DALLAS, April 25, 2017 /PRNewswire/ -- Ashford
Hospitality Trust (NYSE: AHT) ("Ashford Trust" or "We") today
responded to the announcement that the Board of Directors of FelCor
Lodging Trust Incorporated (NYSE: FCH) ("FelCor") had entered into
a merger agreement with RLJ Lodging Trust (NYSE: RLJ) providing for
all-stock consideration for FelCor stockholders valued at
$8.01 per share based on the
April 24, 2017 closing share price of
$22.12 per share. Ashford Trust
announced that it had submitted a revised offer to FelCor's Board
of Directors on April 20, 2017,
comprised of 50% cash consideration and valued at $8.22 per share based on the April 24, 2017 closing share price of AHT of
$6.43 per share. Despite the
acceptance of RLJ's all-stock offer, FelCor pushed hard for a cash
offer from Ashford Trust.
Ashford Trust believes its offer would have been more attractive
to shareholders than the RLJ offer as it included 50% cash, would
have provided a more certain path to future value creation through
guaranteed synergies and operational enhancements and offered a
higher dividend yield on the stock component of the bid. Ashford
Trust is disappointed that the FelCor Board of Directors decided
not to meaningfully engage on the recently revised offer.
A copy of the letter delivered to FelCor's Board of Directors on
April 20, 2017 is included below:
April 20, 2017
The Board of Directors: Mr. Christopher
J. Hartung, Mr. Glenn A.
Carlin, Mr. Thomas J. Corcoran,
Jr., Mr. Robert F. Cotter,
Ms. Patricia L. Gibson, Mr.
Steven R. Goldman, Ms. Dana Hamilton, Mr. Charles A. Ledsinger, Mr. Robert H. Lutz, Jr. and Mr. Mark D. Rozells
FelCor Lodging Trust Incorporated
125 E. John Carpenter Freeway, Suite 1600
Irving, Texas 75062
Dear Members of the Board:
We remain committed to combining Ashford Hospitality Trust, Inc.
("Ashford Trust", "AHT" or "We") and FelCor Lodging Trust
Incorporated ("FelCor") to create a leading lodging REIT for our
collective shareholders. After receiving your feedback that
our initial all-stock proposal needed to include a cash component,
we analyzed numerous structures and submitted a revised proposal
that included cash consideration in a letter to you dated
March 25, 2017. Since then you
have indicated that FelCor would like additional value, cash as
well as certainty. To that end, we have continued to work
alongside our investment banking and legal advisors to refine our
analysis and the structure of our bid in order to be responsive to
these requests and are pleased to provide you the following
enhanced proposal.
Proposal
Our updated proposal includes a total
consideration of $8.25 per each
FelCor share, based on a closing price of AHT as of April 20, 2017 and comprised of the following per
share amounts:
- $4.13 per share in cash;
- 0.608 shares of Ashford Trust;
- 0.003 shares of Ashford Inc. ("AINC"); and
- 0.001 warrants to purchase AINC shares with a strike price of
$100 per share and an expiration date
that is five years from the transaction closing date
This represents a transaction with merger consideration that is
comprised of 50% cash compared to 21% in the prior proposal.
It also reflects an increase to the exchange ratio of 4%. We
are confident that your shareholders will find our enhanced
proposal attractive. Our proposal provides a significant and
immediate premium to the current FelCor share price, value
certainty, and the substantial future upside in our combined
company.
Our proposal represents premiums to FelCor's share price as
follows (based on the noted assumed prices for Ashford Trust, AINC
and FelCor stock):
- Based on AHT and AINC unaffected stock prices as of
February 17, 2017, a substantial 24%
premium to the unaffected closing price of FelCor's stock on
February 17, 2017; and
- Based on AHT's and AINC's 5-trading day volume weighted average
prices as of April 20, 2017, an 11%
premium to the closing price of FelCor's stock on April 20, 2017, which we believe already reflects
a takeover premium.
All other terms in our previous proposal including the synergy
guaranty and governance enhancements remain the same, namely:
- AINC reaffirms its belief that there are approximately
$18 million or more of operational
and G&A synergies and is willing to provide a one (1) year
guarantee of up to $18 million
commencing six (6) months following the completion of the
transaction with the actual payment of this guarantee, if needed,
coming in the form of reduced advisory fees paid to AINC;
- We will adopt proxy access and are willing to work with you to
provide other refinements to governance to be announced in
conjunction with the shareholder vote to approve the
combination;
- Three (3) FelCor directors will have the opportunity to join
the board of AHT, and AINC has indicated that one (1) FelCor
director will have the opportunity to join the board of AINC;
- As announced, we separated AHT's Chairman and CEO roles;
and
- We will seek to negotiate and amend the advisory agreement
between AHT and AINC within one year of combining our companies to
reflect similar recent amendments made between Ashford Hospitality
Prime and AINC, where applicable, with any such amendment subject
to approval by independent committees of both AHT and AINC
Boards.
Financing and Sources and Uses
We are sourcing cash in
the transaction by incurring approximately $1.8 billion in new CMBS on FelCor's properties
and utilizing $223 million from the
Ashford Trust and FelCor balance sheets. We now expect to
refinance FelCor's outstanding bonds in connection with the closing
of the transaction. As you are well aware, in order to refinance
FelCor's outstanding bonds we will be required to pay the
"make-whole" which will result in a substantial additional
cost. We believe the FelCor Board should consider this outlay
by us – which is necessary to be responsive to your request for
more cash – in evaluating the value of our bid. Our definitive
agreement will not be subject to a financing contingency and, as
you know, we have been working with UBS Investment Bank to obtain
committed financing to refinance the existing bonds and fund a
portion of the merger consideration.
