|
|
Item 1.01
|
Entry into a Material Definitive Agreement
|
Amendment No. 1 to Credit Agreement
As previously announced, on
January 15, 2021, Ashford Hospitality Trust, Inc. (“Ashford Trust” or the “Company”) and Ashford Hospitality Limited
Partnership, an indirect subsidiary of the Company (the “Borrower”) entered into a Credit Agreement (as amended, the “Credit
Agreement”) with certain funds and accounts managed by Oaktree Capital Management, L.P. (the “Lenders”) and Oaktree
Fund Administration, LLC, as administrative agent (the “Administrative Agent”), pursuant to which the Lenders made available
to the Borrower a senior secured term loan facility comprising of (a) initial term loans (the “Initial Term Loan”) in an aggregate
principal amount of $200,000,000, (b) initial delayed draw term loans in an aggregate principal amount of up to $150,000,000 (the “Initial
DDTL”), and (c) additional delayed draw term loans in an aggregate principal amount of up to $100,000,000 (the “Additional
DDTL,” and together with the Initial Term Loan and the Initial DDTL, collectively, the “Loans”), in each case to fund
general corporate operations of the Company and its subsidiaries.
On
October 12, 2021, Ashford Trust and the Borrower entered into Amendment No. 1 to the Credit Agreement (“Amendment No. 1”)
with the Lenders and the Administrative Agent. Amendment No. 1, subject to the conditions set forth therein, among other items,
(i) extends the commitment period of the Initial DDTL and Additional DDTL from thirty months to forty-two months after the initial closing
date of the Credit Agreement, if the Initial Term Loans are repaid in full prior to the expiration of such commitment period (the “DDTL
Commitment Period”), (ii) suspends the Company’s obligations to comply with certain covenants during the DDTL Commitment Period
if no Loans or accrued interest thereon are outstanding, (iii) suspends the Company’s obligation to subordinate fees due under the
advisory agreement if at any point there is no accrued interest outstanding or any accrued dividends on any of the Company’s preferred
stock and the Company has sufficient Unrestricted Cash to repay in full all outstanding Loans, (iv) permits the Lenders to, at any
time, elect to receive the exit fee in warrants for the purchase of common stock of the Company equal to 19.9% of all Common Stock outstanding
on the closing date of the senior secured credit facility subject to certain upward or downward adjustments, and (v) provides that in
the event prior to the termination of the facility, the Lenders elect to receive the exit fee in warrants and any of such warrants are
sold at a price per share of Common Stock in excess of $40, all obligations owing to the Lenders shall be reduced by an amount equal to
25% of the amount of such excess consideration, subject to certain adjustments.
The foregoing description
of the Credit Agreement and Amendment No. 1 and the transactions contemplated thereby does not purport to be complete and is subject to,
and qualified in its entirety by, the full text of the Credit Agreement and Amendment No. 1, copies of which are attached hereto as Exhibit
10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.
Warrant Certificate
In
connection with the transactions contemplated by the Credit Agreement, and in the event the Lenders elect to receive the exit fee
in warrants for the purchase of Common Stock, the Company will issue to the Lenders warrants to purchase 1,745,260 shares of our Common
Stock, which represents 19.9% of all Common Stock outstanding on the closing date of the Credit Agreement. The certificate representing
such warrants (the “Warrant Certificate”) agreed to by the parties provides for customary adjustments in the event of certain
distributions, subdivisions, combinations and other issuances by the Company. The Warrant Certificate also provides for adjustments to
the number of shares which such warrants are purchasable for, subject to the terms and conditions set forth in the Credit Agreement and
Warrant Certificate, (i) downward in the event certain of the Company’s subsidiaries effect a pledge of the equity interests of
certain property-level subsidiaries and (ii) upward in the event the Lenders advance Initial DDTLs to the Company.
The summary of
the Warrant Certificate contained in this Item 1.01 does not purport to be complete and is qualified in its entirety by reference to the
full text of Amendment No. 1 and the Warrant Certificate included as Exhibit B thereto, which is filed as Exhibit 10.2 hereto and incorporated
by reference herein.