ASHFORD HOSPITALITY PRIME, INC. (NYSE:AHP) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On January 24, 2017, Ashford Hospitality Prime, Inc. (AHP)
announced that it has entered into an amended and restated
advisory agreement (the Amended Agreement) with Ashford Inc. (the
Advisor). The Amended Agreement amends and restates the Third
Amended and Restated Advisory Agreement, dated as of June 10,
2015, among AHP, the Advisor and certain of their affiliates (the
Existing Agreement). The Amended Agreement will not become
effective unless and until it is approved by AHPs stockholders.
announced that it has entered into an amended and restated
advisory agreement (the Amended Agreement) with Ashford Inc. (the
Advisor). The Amended Agreement amends and restates the Third
Amended and Restated Advisory Agreement, dated as of June 10,
2015, among AHP, the Advisor and certain of their affiliates (the
Existing Agreement). The Amended Agreement will not become
effective unless and until it is approved by AHPs stockholders.
A special committee of the board of directors of AHP, comprised
solely of independent directors, led the negotiations of the
Amended Agreement with a special committee of the board of
directors of the Advisor. The AHP special committee retained
separate independent legal and financial advisors to assist the
committee in its negotiations and evaluation of the Amended
Agreement. The AHP special committee recommended that the board
of directors of AHP, acting solely by the vote of its independent
directors, declare the Amended Agreement to be advisable and to
recommend that AHPs stockholders approve the Amended Agreement.
solely of independent directors, led the negotiations of the
Amended Agreement with a special committee of the board of
directors of the Advisor. The AHP special committee retained
separate independent legal and financial advisors to assist the
committee in its negotiations and evaluation of the Amended
Agreement. The AHP special committee recommended that the board
of directors of AHP, acting solely by the vote of its independent
directors, declare the Amended Agreement to be advisable and to
recommend that AHPs stockholders approve the Amended Agreement.
A copy of the Amended Agreement is attached as an exhibit to this
Form 8-K and is incorporated herein by reference. Material terms
of the Amended Agreement include, without limitation, the
following terms:
Form 8-K and is incorporated herein by reference. Material terms
of the Amended Agreement include, without limitation, the
following terms:
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AHP will make a cash payment to the Advisor of $5.0
million at the time the Amended Agreement becomes effective; |
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the termination fee payable to the Advisor under the
Existing Agreement has been amended by eliminating the 1.1x multiplier and tax gross up components of the fee; |
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the Advisor will disclose publicly the revenues and
expenses used to calculate Net Earnings on a quarterly basis which is used to calculate the termination fee; the Advisor will retain an accounting firm to provide a quarterly report to AHP on the reasonableness of the Advisors determination of expenses, which will be binding on the parties; |
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the right of the Advisor under the Existing Agreement to
appoint a Designated CEO has been eliminated; |
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the right of the Advisor to terminate the Existing
Agreement due to a change in a majority of the Company Incumbent Board (as defined in the Existing Agreement) has been eliminated; |
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AHP will be incentivized to grow its assets under a
growth covenant in the Amended Agreement under which AHP will receive a deemed credit against a base amount of $45.0 million for: 3.75% of the total purchase price of each hotel acquired after the date of the Amended Agreement that was recommended by the Advisor, netted against 3.75% of the total sale price of each hotel sold after the date of the Amended Agreement. The difference between $45.0 million and such net credit, if any, is referred to as the Uninvested Amount. If the Amended |
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Agreement is terminated, other than due to certain acts
by the Advisor, AHP must pay the Advisor the Uninvested Amount, in addition to any termination fee payable under the Amended Agreement; |
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the Amended Agreement requires AHP to maintain a net
worth of not less than $390 million plus 75% of the equity proceeds from the sale of securities by AHP after December 31, 2016 and a covenant prohibiting AHP from paying dividends except as required to maintain its REIT status if paying the dividend would reduce AHPs net worth below the required minimum net worth; |
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the initial term of the Amended Agreement ends on the
10th anniversary of its effective date, subject to renewal by the Advisor for up to seven additional successive 10-year terms; |
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the base management fee payable to the Advisor will be
fixed at 70 bps, and the fee will be payable on a monthly basis; |
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reimbursements of expenses to the Advisor will be made
