NEW YORK, Sept 28 (Reuters) – Shares of Ashford Hospitality Trust jumped almost 30% on Monday after a proxy advisory firm recommended shareholders of the troubled hotel operator approve, “with caution,” two proposals that would substantially dilute their ownership.
The rally in AHT AHT.N, a real estate investment trust whose shares had plunged almost 95% this year as of Friday, comes as the industry’s outlook has improved but hotel occupancy remains low due to the still-unchecked coronavirus pandemic.
An exchange offer for preferred stock in AHT AHT.N could dilute legacy shareholders’ stakes by up to 90.6%, said advisory firm Institutional Shareholder Services on Friday.
Rapidly eroding cash reserves, mounting debt and apparently limited financing options have cast doubt on AHT unless the hotel industry recovers, ISS said. The proposal could allow AHT, which operates 116 hotels, to stave off bankruptcy, it said.
“The proposals are therefore supportable, with caution,”