ITEM 7.01 REGULATION FD DISCLOSURE.
The disclosure set forth under Item 1.01 of this Form 8-K is incorporated herein by reference.
Declaration of Preferred Share Dividends
On November 23, 2021, the Company issued a press release (the “Press Release”) announcing that its board of directors (the “Board”) declared cash dividends on the Company’s 8.45% Series D Cumulative Preferred Stock, 7.375% Series F Cumulative Preferred Stock, 7.375% Series G Cumulative Preferred Stock, 7.50% Series H Cumulative Preferred Stock, and 7.50% Series I Cumulative Preferred Stock reflecting accrued and unpaid dividends for the quarters ending June 30, 2020, September 30, 2020, December 31, 2020, March 31, 2021, June 30, 2021, and September 30, 2021 (the “Accrued Preferred Share Dividends”). The Company will pay a cash dividend of $3.1686 per Series D preferred share, $2.7654 per Series F preferred share, $2.7654 per Series G preferred share, $2.8125 per Series H preferred share, and $2.8125 per Series I preferred share. These preferred share dividends are payable December 10, 2021, to shareholders of record as of December 1, 2021. The aggregate amount of the Accrued Preferred Share Dividends is approximately $18.6 million.
The Company also announced in the Press Release that its Board:
a)declared a dividend for the fourth quarter ending December 31, 2021, of $0.5281 per diluted share, for the Company’s 8.45% Series D Cumulative Preferred Stock. This dividend is payable January 14, 2022, to shareholders of record as of December 31, 2021;
b)declared a dividend for the fourth quarter ending December 31, 2021, of $0.4609 per diluted share, for the Company’s 7.375% Series F Cumulative Preferred Stock. This dividend is payable January 14, 2022, to shareholders of record as of December 31, 2021;
c)declared a dividend for the fourth quarter ending December 31, 2021, of $0.4609 per diluted share, for the Company’s 7.375% Series G Cumulative Preferred Stock. This dividend is payable January 14, 2022, to shareholders of record as of December 31, 2021;
d)declared a dividend for the fourth quarter ending December 31, 2021, of $0.46875 per diluted share, for the Company’s 7.50% Series H Cumulative Preferred Stock. This dividend is payable January 14, 2022, to shareholders of record as of December 31, 2021; and
e)declared a dividend for the fourth quarter ending December 31, 2021, of $0.46875 per diluted share, for the Company’s 7.50% Series I Cumulative Preferred Stock. This dividend is payable January 14, 2022, to shareholders of record as of December 31, 2021.
Prepayment of PIK Principal Outstanding Under the Credit Agreement
Pursuant to the Credit Agreement, prepayment of all PIK Principal outstanding under the Credit Agreement is a condition precedent to the Company’s ability to pay current and accrued dividends on Company Preferred Stock. Accordingly, the Company intends to prepay in full all PIK Principal outstanding under the Credit Agreement prior to the payment of the preferred share dividends announced in the Press Release. As of the date of this Form 8-K, PIK Principal outstanding under the Credit Agreement totals approximately $23.5 million.
Payment of Deferred Advisory Fees
Pursuant to Amendment No. 1, so long as (i) there is no PIK Principal is outstanding, (ii) there are no accrued dividends on Company Preferred Stock, and (iii) the aggregate amount of Unrestricted Cash exceeds the amount of (x) all loans outstanding under the Credit Agreement, (y) the PIK Principal outstanding and (z) an amount equal to pay any premiums (including the Prepayment Premium (as defined in the Credit Agreement)) and fees (excluding the exit fee), in each case, that would then be owing if all loans and PIK Principal were prepaid and the Credit Agreement was terminated, the Company’s obligation to defer certain fees due under the Company’s advisory agreement with Ashford Inc. (the “Advisory Agreement”) shall be suspended. Following the Company’s payment of the Accrued Preferred Share Dividends and the PIK Principal outstanding under the Credit Agreement, the Company believes that all other conditions to the Company’s obligation to subordinate fees due under the Advisory Agreement will be satisfied. Accordingly, following such payments, the Company intends to pay all deferred advisory fees under the Advisory Agreement to Ashford Inc. As of the date of this Form 8-K, such deferred advisory fees total approximately $6.6 million.
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A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The information in this Item 7.01 of this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Forward-Looking Statements
Certain statements and assumptions in this Current Report 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 Current Report 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 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 impact of COVID-19, and the rate of adoption and efficacy of vaccines to prevent COVID-19, on our business and investment strategy; the timing and outcome of the SEC’s investigation; our ability to regain 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 and preferred 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 SEC.
The forward-looking statements included in this Current Report are only made as of the date of this Current Report. 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.