Wyndham Expands in the Extended-Stay Sector

The DJIA was down 397 points while Nasdaq was down 156, the S&P 500 fell 38 points and the 10-year treasury yield went up another .04 to 4.37%. Lodging stocks were lower, in fact, if it was not for Ashford Inc. (AINC), it would have been nearly across the board. AINC surged 114% on the news below. SLNA, on the other hand, traded down to another new low and is almost a dime, closing at $0.11. VCSA was down -5% on the day.

Ashford Inc. said a Special Committee of independent and disinterested directors recommended, and the Board of Directors approved, a plan to terminate the registration of the Company’s common stock following the completion of a proposed reverse stock split transaction and then a forward stock split transaction. Let us break this down in a way most can understand. AINC will do a 1 for 10,000 reverse stock split. By getting rid of all shareholders that hold under 10,000 shares, they will not have enough shareholders to remain listed on the NYSE American. The reason why the stock surged is that while it is a reverse stock split to get rid of most shareholders, AINC is giving them $5 a share pre-reverse split. The stock closed yesterday at $2.22 a share. We are assuming there are few, except for insiders, that own more than 10,000 shares but whoever does will then wind up with the shares they have today as the remaining shareholders would be subject to a 10,000 for 1 reverse split. Between cashing out the under 10,000 a share shareholders and expenses, it will cost AINC $6.7 million. They expect to save more than $2.5 million a year not being a registered, listed public company.

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