Consider this opportunity for a quick $2,000.  Ashford Inc.’s (AINC) board has approved a going dark transaction. Each share of common stock held by a stockholder owning fewer than 10,000 shares in any one account before the Reverse Stock Split will be automatically converted into the right to receive $5.00 in cash for each share. With shares currently trading at $4.77, a potential profit of $ 2,300 using 9,999 shares equates to a 4.8% return. With a projected closing in July, this annualizes to 19.2%.  

 

AINC is a management company focused primarily on hotels. Its largest client is Ashford Hospitality Trust. Monty Bennett controls the company by owning 19% of the common stock and 51% of AINC’s Series D Preferred Stock. To date, common stockholders have had a mostly painful experience.    

 

The Transaction is subject to a stockholder vote, requiring majority approval. The Series D Preferred will vote on an as-converted basis. Notably, approximately 38% of common stock and Series D Preferred is held by AINC's directors and executive officers, who have expressed their support for the Transaction. Additionally, an IRA Waiver Proposal must be passed to affect the Transaction. Directors and executive officers (excluding Monty J. Bennett) have indicated their intention to vote their common stock shares for the IRA Waiver Proposal.  They collectively own approximately 10% of the common stock.  

 

AINC estimates that approximately 1.1 million shares of the Company’s common stock (representing approximately 31% of the shares of common stock currently outstanding) would be cashed out in the Transaction for $5.5 million.  Transaction expenses are estimated at $6.7 million. AINC estimates savings of $2.5 million annually from going dark.  As of the December 2023 reporting period, the company had unrestricted cash of $52 million.  

 

AINC is a sick puppy from the common stockholders' perspective.  There is approximately $130 million of debt, $478 million of Preferred Series D, and a market cap of common of $16 million.  EBITDA in 2023 was $60 million.  Analyst estimates for 2024 are $70 million.  Free cash has been going to the Series D Preferred dividends, which are $35 million annually (with $28 million accrued but unpaid). 

 

Below is a link to the preliminary proxy.