Drive Shack Inc. Announces Agreement to Internalize Management
December 21 2017 - 5:00PM
Business Wire
Drive Shack Inc. (NYSE:DS; the “Company”) announced that it has
entered into definitive agreements with its external manager, FIG
LLC (the “Manager”), an affiliate of Fortress Investment Group LLC,
to internalize the Company’s management function. In connection
with the termination of the existing management agreement, the
Company will make a one-time cash payment of $10.7 million to the
Manager. The internalization will become effective on January 1,
2018.
The transaction was negotiated and unanimously approved by a
special committee (the “Special Committee”) comprised entirely of
independent and disinterested members of the board of directors of
the Company (the “Board”), and the Special Committee was advised by
independent counsel.
Sarah L. Watterson, the Company’s Chief Executive Officer &
President stated, “This is an incredibly exciting event within the
Company’s overall transformation. While the external management
structure has served the Company well for over 15 years, given the
Company’s tremendous growth plan developing and operating Drive
Shack venues and optimizing our American Golf properties, we
believe shifting to an internalized management structure today is
the right move for our business.”
Key Mechanics of the Internalization:
- The Company's Management Team Will
Not Change. Wesley R. Edens, who is a Principal and Co-Founder
of Fortress Investment Group LLC, will remain the Chairman of the
Board. Furthermore, members of the executive team, who were
previously employed by the Manager, will become employees of the
Company, including (i) Ms. Watterson, (ii) Lawrence A. Goodfield,
Jr., Chief Financial Officer, Chief Accounting Officer &
Treasurer, and (iii) Sara A. Yakin, Chief Operating Officer. In
addition, certain other professionals who previously provided
services to the Company on behalf of the Manager will continue to
fill similar roles as employees of the Company or its
subsidiaries.
- The Company and the Manager Entered
into a Transition Services Agreement. For a transition period,
the Manager has agreed to continue to provide the Company with
certain services and personnel related mainly to information
technology, legal, compliance, accounting and tax. These services
will be provided to the Company at cost.
Key Potential Benefits of the Internalization:
- Cost Savings Opportunity. The
Company targets savings of more than $2 million per year following
the internalization.
- Potential for Expanded Institutional
Investor Base. Following the internalization, the Company will
have a structure that is more comparable to its leisure and
entertainment peers.
- Continued Manager Support and
Principal Involvement. The Company will receive support from
the Manager for certain functions throughout the duration of the
transition services agreement. Furthermore, Mr. Edens, the
Company’s largest shareholder, will remain the Chairman of the
Board.
Additional details regarding the internalization can be found in
the Company’s Current Report on Form 8-K filed with the Securities
and Exchange Commission on December 21, 2017.
ABOUT DRIVE SHACK
Drive Shack Inc. is a leading owner and operator of golf-related
leisure and entertainment businesses.
FORWARD-LOOKING STATEMENTS
Certain items in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements
regarding the key potential benefits of the Company’s
internalization of management, including, but not limited to,
targeted savings of more than $2 million per year following
internalization, potential for expanded institutional investor base
and continued Manager support and Principal involvement. These
statements are based on management's current expectations and
beliefs and are subject to a number of trends and uncertainties
that could cause actual results to differ materially from those
described in the forward-looking statements, many of which are
beyond Drive Shack’s control. The Company can give no assurance
that its expectations will be attained. Accordingly, you should not
place undue reliance on any forward-looking statements contained in
this press release. For a discussion of some of the risks and
important factors that could cause actual results to differ from
such forward-looking statements, see the sections entitled “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s most recent
Annual Report on Form 10-K and most recent Quarterly Report on Form
10-Q. Furthermore, new risks and uncertainties emerge from time to
time, and it is not possible for the Company to predict or assess
the impact of every factor that may cause its actual results to
differ from those contained in any forward-looking statements. Such
forward-looking statements speak only as of the date of this press
release. The Company expressly disclaims any obligation to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
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Drive Shack Inc.Investor Relations212-479-3195
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