DALLAS, April 9, 2018 /PRNewswire/ --
Transaction Highlights:
- Transaction values Remington Project Management at a
trailing 12-month EBITDA multiple of 12.5x
- Consideration in the form of convertible preferred stock
convertible at $140 per share, a
premium of 45% to the current market price of Ashford common
stock
- Transaction is expected to be immediately accretive to
adjusted net income per share
- Increases breadth of services provided to managed
REITs
- Transaction rapidly builds operating scale and increases
earnings potential
- High margin, low-capex business model
Ashford Inc. (NYSE American: AINC) (the "Company") today
announced that it has signed a definitive agreement to acquire the
Project Management business of privately-held Remington Holdings,
L.P. ("Remington"). The transaction, which is expected to close
during the third quarter of 2018, is subject to approval by the
Company's stockholders and customary closing conditions.
"The proposed acquisition of Remington's high-margin project
management business will immediately add scale, diversification and
an enhanced competitive position in the hospitality industry while
also expanding the breadth of services we offer to our managed
REITs," commented Monty J. Bennett,
Ashford's Chairman and Chief Executive Officer. "With deep industry
experience and long-term contracts in place, we believe this
transaction represents a compelling opportunity for Ashford to
diversify its earnings stream and, moving forward, the potential to
expand business to other third-party clients."
Remington's Project Management provides comprehensive and
cost-effective design, development, and project management services
for both Remington managed hotels as well as external partners. It
provides project oversight, coordination, planning, and execution
of renovation, capital expenditure or ground-up development
projects. Its operations are responsible for managing and
implementing substantially all capital improvements at Ashford
Hospitality Trust, Inc. (NYSE: AHT) and Ashford Hospitality Prime,
Inc. (NYSE: AHP). Additionally, it has extensive experience working
with many of the major hotel brands in areas of renovating,
converting, developing or repositioning hotels. In 2017, Remington
Project Management had revenues of approximately $29.0 million and adjusted EBITDA of
approximately $16.3 million.
Under the terms of the agreement, the Company will acquire
Remington's Project Management business for a total transaction
value of $203 million. The purchase
price will be paid by issuing voting, convertible preferred stock
to the sellers. The newly created convertible preferred stock will
have a conversion price of $140 per
share (a 45% premium to the current trading level) and, if
converted immediately after the consummation of the transaction,
would convert into 1,450,000 shares of common stock. Dividends on
the convertible preferred stock are payable at an annual rate of
5.5% in the first year, 6.0% in the second year, and 6.5% in the
third year and each year thereafter. Voting rights of the
convertible preferred stock will be on an as-converted basis and
the holders of the convertible preferred stock will have a voting
limit of 25% of the Company's voting securities for five years.
Upon closing of the transaction, the sellers will have the right to
nominate two directors to the Company's Board of Directors. The
transaction does not require a private letter ruling from the
Internal Revenue Service.
Remington is currently owned by Monty J.
Bennett and Archie Bennett,
Jr., the Company's Chairman and Chief Executive Officer and
his father. The Company's Board of Directors, therefore, formed a
special committee of independent and disinterested directors to
analyze and negotiate the transaction on behalf of the Company and
deliver a recommendation to the Company's Board of Directors with
respect to the transaction.
The Company's special committee was advised by Janney Montgomery
Scott LLC as financial advisor, and Norton Rose Fulbright US LLP
acted as its legal advisor. Robert W. Baird & Co., Inc. acted
as Remington's financial advisor, and Baker Botts L.L.P. acted as
Remington's legal advisor.
Upon the unanimous recommendation of the special committee, the
independent and disinterested members of the Company's Board of
Directors unanimously approved the transaction and recommended its
approval by the Company's stockholders.
Ashford provides global asset management, investment management
and related services to the real estate and hospitality
sectors.
Follow Chairman and CEO Monty
Bennett on Twitter at www.twitter.com/MBennettAshford or
@MBennettAshford.
Ashford has created an Ashford App for the hospitality REIT
investor community. The Ashford App is available for free download
at Apple's App Store and the Google
Play Store by searching "Ashford."
Ashford
Inc.
|
Remington Project
Management Business
|
Reconciliation of
Net Operating Income to EBITDA to Net Income
|
(Unaudited)
|
|
|
12
Months
|
|
Ended December
31,
|
|
2017
|
Net Operating
Income[1]
|
$
|
16,276,710
|
|
|
|
Adjustment:
|
|
|
Gain on distribution of
restricted investment[1]
|
$
|
20,402
|
Dividend
income[1]
|
$
|
8,569
|
Other[1]
|
$
|
269
|
|
|
|
EBITDA
|
$
|
16,305,950
|
|
|
|
Adjustment:
|
|
|
Income Tax[1]
|
$
|
(90,164)
|
|
|
|
Net Income[1]
|
$
|
16,215,786
|
|
(1) Obtained
from audited operating financial data for the full year of
2017.
|
In connection with the transaction, the Company will file
with the Securities and Exchange Commission a registration
statement on Form S-4 containing a proxy/prospectus. Additionally,
the Company files annual, quarterly and current reports, proxy and
information statements and other information with the Securities
and Exchange Commission. INVESTORS AND SECURITY HOLDERS OF THE
COMPANY ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS
OR SUPPLEMENTS THERETO AND DOCUMENTS INCORPORATED BY REFERENCE
THEREIN) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE
TRANSACTION THAT THE COMPANY WILL FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE
TRANSACTION. The proxy/prospectus and other relevant materials in
connection with the transaction (when they become available), and
any other documents filed by the Company with the Securities and
Exchange Commission, may be obtained free of charge at the
Securities and Exchange Commission's website at www.sec.gov. In
addition, investors and security holders may obtain free copies of
the documents filed with the Securities and Exchange Commission at
the Company's website, www.ashfordinc.com, under the "Investors"
link, or by requesting them in writing or by telephone from us at
14185 Dallas Parkway, Suite 1100, Dallas,
Texas 75254, Attn: Investor Relations or (972)
490-9600.
The Company, Remington and certain of their respective
directors and officers may, under the rules of the Securities and
Exchange Commission, be deemed to be "participants" in the
solicitation of proxies from its stockholders that will occur in
connection with the transaction. Information concerning the
interests of the directors and officers of the Company who may be
considered "participants" in the solicitation is or will be set
forth in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission, as amended, and will be set
forth in the proxy statement relating to the transaction when the
proxy statement becomes available. Information concerning the
directors and officers of Remington who may be considered
"participants" in the solicitation will be set forth in the Form
S-4. Copies of these documents can be obtained, without charge, at
the Securities and Exchange Commission's website at www.sec.gov, by
directing a request to the Company at the address above, or at
www.ashfordinc.com.
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. These forward-looking
statements are subject to risks and uncertainties. When we use the
words "will likely result," "may," "can," "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 the Company'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: the occurrence of any event, change or other
circumstances that could give rise to the termination of the
transaction; the failure to satisfy conditions to completion of the
transaction, including receipt of regulatory approvals and
stockholder approval; changes in the business or operating
prospects of Remington's Project Management business; adverse
litigation or regulatory developments; our success in implementing
our business development plans of integrating the Company's and
Remington's Project Management business and realizing the expected
benefits of the transaction; general volatility of the capital
markets and the market price of our common stock; changes in our
business or investment strategy; availability, terms and deployment
of capital; availability of qualified personnel; changes in our
industry and the market 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. Investors
should not place undue reliance on these forward-looking
statements. 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.
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SOURCE Ashford Inc.