Lodging REIT Ashford Hospitality (AHT) continues down the road to insolvency.
It is likely many of you have followed this saga, but new twists and angles continue to be unveiled. I follow it a bit–not close as I have no dog in this fight.
AHT has 5 perpetual preferreds outstanding–which you can see here. Dividends have been suspended on the shares and each of the issues have tumbled another 25% in the last few days as survival seems bleak–all now trading in the $3’s.
AHT has offered an exchange of 5.58 common shares for each preferred share–or alternatively, for a very limited number of preferred holders, $7.75/share.
AHT currently has around 13 million common shares outstanding and the current offer on the table to the preferred holders would expand the number of common shares outstanding to a massive 140,000,000 shares.
Current common holders seem to be screwed no matter what they do. Common shares holders must be asked for approval to issue the new shares to the preferred holders–if they approve the exchange they will instantly be diluted into oblivion–if they don’t they can ride shares into Chapter 11 (maybe).
Preferred holders are pretty well screwed as well. They have been offered common shares which were trading higher when the exchange offer was made–but now are at $1.71/share today. If they do not exchange their shares the company is looking for approval to give them 1.74 common shares for each preferred share, instead of the 5.58 shares noted above.
Pile on top of this Cygnus Capital–a dissident holder has now come out against the exchange offer. Whether they have a clue as to what they are doing is anyone’s guess. Management obviously thinks Cygnus is clueless and has responded.
All I can say is ‘what a damned mess’. AHT now has a market cap of $24 million and debt of $4 billion — at least they had that debt before they turned over the keys on many of their hotels.
Regardless the saga may be drawing to a close soon.