monthly in advance, based on an annual expense budget, with a quarterly true-up for actual expenses; |
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the right of AHP to terminate the Existing Agreement due
to a change of control of the Advisor has been eliminated; |
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the rights of AHP to terminate the Existing Agreement at
the end of each term upon payment of the termination fee based on the parties being unable to agree on new market-based fees or Advisors performance have been eliminated; however, the Amended Agreement provides a mechanism for the parties to renegotiate the fees payable to the Advisor at the end of each term based on then prevailing market conditions, subject to floors and caps on the changes; |
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if a Change of Control (as defined in the Amended
Agreement) is pending, AHP has agreed to deposit not less than 50%, and in certain cases 100%, of the applicable termination fee in escrow, with the payment of any remaining amounts owed to the Advisor secured by a letter of credit and/or first priority lien on certain assets; |
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AHPs ability to terminate the Amended Agreement due to a
material default by the Advisor is limited to instances where a court finally determines that the default had a material adverse effect on AHP and the Advisor fails to pay monetary damages in accordance with the Amended Agreement; and |
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if AHP repudiates the Amended Agreement, AHP will be
liable to the Advisor for a liquidated damages amount. |
The foregoing is intended only as a summary of certain terms of
the Amended Agreement. It is not a complete description of the
Amended Agreement. It is subject to and
the Amended Agreement. It is not a complete description of the
Amended Agreement. It is subject to and
qualified in its entirety by reference to the Amended Agreement,
a copy of which is filed as an exhibit to this Current Report.
a copy of which is filed as an exhibit to this Current Report.
ITEM 7.01 Regulation FD Disclosure
On January 24, 2017, AHP issued a press release announcing that
it had entered into an amended and restated advisory agreement
with Ashford Inc. 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 and the Exhibit 99.1 attached
hereto shall not be deemed filed for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended, nor shall it
be deemed incorporated by reference in any filing under the
Securities Act of 1933, as amended, except as shall be
expressly set forth by specific reference in such filing.
it had entered into an amended and restated advisory agreement
with Ashford Inc. 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 and the Exhibit 99.1 attached
hereto shall not be deemed filed for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended, nor shall it
be deemed incorporated by reference in any filing under the
Securities Act of 1933, as amended, except as shall be
expressly set forth by specific reference in such filing.
Important Information for Investors
This communication is not intended to and does not constitute
the solicitation of any vote or approval in any jurisdiction.
In connection with the proposed amendment to the advisory
agreement (the Proposed Amendment), AHP will file with the
Securities and Exchange Commission (the SEC) and mail or
otherwise provide to its shareholders a proxy statement
regarding the Proposed Amendment (the Proxy Statement). BEFORE
MAKING ANY VOTING DECISION, AHPS SHAREHOLDERS ARE URGED TO READ
THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE
AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH
THE PROPOSED AMENDMENT OR INCORPORATED BY REFERENCE THEREIN
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED AMENDMENT. AHPs investors and security holders may
obtain a free copy of the Proxy Statement and other documents
that AHP files with the SEC (when available) from the SECs
website at www.sec.gov and the Investor section of
http://www.ahpreit.com. In addition, the Proxy Statement
and these other documents may also be obtained for free from
AHP by directing a request to Ashford Hospitality Prime, Inc.,
Attn: Investor Relations, 14185 Dallas Parkway, Suite 1100,
Dallas, Texas 75254 or by calling (972) 490-9600.
the solicitation of any vote or approval in any jurisdiction.
In connection with the proposed amendment to the advisory
agreement (the Proposed Amendment), AHP will file with the
Securities and Exchange Commission (the SEC) and mail or
otherwise provide to its shareholders a proxy statement
regarding the Proposed Amendment (the Proxy Statement). BEFORE
MAKING ANY VOTING DECISION, AHPS SHAREHOLDERS ARE URGED TO READ
THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE
AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH
THE PROPOSED AMENDMENT OR INCORPORATED BY REFERENCE THEREIN
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED AMENDMENT. AHPs investors and security holders may
obtain a free copy of the Proxy Statement and other documents
that AHP files with the SEC (when available) from the SECs
website at www.sec.gov and the Investor section of
http://www.ahpreit.com. In addition, the Proxy Statement
and these other documents may also be obtained for free from
AHP by directing a request to Ashford Hospitality Prime, Inc.,
Attn: Investor Relations, 14185 Dallas Parkway, Suite 1100,
Dallas, Texas 75254 or by calling (972) 490-9600.
