Ashford Inc. has announced that both an independent Special Committee and its Board of Directors have endorsed their decision to unregister the company's common stock under federal securities laws upon completing a proposed reverse-forward stock split transaction. Additionally, they plan to delist the company's shares from trading on the NYSE American LLC.
The plan is projected to commence in the summer of 2024. Ashford stated that the move is designed to steer clear of the significant expenses attached to being a public reporting company, thereby redirecting company resources towards fostering long-term stockholder value. The anticipated annual savings from the proposed transaction are expected to exceed $2.50 million.
The planned reverse stock split will be a 1-for-10,000 split. Holders of fewer than 10,000 company shares in a single account immediately before the reverse stock split will be paid out at $5.00 per share, implying a 125.2% premium above the common stock’s closing price as of April 1, 2024.
Shareholders possessing 10,000 or more company shares in a single account immediately before the reverse stock split will retain all their shares and remain shareholders in Ashford, which will not be burdened by the costs and distractions associated with being a public reporting company.
Ashford predicts that approximately 1.1 million shares, accounting for about 31% of the currently outstanding common stocks, will be cashed out in the proposed transaction. The cumulative costs for the company arising from the proposed transaction are estimated to be around $5.5 million, in addition to transaction expenses approximated to be about $6.7 million. The company plans to cover these costs using cash-on-hand.
