Ashford stockholder Cygnus Capital says conversion will dilute stock

By Taylor Fox

New York, Oct. 5 – Ashford Hospitality Trust, Inc. stockholder Cygnus Capital, Inc., beneficially owning 8.3% of Ashford’s outstanding common stock, responded to the recent amendments made by Ashford to its exchange offers of preferred stock into common stock that could dilute existing common stockholder by 94%, according to a news release.

Cygnus stated that while the proposal to amend Ashford’s corporate charter, which would convert all preferred stock into common stock if more than 66 2/3% of each series of preferred stock and the common stock approve of the amendment, is no longer a condition to consummating the exchange offers, Ashford can still dilute common stockholders if the proposal required by the New York Stock Exchange to issue up to 126 million shares is approved at Tuesday’s special meeting of stockholders.

The NYSE proposal is a condition to consummating the exchange offers. If the NYSE proposal fails, Ashford will not be permitted to issue more than 20% of the outstanding common stock.

As previously reported, the following Ashford preferred stocks are covered by the exchange offer:

• 2,389,393 outstanding shares of 8.45% series D cumulative preferred stock (Cusip: 044103406, Symbol: AHTprD);

• 4.8 million outstanding shares of 7.375% series F cumulative preferred stock (Cusip: 044103604, Symbol: AHTprF);

• 6.2 million outstanding shares of 7.375% series G cumulative preferred stock (Cusip: 044103703, Symbol: AHTprG);

• 3.8 million outstanding shares of 7.5% series H cumulative preferred stock (Cusip: 044103802, Symbol: AHTprG); and

• 5.4 million outstanding shares of 7.5% series I cumulative preferred stock (Cusip: 044103885, Symbol: AHTprH).

The total consideration offered in the exchange offers in the aggregate to all series of preferred stock is 126,048,813 newly issued shares of the company’s common stock and $30 million in cash.

As of midnight ET on Oct. 1, 261,536 shares of 8.45% series D cumulative preferred stock, 345,767 shares of 7.375% series F cumulative preferred stock, 654,087 shares of 7.375% series G cumulative preferred stock, 297,557 shares of 7.50% series H cumulative preferred stock and 569,071 shares of 7.50% series I cumulative preferred stock had been validly tendered and not withdrawn early.

Ashford is a Dallas-based real estate investment trust focused on luxury hotels.

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