Ashford Hospitality Trust, Inc. (NYSE:AHT) (“Ashford Trust” or the “Company”) announced today that its Board of Directors unanimously approved a reverse split of the Company’s common stock at a ratio of 1-for-10.
As of the effective date of the reverse split, each share of the Company’s issued and outstanding common stock will be automatically converted into 1/10th of a share of the Company’s common stock. The reverse stock split will become effective as of the close of business on July 16, 2021, and the common stock is anticipated to commence trading on the New York Stock Exchange on July 19, 2021 on the split-adjusted basis. The foregoing actions have been approved by the Company’s Board of Directors pursuant to the Maryland General Corporation Law and no stockholder approval is required.
“The Company is committed to making owning Ashford Trust’s common stock as shareholder friendly as possible, and we believe implementing a reverse stock split is another important step for the Company and its stockholders to optimize our position,” commented Rob Hays, Ashford Trust’s President and Chief Executive Officer.
The Company believes the reverse stock split will benefit all shareholders by addressing several items impacting its common stock and options:
- The reverse split will meaningfully increase AHT’s market price per share above the $5 per share threshold required by many institutions to hold shares.
- Some brokers limit the ability or increase the cost to margin a stock under $5 per share.
- Having option strike increments of 50% of the stock price (i.e., $2.50 on a $5 stock) has made option trading on AHT shares less attractive due to limited applicable strike prices.
- There are high transaction costs as a percentage of AHT’s stock price commissions. Commissions are typically calculated on the number of shares/options rather than dollar value and even the “zero commission” brokerages still charge per-contract fees on options. The reverse split may reduce per-share and per-contract commissions and fees by as much as 90% for the same dollar value transaction.
By implementing a reverse stock split, the Company and its Board of Directors believes it can realize increased incremental demand for both its common stock and its options while also making AHT’s shares more attractive to a broader range of potential long-term institutional investors, individual investors, and buy-side analysts.
This action is in addition to Ashford Trust recently being added to the Russell 2000®, Russell 3000®, and Russell Microcap® indexes — which created added exposure to key institutional investors as well as to investors who use the Russell indexes to benchmark their portfolio.
No fractional shares of common stock will be issued as a result of the reverse stock split. Instead, any fractional shares resulting from the reverse stock split will be rounded down to the nearest full share, sold in the open market and the proceeds from such sales will be distributed to the applicable stockholder in cash. In addition, the common stock will trade under a new CUSIP number. The reverse stock split will affect all stockholders proportionally and will not affect any stockholder’s ownership percentage of shares of the Company’s common stock, except for minor changes resulting from the payment of cash for fractional shares. Ashford Trust’s stockholders should contact their broker or Ashford Trust’s transfer agent, Computershare, at (800) 546-5141, for any necessary assistance relating to the reverse stock split.
The Company also intends to effect a reverse split of the partnership units of Ashford Hospitality Limited Partnership, the Company’s operating partnership (“Ashford Trust OP”), at a ratio of 1-for-10, effective July 16, 2021.