Certain Information Concerning Participants in the Proxy
Solicitation
Solicitation
AHP and its directors, executive officers and employees may be
deemed participants in connection with the solicitation of
proxies from AHPs shareholders with respect to the Proposed
Amendment. Information regarding the persons who may, under SEC
rules, be deemed participants in the solicitation, including a
description of their direct or indirect interests, by security
holdings or otherwise, will be included in the Proxy Statement
when it is filed with the SEC. Security holders may obtain
additional information regarding the names, affiliations and
interests of such individuals in AHPs Annual Report on Form
10-K for the fiscal year ended December 31, 2015, filed with
the SEC on March 15, 2016, and its definitive proxy statement
for the 2016 annual meeting of shareholders, filed with the SEC
on April 25, 2016. These documents may be obtained free of
charge from the SECs website at www.sec.gov and the
Investor section of http://www.ahpreit.com.
deemed participants in connection with the solicitation of
proxies from AHPs shareholders with respect to the Proposed
Amendment. Information regarding the persons who may, under SEC
rules, be deemed participants in the solicitation, including a
description of their direct or indirect interests, by security
holdings or otherwise, will be included in the Proxy Statement
when it is filed with the SEC. Security holders may obtain
additional information regarding the names, affiliations and
interests of such individuals in AHPs Annual Report on Form
10-K for the fiscal year ended December 31, 2015, filed with
the SEC on March 15, 2016, and its definitive proxy statement
for the 2016 annual meeting of shareholders, filed with the SEC
on April 25, 2016. These documents may be obtained free of
charge from the SECs website at www.sec.gov and the
Investor section of http://www.ahpreit.com.
Safe Harbor for Forward-Looking Statements
This document contains statements that are forward-looking
statements made to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are
based on current expectations or beliefs about future events.
These statements are not guarantees of future events and involve
risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual events may differ materially from what
is expressed in such forward-looking statements due to numerous
factors. Further information and risks regarding factors that
could affect AHPs business, operations, financial results or
financial positions are discussed from time to time in AHPs SEC
filings and reports, including its Annual Report on Form 10-K for
the year ended December 31, 2015. The stockholders of AHP and
other readers are cautioned not to put undue reliance on any
forward-looking statements. AHP undertakes no obligation to
publicly update any forward-looking statements, whether as a
result of new information, future events or otherwise.
statements made to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are
based on current expectations or beliefs about future events.
These statements are not guarantees of future events and involve
risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual events may differ materially from what
is expressed in such forward-looking statements due to numerous
factors. Further information and risks regarding factors that
could affect AHPs business, operations, financial results or
financial positions are discussed from time to time in AHPs SEC
filings and reports, including its Annual Report on Form 10-K for
the year ended December 31, 2015. The stockholders of AHP and
other readers are cautioned not to put undue reliance on any
forward-looking statements. AHP undertakes no obligation to
publicly update any forward-looking statements, whether as a
result of new information, future events or otherwise.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
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Exhibit
Number
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Description
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10.1
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Fourth Amended and Restated Advisory Agreement
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| 99.1 |
Press Release Announcing Fourth Amended and Restated Advisory Agreement |
About ASHFORD HOSPITALITY PRIME, INC. (NYSE:AHP)
Ashford Hospitality Prime, Inc. invests in high revenue per available room (RevPAR), luxury, upper-upscale and upscale hotels in gateway and resort locations. The Company conducts its business and owns all of its assets through its operating partnership, Ashford Hospitality Prime Limited Partnership. It operates in the direct hotel investment segment of the hotel lodging industry. It owns interest in over 15 hotels in approximately six states, the District of Columbia and St. Thomas, the United States Virgin Islands with over 3,950 total rooms, excluding those attributable to its partner. The hotels in its portfolio are located in the United States gateway and resort locations. The Company owns over 10 of its hotel properties directly, and the remaining hotel properties through an investment in a majority-owned consolidated entity. All of the hotels in the Company’s portfolio are asset-managed by Ashford Hospitality Advisors LLC. ASHFORD HOSPITALITY PRIME, INC. (NYSE:AHP) Recent Trading Information
ASHFORD HOSPITALITY PRIME, INC. (NYSE:AHP) closed its last trading session up +0.10 at 14.68 with 119,665 shares trading hands.