Ashford Inc. (NYSE: AINC) is currently experiencing a significant upsurge of 78.83% during the pre-market trading session, presently valued at $3.97. Its previous session concluded at $2.22, marking a marginal decline of 1.77%. The notable rise in AINC stock on the US market is credited to a strategic business maneuver announced by the company today.
Ashford (AINC) has announced that a Special Committee comprised of independent and impartial directors has proposed, and its Board of Directors has sanctioned, a scheme to cease the registration of the Company’s common stock under the federal securities laws subsequent to the completion of a planned reverse stock split transaction immediately succeeded by a forward stock split transaction, and to remove its common stock shares from trading on the NYSE American LLC.
It is anticipated that this scheme will commence in the summer of 2024, contingent upon the approval of Ashford’s stockholders for the Proposed Transaction at a Special Meeting of Stockholders scheduled for that purpose. These actions are being undertaken by Ashford to circumvent the significant costs associated with being a public reporting company and to channel the Company’s resources towards augmenting long-term shareholder value.
The Proposed Transaction is expected to result in annual savings for the Company that surpass $2,500,000. Under the proposed reverse stock split, shareholders who held fewer than 10,000 shares of the company’s common stock in any one account immediately before the reverse stock split would be purchased out at a cost of $5.00 per share held prior to the reverse stock split. The split would be one for 10,000.
A fairness judgment from Oppenheimer & Co. Inc., which the Special Committee particularly recruited for this reason, supports this pricing. It is a 125.2% premium over the closing price of the ordinary shares on April 1, 2024. According to Ashford, the proposed deal would cost the company a total of around $5.5 million, including an anticipated $6.7 million in transaction expenditures. Approximately 1.1 million shares would be purchased out.
