Hospitality Trust operator Ashford Inc. (AINC) Friday announced a combination agreement with Remington Holdings LP, a premier hotel property and project management company. The Transaction is expected to builds operating scale and increased earnings power and will be immediately accretive to normalized adjusted net income per share.
As per the agreement, 916,500 shares of subsidiary nonvoting common stock will be issued at $100 per share, at a premium of 54 percent to the current market price of Ashford common stock. Further, $230 million of subsidiary participating convertible preferred stock convertible at $120 per share, at a premium of 85 percent to the current market price of Ashford also will be issued. For the next four years, $625,000 will be paid in cash each quarter.
The transaction is being structured as a Section 351 tax-free exchange for federal income tax purposes. Ashford said it will create a new subsidiary structure that will acquire an 80 percent stake in Remington and all of Ashford's existing business. The Remington sellers will retain a 20 percent interest in Remington
The transaction is expected to be completed in the first quarter of 2016, and is subject to U.S. Internal Revenue Service and stockholders' approval.
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