UPDATE 1-Ashford Hospitality Prime shuffles management, adopts governance changes

By Mike Stone
Reuters

(Changes sourcing, updates throughout)

Aug 9 (Reuters) - U.S. hotel owner Ashford Hospitality Prime Inc announced Tuesday corporate governance changes, including a new board member and the separation of the chairman and chief executive roles, as a result of an "on-going dialog" with shareholders.

The shake up comes as shareholders have lobbied the hotel property owner to buy back shares, return cash to shareholders and even sell the company, which has a market capitalization of $446 million.

The Dallas, Texas-based hospitality real estate investment trust (REIT) is in the midst of a strategic review process and in June received a bid from The Weisman Group, a Sherman Oaks, California-based investment firm.

The Weisman Group offered Ashford Prime shareholders a deal worth $20.58 per share to them. Ashford is currently trading at about $15.65 a share. Weisman's bid was non-binding and, according to statements on Ashford's Aug. 4 quarterly earnings call, the group has not signed documents allowing it access to confidential due diligence materials.

As part of its corporate governance overhaul, Ashford Prime said it would split the roles of its current CEO and chairman Monty Bennett. Bennett will remain in the chairman's seat and the company has already hired an executive search firm to find a CEO, according to a previous Reuters report.

Ashford Prime, which focuses on owning luxury properties in gateway cities and resorts, also announced that Ken Fearn will join Ashford Prime's board of directors, bringing the board's total to eight, with six serving as independent directors.

As part of the changes, the company will also allow long-term shareholders, those who have owned shares continuously for more than three years, to include their board nominations on the annual voting list for new directors.

On the Aug. 4 call, Bennett said that following the Weisman Group offer, the company's "board had instructed its financial advisor, Deutsche Bank, to reach out to other potential bidders and as part of the process, a data room is up and open, and we have signed non-disclosure agreements with other unrelated groups."

Bennett was referring to groups that are not related to the Weisman offer.

On the same call, Bennett said Ashford Prime's governance committee had approved several of the governance changes which were formally announced today.

Earlier this year, Ashford Hospitality Prime shareholder, Sessa Capital, a New York-based hedge fund, has sued the company and nominated five directors for Ashford Prime's board, while pushing the REIT to seek a buyer. Sessa's effort was unsuccessful and stopped by a court in June. (Reporting by Mike Stone in New York; Editing by Carmel Crimmins and Alan Crosby)

08/09/2016 17:07