ASHFORD INC. ANNOUNCES EFFECTUATION OF REVERSE STOCK SPLIT AND FORWARD STOCK SPLIT

Rhea-AI Summary

Ashford Inc. (NYSE American: AINC) has announced the effectuation of its previously planned reverse stock split and forward stock split on July 29, 2024. This move is part of the company's strategy to delist from the NYSE American stock exchange and deregister its common stock under the Securities Exchange Act of 1934. The transaction involved a 1-for-10,000 reverse stock split followed immediately by a 10,000-for-1 forward stock split, resulting in 2,066,860 shares outstanding. The NYSE American has filed a Form 25 with the SEC to remove Ashford's common stock from listing and deregister it. Ashford intends to terminate its registration under the Exchange Act and cease reporting as a public company.

Positive

• None.

Negative

• Delisting from NYSE American stock exchange
• Ceasing to be a public reporting company
• Potential reduction in liquidity for shareholders

Insights

Financial Analyst

Ashford Inc.'s decision to delist from the NYSE American and cease reporting as a public company marks a significant shift in the company's corporate strategy. This move, facilitated by a complex stock split maneuver, has several implications for investors and the company's future:

• Reduced Transparency: By delisting and deregistering, Ashford will no longer be required to file regular financial reports with the SEC. This reduction in transparency could make it challenging for investors to assess the company's financial health and performance.
• Liquidity Concerns: The delisting will likely result in decreased liquidity for Ashford's shares. Without a major exchange listing, trading volumes may drop significantly, potentially making it difficult for shareholders to buy or sell shares at favorable prices.
• Cost Savings: On the positive side, Ashford may benefit from reduced compliance and reporting costs associated with being a public company. These savings could potentially be reinvested into the business or used to improve profitability.
• Ownership Concentration: The reverse split followed by a forward split is likely designed to reduce the number of small shareholders. This could lead to a more concentrated ownership structure, potentially giving management greater control over the company's direction.

While the company cites the Transaction as part of its delisting strategy, it's worth noting that such moves are often undertaken when a company believes its stock is undervalued or when it wants to avoid the scrutiny and costs of being publicly traded. Investors should carefully consider the implications of holding shares in a company that will no longer be subject to the same level of regulatory oversight and market visibility.

Legal Expert

Ashford Inc.'s delisting and deregistration process raises several legal and regulatory considerations:

• Compliance with SEC Rules: The company appears to be following the proper procedures for delisting and deregistration as outlined in SEC regulations. The filing of Form 25 by the NYSE American is a important step in this process.
• Shareholder Rights: The reverse and forward stock split maneuver, while legal, may raise questions about minority shareholder rights. This transaction could potentially force out smaller shareholders, which might be seen as a form of "going private" without a formal tender offer.
• Disclosure Obligations: Even after delisting, Ashford may still have certain disclosure obligations to its shareholders under state corporate law. The extent of these obligations will depend on the company's state of incorporation and its bylaws.
• Future Regulatory Landscape: While Ashford intends to cease reporting as a public company, it's important to note that if the number of shareholders of record exceeds certain thresholds in the future, the company may be required to resume reporting under SEC rules.

From a legal perspective, this move significantly alters the relationship between Ashford and its shareholders. Investors will lose many of the protections afforded by federal securities laws and SEC oversight. It's important for shareholders to understand that their access to company information and their ability to influence corporate governance may be substantially reduced following this transition.

Market Research Analyst

Ashford Inc.'s decision to delist from the NYSE American and go private reflects broader trends in the market:

• Public to Private Trend: There's been a growing trend of companies choosing to go private, especially among smaller cap stocks. This is often driven by the high costs of maintaining a public listing and the perception that the market undervalues certain companies.
• Market Valuation Concerns: Ashford's move might indicate that management believes the company's stock is undervalued in the public market. By going private, they may hope to unlock value without the short-term pressures of quarterly reporting and public market scrutiny.
• Industry Implications: As a provider of asset management and advisory services to the hospitality industry, Ashford's decision could signal challenges in this sector. It may reflect difficulties in maintaining investor interest in hospitality-related stocks in the current economic environment.
• Investor Sentiment: This move could impact investor sentiment towards similar small-cap stocks in the hospitality and asset management sectors. It may raise questions about the viability of public markets for companies of this size and in this industry.

The Transaction, involving a dramatic reverse split followed immediately by a forward split, is a technique sometimes used to reduce the number of shareholders of record. This could be seen as a strategy to consolidate control and potentially squeeze out smaller investors. From a market research perspective, this move highlights the ongoing debate about the benefits and drawbacks of public versus private ownership structures, especially for smaller companies in specialized industries.

DALLAS, July 31, 2024 /PRNewswire/ -- Ashford Inc. (NYSE American: AINC) ("Ashford" or the "Company"), today announced that in connection with its previously announced plan to withdraw and delist its common stock from trading on the NYSE American LLC stock exchange (the "NYSE American") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company effected a 1-for-10,000 reverse stock split of the Company's common stock (the "Reverse Stock Split") followed immediately by a 10,000-for-1 forward stock split of the Company's common stock (the "Forward Stock Split," together with the Reverse Stock Split, the "Transaction"), on July 29, 2024 at 5:01 p.m. Eastern Time and 5:02 p.m. Eastern Time, respectively. Following the Transaction, there were 2,066,860 shares outstanding.

The NYSE American has filed with the Securities and Exchange Commission (the "SEC") a Form 25 to effectuate the removal of the Company's common stock from listing on the NYSE American and to deregister the common stock under Section 12(b) of the Exchange Act. As a result, Ashford common stock will no longer be listed on the NYSE American. The Company intends to terminate the registration of common stock under the Exchange Act and cease reporting as a public company.

For more information regarding the Company's deregistration and delisting transaction, please refer to the definitive proxy statement on Schedule 14A filed with the SEC on June 21, 2024.

View original content:https://www.prnewswire.com/news-releases/ashford-inc-announces-effectuation-of-reverse-stock-split-and-forward-stock-split-302211008.html

SOURCE Ashford Inc.

FAQ

What stock splits did Ashford Inc. (AINC) implement on July 29, 2024?

Ashford Inc. (AINC) implemented a 1-for-10,000 reverse stock split followed immediately by a 10,000-for-1 forward stock split on July 29, 2024.

Why is Ashford Inc. (AINC) delisting from the NYSE American?

Ashford Inc. (AINC) is delisting from the NYSE American as part of its plan to withdraw its common stock from trading and deregister under the Securities Exchange Act of 1934.

How many shares of Ashford Inc. (AINC) were outstanding after the stock splits?

After the reverse and forward stock splits, Ashford Inc. (AINC) had 2,066,860 shares outstanding.

What are the implications of Ashford Inc. (AINC) ceasing to be a public company?

By ceasing to be a public company, Ashford Inc. (AINC) will no longer be required to file regular reports with the SEC, potentially reducing transparency for investors and affecting stock liquidity.