The table below highlights indicative sources and uses
contemplated in our proposal.
Sources
|
($mm)
|
|
Uses
|
($mm)
|
AHT Equity
|
523
|
|
Purchase of FelCor
Equity
|
1,145
|
New CMBS
|
1,842
|
|
Illustrative Fees
& Expenses
|
131
|
AHT-FCH Excess
Balance Sheet
Cash
|
223
|
|
Paydown FelCor
Revolving Credit
Facility
|
119
|
AINC
Consideration
|
24
|
|
Other FelCor Debt
Refinanced
(including "make-whole" premium)
|
1,268
|
AHT Current Ownership
of
FelCor
|
51
|
|
Total
|
$2,663
|
|
Total
|
$2,663
|
Our proposal contained in this letter is preliminary and
non-binding, and does not create any legally enforceable obligation
of AHT, AINC or FelCor unless and until a definitive agreement is
signed, which would contain customary terms and conditions.
Any final proposal is subject to the completion of a due diligence
review, the final approval of our respective Boards and the
negotiation and execution of mutually acceptable definitive
transaction agreements.
We remain convinced of the strategic benefits of this
transaction and strongly believe that a combination is in the best
interests of both Ashford Trust's and FelCor's shareholders.
We believe our proposal provides FelCor shareholders both immediate
value and the opportunity to participate meaningfully in the future
value creation of a leading lodging REIT. We are prepared to
move quickly and look forward to your prompt reply.
Sincerely,
Douglas A. Kessler
Chief Executive Officer
Ashford Hospitality Trust, Inc.
Cc: Mr. Jonathan H. Yellen
EVP, General Counsel
Ashford Hospitality Trust is a real estate investment trust
(REIT) focused on investing opportunistically in the hospitality
industry in upper upscale, full-service hotels.
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."
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. 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 Hospitality Trust, Inc.'s ("Ashford Trust")
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: 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 Ashford Trust's
filings with the Securities and Exchange Commission. In
addition, material risks that could cause actual results to differ
from forward-looking statements include: the inherent uncertainty
associated with financial or other projections; the ability to
successfully integrate Ashford Trust and FelCor Lodging Trust
Incorporated ("FelCor"); and the ability to recognize the
anticipated benefits from the proposed combination of Ashford Trust
and FelCor, including the anticipated synergies resulting from the
proposed combination.
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.
Additional Information
This communication does not constitute an offer to buy or
solicitation of any offer to sell securities. This communication
relates to a proposal which Ashford Hospitality Trust, Inc.
("Ashford Trust") has made for a business combination transaction
with FelCor Lodging Trust Incorporated ("FelCor"). In furtherance
of this proposal and subject to future developments, Ashford Trust
(and, if a negotiated transaction is agreed, FelCor) may file one
or more registration statements, prospectuses, proxy statements or
other documents with the SEC. This communication is not a
substitute for any registration statement, prospectus, proxy
statement or other document Ashford Trust or FelCor may file with
the SEC in connection with the proposed transaction. INVESTORS AND
SECURITY HOLDERS OF ASHFORD TRUST AND FELCOR ARE URGED TO READ
CAREFULLY THE REGISTRATION STATEMENT(S), PROSPECTUS(ES), PROXY
STATEMENT(S) AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC IF
AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT ASHFORD TRUST, FELCOR AND THE PROPOSED
TRANSACTION. Investors and security holders may obtain free copies
of these documents (if and when they become available) and other
related documents filed with the SEC at the SEC's web site at
www.sec.gov or by directing a request to Ashford Trust's Investor
Relations department at Ashford Hospitality Trust, Inc., Attention:
Investor Relations, 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254 or by calling Ashford
Trust's Investor Relations department at (972) 490-9600. Investors
and security holders may obtain free copies of the documents filed
with the SEC on Ashford Trust's website at www.ahtreit.com under
the "Investor" link, at the "SEC Filings" tab.
Certain Information Regarding Participants
Ashford Trust and Ashford Inc. and their respective directors
and executive officers may be deemed participants in the
solicitation of proxies in connection with the proposed
transaction. You can find information about Ashford Trust's
directors and executive officers in Ashford Trust's definitive
proxy statement for its most recent annual meeting filed with the
SEC on April 25, 2016. You can find
information about Ashford Inc.'s directors and executive officers
in Ashford Inc.'s definitive proxy statements for its most recent
annual meeting and special meeting filed with the SEC on
April 28, 2016 and October 7, 2016, respectively. You can find
information about FelCor's directors and executive officers in
FelCor's definitive proxy statement for its most recent annual
meeting filed with the SEC on April 14,
2016. These documents are available free of charge at the
SEC's web site at www.sec.gov and (with respect to documents and
information relating to Ashford Trust) from Investor Relations at
Ashford Trust, as described above. Additional information
regarding the interests of such potential participants will be
included in one or more registration statements, proxy statements,
tender offer statements or other related documents filed with the
SEC if and when they become available.
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SOURCE Ashford Hospitality Trust, Inc.