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements in this
press release include, among others, statements about the Company's
strategy and future plans. These forward-looking statements are
subject to risks and uncertainties. When we use the words "will
likely result," "may," "anticipate," "estimate," "should,"
"expect," "believe," "intend," or similar expressions, we intend to
identify forward-looking statements. Such statements are subject to
numerous assumptions and uncertainties, many of which are outside
Ashford Inc.'s control.
These forward-looking statements are subject to known and
unknown risks and uncertainties, which could cause actual results
to differ materially from those anticipated, including, without
limitation: our ability to maintain compliance with NYSE American
LLC continued listing standards; our ability to consummate the
Proposed Transaction on the terms described herein, if at all; Form
S-3 eligibility; our ability to repay, refinance or restructure our
debt and the debt of certain of our subsidiaries; anticipated or
expected purchases or sales of assets; our projected operating
results; completion of any pending transactions; our understanding
of our competition; market trends; projected capital expenditures;
the impact of technology on our operations and business; general
volatility of the capital markets and the market price of our
common stock; availability, terms and deployment of capital;
availability of qualified personnel; changes in our industry and
the markets in which we operate, interest rates or the general
economy; and the degree and nature of our competition. These and
other risk factors are more fully discussed in the Company's
filings with the Securities and Exchange Commission.
The forward-looking statements included in this press release
are only made as of the date of this press release. Such
forward-looking statements are based on our beliefs, assumptions,
and expectations of our future performance taking into account all
information currently known to us. These beliefs, assumptions, and
expectations can change as a result of many potential events or
factors, not all of which are known to us. If a change occurs, our
business, financial condition, liquidity, results of operations,
plans, and other objectives may vary materially from those
expressed in our forward-looking statements. You should carefully
consider this risk when you make an investment decision concerning
our securities. Investors should not place undue reliance on these
forward-looking statements. The Company can give no assurance that
these forward-looking statements will be attained or that any
deviation will not occur. We are not obligated to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or circumstances, changes in
expectations, or otherwise, except to the extent required by
law.
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SOURCE Ashford Inc.