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Ashford Hospitality Trust, Inc. announced that it has been engaged in a process regarding a potential financing, according to a Form 8-K. The Company anticipates that any financing ultimately entered into may provide for (i) an initial loan of approximately $200 million or more, (ii) the issuance, as part of the consideration for the initial loan, of 19.9% of the Company’s issued and outstanding common stock or other comparable equity participation structures in lieu of upfront common stock or warrants, (iii) potential advances of additional loans at the Company’s election which would likely require, if drawn, the issuance of a substantial amount of additional shares of common stock, however, at this time the Company does not believe that such potential advances will be needed or drawn and (iv) interest rates with an amount and structure generally consistent with similar facilities for highly distressed borrowers.
The Company warned that “if we are unable to consummate a financing transaction as a result of this process, we estimate that our existing capital resources will only be sufficient to fund our operations into the early part of fiscal year 2021 and we would need to seek additional sources of capital, such as a potential bridge loan or asset sales, including hotels that the Company is currently marketing for sale. If we are unable to raise additional capital to fund our business, we may need to seek bankruptcy court protection.”
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