Ashford to Acquire Remington’s Project Management Division for $203 Million

DALLAS—Ashford Inc. announced that it has signed a definitive agreement to acquire the project management business of privately-held Remington Holdings, L.P. for a total transaction value of $203 million. Expected to close during the third quarter of 2018, the transaction is subject to approval by the company’s stockholders and customary closing conditions.

Remington is currently owned by Ashford Chairman and CEO Monty J. Bennett and his father, Archie Bennett, Jr. “The proposed acquisition of Remington’s high-margin project management business will immediately add scale, diversification, and an enhanced competitive position in the hospitality industry while also expanding the breadth of services we offer to our managed REITs,” Monty J. Bennett, Ashford’s chairman and CEO, comments. “With deep industry experience and long-term contracts in place, we believe this transaction represents a compelling opportunity for Ashford to diversify its earnings stream and, moving forward, the potential to expand business to other third-party clients.”

Remington’s Project Management division provides design, development, and project management services for both Remington managed hotels as well as external partners. It provides project oversight, coordination, planning, and execution of renovation, capital expenditure, or ground-up development projects. Its operations are responsible for managing and implementing all capital improvements at Ashford Hospitality Trust and Ashford Hospitality Prime. Additionally, it has extensive experience working with many of the major hotel brands in areas of renovating, converting, developing, or repositioning hotels. In 2017, Remington Project Management had revenues of approximately $29.0 million and adjusted EBITDA of approximately $16.3 million.

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The company says that the purchase price of the transaction will be paid by issuing voting, convertible preferred stock to the sellers. The newly created convertible preferred stock will have a conversion price of $140 per share—a 45 percent premium to the current trading level—and, if converted immediately after the consummation of the transaction, would convert into 1.45 million shares of common stock. Dividends on the convertible preferred stock are payable at an annual rate of 5.5 percent in the first year, 6 percent in the second year, and 6.5 percent in the third year and each year thereafter. Voting rights of the convertible preferred stock will be on an as-converted basis and the holders of the convertible preferred stock will have a voting limit of 25 percent of the company’s voting securities for five years. Upon closing of the transaction, the sellers will have the right to nominate two directors to the Ashford’s Board of Directors. The transaction does not require a private letter ruling from the Internal Revenue Service.

Ashford’s Board of Directors formed a special committee of independent and disinterested directors to analyze and negotiate the transaction on behalf of the company and deliver a recommendation to the Board of Directors with respect to the transaction. The company’s special committee was advised by Janney Montgomery Scott LLC as financial advisor, and Norton Rose Fulbright US LLP acted as its legal advisor. Robert W. Baird & Co., Inc. acted as Remington’s financial advisor, and Baker Botts L.L.P. acted as Remington’s legal advisor. Upon the unanimous recommendation of the special committee, the independent and disinterested members of the Board of Directors unanimously approved the transaction and recommended its approval by the Company’s stockholders.