IRVING, Texas, Feb. 24, 2017 /PRNewswire/ -- FelCor Lodging
Trust Incorporated (NYSE: FCH) today offered clarification on the
unsolicited, non-binding and conditional proposal to combine its
business with Ashford Hospitality Trust (NYSE: AHT).
AHT's February 21, 2017 proposal
follows several months of discussions between FelCor and AHT,
during which FelCor repeatedly expressed numerous concerns
regarding the value and structure of AHT's various proposals.
Notable concerns include:
- Dilution to AHT Shareholders. The proposed
offer would dilute AHT's Funds From Operations (FFO) by more than
30% (based on current consensus estimates for 2017 and not
including any incremental costs or synergies), thereby affecting
both the value of AHT's all-stock, fixed exchange ratio proposal
and creating uncertainty around the ability to obtain the
shareholder approval required from both AHT and FelCor
shareholders.
- External Management Fees Negate Synergies.
AHT's proposal for a one-year guarantee of $18 million in cost and operating synergies would
be more than offset by external management fees to its external
advisor, Ashford Inc., in excess of $25
million. Further, AHT has only offered to guarantee
synergies for the first year, whereas these external management
fees will be paid every year. Moreover, transferring hotel
management to its affiliate, Remington Hotels, would further
increase the fees paid to Ashford Inc. after it completes its
pending acquisition of Remington.
- Value Transfer to External Manager. A
potential combination would result in a significant value transfer
to Ashford Inc. in the form of future external management fees and
property management fees, for which neither FelCor nor AHT
shareholders would be compensated. Under its external
management contract, AHT paid Ashford Inc. over $46 million in fees during the twelve-month
period ending September 30,
2016. Bringing FelCor assets under that same external
management contract would increase those fees, at a minimum, by
more than $25 million annually.
Tellingly, the shares that have benefitted the most to date since
AHT made its offer public have been the shares of Ashford Inc., not
FelCor or AHT.
- Extremely High Leverage. A
combination of AHT and FelCor would result in a new company with
leverage of approximately 8.5x EBITDA, or approximately 1.5x higher
than FelCor on a standalone basis, including preferred
shares. This increase in leverage is contrary to FelCor's
stated strategy, which most long-term REIT investors, including
many FelCor investors, support.
- Disproportionate Governance. AHT's offer of
three FelCor-designated seats on the AHT board is not commensurate
with FelCor's 58% pro forma combined company ownership,
particularly given that the proposal would leave FelCor's
shareholders as shareholders in an externally-managed REIT with a
manager that is not accountable to FelCor's shareholders.
The items referenced above are neither a complete list of
concerns expressed to AHT nor should they be taken as FelCor's
response to AHT's proposal. As previously announced on
February 21, 2017, together with its
financial and legal advisors, FelCor's Board of Directors is
reviewing AHT's latest proposal and its proposed board nominees,
and will respond in detail in due course. FelCor's
shareholders are advised to take no action at this time.
BofA Merrill Lynch is acting as financial advisor to the Company
and Sidley Austin LLP, Polsinelli PC and Jones Day are providing legal advice to the
Company.
About FelCor
FelCor, a real estate investment trust, owns a diversified
portfolio of primarily upper-upscale and luxury hotels that are
located in major and resort markets throughout the U.S. FelCor
partners with top hotel companies to operate its properties under
globally renowned names and as premier independent hotels.
Additional information can be found on the company's website at
www.felcor.com.
Forward-Looking Statements
With the exception of historical information, the matters
discussed in this news release include "forward-looking statements"
within the meaning of the federal securities laws. These
forward-looking statements are identified by their use of terms and
phrases such as "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "plan," "predict," "project," "should,"
"will," "continue" and other similar terms and phrases, including
references to assumptions and forecasts of future results.
Forward-looking statements are not guarantees of future
performance. Numerous risks and uncertainties, and the occurrence
of future events, may cause actual results to differ materially
from those anticipated at the time the forward-looking statements
are made. Current economic circumstances or an economic slowdown
and the impact on the lodging industry, operating risks associated
with the hotel business, relationships with our property managers,
risks associated with our level of indebtedness and our ability to
meet debt covenants in our debt agreements, our ability to complete
acquisitions, dispositions and debt refinancing, the availability
of capital, the impact on the travel industry from security
precautions, our ability to continue to qualify as a Real Estate
Investment Trust for federal income tax purposes and numerous other
factors may affect future results, performance and achievements.
Certain of these risks and uncertainties are described in greater
detail in our filings with the Securities and Exchange Commission.
Although we believe our current expectations to be based upon
reasonable assumptions, we can give no assurance that our
expectations will be attained or that actual results will not
differ materially. We undertake no obligation to update any
forward-looking statement to conform the statement to actual
results or changes in our expectations.
Additional Information and Where to Find It
This release may be deemed to be solicitation material in
connection with the matters to be considered at the 2017 annual
meeting (the "2017 Annual Meeting") of shareholders of
FelCor. FelCor intends to file a proxy statement and a WHITE
proxy card with the SEC in connection with any such solicitation of
proxies from FelCor shareholders. FELCOR SHAREHOLDERS ARE STRONGLY
ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO) WHEN THEY BECOME AVAILABLE,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders
will be able to obtain any proxy statement, any amendments or
supplements thereto and other documents filed by FelCor with the
SEC for no charge at the SEC's website at www.sec.gov. Copies will
also be available at no charge at FelCor's website at
www.felcor.com or by writing to FelCor at 125 East John Carpenter
Freeway, Suite 1600, Irving, Texas
75062, Attn: Investor Relations.
Participants in the Solicitation
FelCor and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from FelCor's
shareholders in connection with the matters to be considered at the
2017 Annual Meeting. Investors may obtain information regarding
FelCor and its directors and executive officers in FelCor's Annual
Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC
on February 26, 2016, and FelCor's
definitive proxy statement for its 2016 annual meeting of
shareholders (the "2016 Annual Meeting"), which was filed with the
SEC on April 14, 2016. To the
extent holdings of FelCor securities by FelCor's directors or
executive officers have changed since the amounts disclosed in the
definitive proxy statement for the 2016 Annual Meeting, such
changes have been or will be reflected on Initial Statements of
Beneficial Ownership on Form 3 and Statements of Change in
Beneficial Ownership on Form 4 filed with the SEC. More
detailed information regarding the identity of potential
participants in the solicitation, and their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the proxy statement and other materials to be filed with the SEC in
connection with the 2017 Annual Meeting.
CONTACTS:
Investors
Michael
Hughes/Abi Salami
FelCor Lodging Trust Incorporated
(972) 444-4900
Or
Tom Germinario
D.F. King & Co., Inc.
(212) 269-5550
Media
Hugh
Burns/Robin
Weinberg/Emily Claffey
Sard Verbinnen & Co
(212) 687-8080
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SOURCE FelCor Lodging Trust Incorporated