DALLAS, April 1, 2024 — Ashford Inc. (NYSE American: AINC) (“Ashford” or the “Company”) today announced that a Special Committee of independent and disinterested directors has recommended, and its Board of Directors has approved, a plan to terminate the registration of the Company’s common stock under the federal securities laws following the completion of a proposed reverse stock split transaction (the “Reverse Stock Split”) immediately followed by a forward stock split transaction and to delist its shares of common stock from trading on the NYSE American LLC (the “NYSE American”) (the “Proposed Transaction”). It is expected that this plan would be initiated in the summer of 2024, subject to Ashford’s stockholders approving the Proposed Transaction at a Special Meeting of Stockholders to be held for that purpose, as described below.
Ashford is taking these steps to avoid the substantial cost and expense of being a public reporting company and to focus the Company’s resources on enhancing long-term stockholder value. The Company anticipates savings exceeding $2,500,000 on an annual basis as a result of the Proposed Transaction. The proposed reverse stock split is a 1-for-10,000 split, in which holders of less than 10,000 shares of the Company’s common stock in any one account immediately prior to the reverse stock split would be cashed out at a price of $5.00 per each pre reverse stock split share. Such price represents a 125.2% premium above the common stock’s closing price on April 1, 2024 and is supported by a fairness opinion provided by Oppenheimer and Co. Inc. (“Oppenheimer”), whom the Special Committee engaged for such purpose. Stockholders owning 10,000 or more shares of the Company’s common stock in any one account immediately prior to the reverse stock split would not have any shares cashed out and would remain stockholders in Ashford, which would no longer be encumbered by the expenses and distraction of being a public reporting company. The number of shares they would own following the Proposed Transaction would be unchanged, as immediately after the reverse stock split, a forward split of 10,000-for-1 would be applied to the continuing stockholders, negating any effects to the number of shares held by them. Ashford estimates that approximately 1.1 million shares (representing approximately 31% of the shares of common stock currently outstanding) would be cashed out in the Proposed Transaction and the aggregate cost to the Company of the Proposed Transaction would be approximately $5.5 million, plus transaction expenses, which are estimated to be approximately $6.7 million. Ashford intends to fund such costs using cash-on-hand.
Ashford’s Special Committee and its Board of Directors have determined that the costs of being a U.S. Securities and Exchange Commission (“SEC”) reporting company outweigh the benefits and, thus, it is no longer in the best interests of the Company and its stockholders, including its unaffiliated stockholders (consisting of stockholders other than executive officers, directors and stockholders who own more than 10% of the Company’s outstanding common stock) for Ashford to remain an SEC reporting company. Without its public company status, Ashford would have an ongoing cost structure befitting its current and foreseeable scale of operations, and its management would be able to focus on long-term growth without an undue emphasis on short-term financial results. The purpose of the reverse stock split is to (i) help Ashford reduce and maintain below 300 record holders of its common stock, which is the level at which SEC public reporting obligations are required, (ii) offer liquidity to smaller stockholders at $5.00 per share without a brokerage commission, and (iii) provide all stockholders the opportunity to vote on this matter. Among the factors considered by Ashford’s Board of Directors were:
the significant ongoing costs and management time and effort involved in the Company remaining a public company, including the preparation and filing of periodic and other reports with the SEC and compliance with Sarbanes-Oxley Act and other applicable requirements; the limited trading volume and liquidity of the Company’s common stock; the business and operations of the Company are expected to continue substantially as presently conducted, except without the burden of public company costs; enabling the Company’s stockholders with the smallest holdings, who represent a large number of the record holders of Company’s common stock, to liquidate their holdings in the Company’s common stock and receive a premium over current market prices without incurring brokerage commissions; the determination of Oppenheimer, independent fairness opinion provider to the Special Committee, that the Proposed Transaction consideration for the fractional shares is fair from a financial point of view to the unaffiliated stockholders; and as a result of the deregistration and delisting, the ability of the Company’s management and employees to focus their time, effort and resources on the Company’s long-term growth and increasing long-term stockholder value.
Subject to regulatory clearance of the Company’s proxy statement to be filed relating to the Proposed Transaction and stockholder approval thereof, it is anticipated that the Company would initiate its plan to terminate the registration of its common stock shortly after the Special Meeting of Stockholders, which is expected to be held in the summer of 2024. Approval of the Reverse Stock Split requires a majority vote cast of the Company’s common stock (taking into account the Company’s Series D Convertible Preferred Stock on an as-converted basis) at the Special Meeting. (A “majority vote” means that more votes have been cast for a proposal than against it, and abstentions and broker non-votes, if any, will not be considered as votes cast.) A “Rule 13e-3 transaction” is any transaction or series of transactions (involving a securities purchase, tender offer, or specified proxy solicitation) by an issuer or an affiliate of the issuer, which has a reasonable likelihood or purpose of directly or indirectly (i) causing any registered class of equity securities to be eligible for termination of registration, or eligible for termination or suspension of reporting obligations; or (ii) causing any listed class of equity securities to cease to be listed on a national securities exchange. Because the Proposed Transaction constitutes a Rule 13e-3 transaction, stockholders will be asked to consider and vote upon a proposal to approve a waiver of the prohibition on Rule 13e-3 transactions contained in Section 3.03 of a certain Investor Rights Agreement entered into as of November 6, 2019 by and among the Company, Archie Bennett, Jr., Monty J. Bennett and certain other parties. As of March 25, 2024, the Company’s directors and executive officers owned approximately 37.9% of the issued and outstanding shares of the Company’s common stock (including the Series D Convertible Preferred Stock on an as-converted basis and the associated accrued and unpaid dividends) and are expected to vote “FOR” the Proposed Transaction.
After the Special Meeting, the Company expects to terminate the registration of its common stock with the SEC and delist its common stock from the NYSE American. As a result, subject to applicable waiting periods for deregistration under the federal securities laws, (i) the Company will cease to file annual, quarterly, current and other reports and documents with the SEC, and stockholders will cease to receive annual reports and proxy statements, and (ii) the Company’s common stock will no longer be listed on the NYSE American. If consummated, the Proposed Transaction would apply directly to record holder