Company also secures $10 million through 9.25% loan with Essex Equity
By Devika Patel
Knoxville, Tenn., April 18 - MHI Hospitality Corp. settled a $25 million private placement of 10% series A cumulative redeemable preferred stock on April 18, according to an 8-K filed Monday with the Securities and Exchange Commission.
The company sold 25,000 preferreds to Essex Illiquid, LLC and Richmond Hill Capital Partners, LP. The preferreds are non-voting and non-convertible. They have a mandatory redemption date of April 18, 2016.
The two investors also received warrants for 1.9 million common shares, which are exercisable at $2.25 until Oct. 18, 2016. The strike price is a 16.67% discount to the company's closing stock price on April 15, $2.70.
The company also said it negotiated an agreement with Essex Equity High Income Joint Investment Vehicle, LLC on April 18 under which it may borrow up to $10 million from Essex and repay the amount with a 9.25% interest rate. The principal will be represented by a four-year note, which may be prepaid by the company at any time without penalty.
Proceeds will be used to refinance the mortgage on the Crowne Plaza Jacksonville Riverfront Property, for transaction fees, expenses and the company's ongoing working capital and general corporate needs.
MHI is a Williamsburg, Va.-based self-managed REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper upscale full-service hotels.
| Issuer: | MHI Hospitality Corp.
|
| Issue: | Series A cumulative redeemable preferred stock
|
| Amount: | $25 million
|
| Preferreds: | 25,000
|
| Maturity: | April 18, 2016
|
| Dividends: | 10%
|
| Warrants: | For 1.9 million shares
|
| Warrant expiration: | Oct. 18, 2016
|
| Warrant strike price: | $2.25
|
| Investors: | Essex Illiquid, LLC and Richmond Hill Capital Partners, LP
|
| Settlement date: | April 18
|
| Stock symbol: | Nasdaq: MDH
|
| Stock price: | $2.78 at close April 18
|
| Market capitalization: | $26.65 million
|
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