UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date
of earliest event reported): June 8, 2020
BRAEMAR HOTELS & RESORTS INC.
(Exact name of registrant as specified in its charter)
Maryland |
001-35972 |
46-2488594 |
(State
or other jurisdiction of
incorporation or organization) |
(Commission
file number) |
(I.R.S.
Employer Identification
Number) |
14185 Dallas Parkway, Suite 1100
Dallas, Texas
|
|
75254 |
(Address
of principal executive
offices) |
|
(Zip
Code) |
Registrant’s telephone number, including area code: (972)
490-9600
N/A
(Former name or former address, if changed since last
report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of
1933(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised
financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the
Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common
Stock |
|
BHR |
|
New
York Stock Exchange |
Preferred
Stock, Series B |
|
BHR-PB |
|
New
York Stock Exchange |
Preferred
Stock, Series D |
|
BHR-PD |
|
New
York Stock Exchange |
|
Item
1.01 |
Entry into a Material Definitive
Agreement. |
On
June 8, 2020, Braemar Hotels & Resorts Inc. (the
“Company”) entered into the First Amendment to Second
Amended and Restated Credit Agreement (the “Amendment”) with
Braemar Hospitality Limited Partnership, the Company’s operating
partnership, Bank of America, N.A., as administrative agent, and
the other financial institutions party thereto. The Amendment
converts the $75 million Second Amended and Restated Credit
Agreement, dated October 25, 2019 (the “Credit
Facility”), which was a secured revolving credit facility, into
a $65 million secured term loan. The Company had borrowed the full
borrowing capacity of $75 million under the Credit Facility and
repaid $10 million on June 8, 2020, in connection with the
signing of the Amendment. The Amendment waives certain covenants
through the first quarter of 2021 and amends certain other terms,
as described further below. The material terms of the Credit
Facility were summarized in the Company’s Current Report on
Form 8-K filed with the Securities and Exchange Commission on
October 28, 2019.
Pursuant to the terms of the Amendment, borrowings will bear
interest at a rate of LIBOR plus 3.50% or Base Rate plus 2.50%
until June 30, 2021. After such date, the pricing will revert
to the original terms of the Credit Facility. The Amendment also
adds amortization of $5 million per quarter commencing on
March 31, 2021.
The Amendment changes the terms of certain financial covenants that
the Company was subject to under the Credit Facility. The
requirement that the Consolidated Fixed Charge Coverage Ratio (as
defined in the Amendment) be not less than 1.40 has been waived
through March 31, 2021 (the “Covenant Waiver Period”).
At the end of the Covenant Waiver Period, the Consolidated Fixed
Charge Coverage Ratio (as defined in the Credit Facility) becomes
1.0 for the second quarter of 2021, 1.10 for the third and fourth
quarters of 2021, 1.20 for the first quarter of 2022, and then
returns to 1.40 thereafter. The covenant that required the
Company’s consolidated recourse indebtedness (other than the Credit
Facility) not exceed $50 million was permanently reduced to zero
($0) and a new covenant was also added that requires the Company to
have minimum liquidity (comprised of unrestricted cash) of $20
million through June 30, 2021, which shall be tested
monthly.
The Amendment adds limitations on the Company’s ability prior to
June 30, 2021, to incur or guaranty additional indebtedness,
grant liens, make restricted payments (with the exception of
existing preferred dividend payments) or engage in asset sales,
discretionary capital expenditures or additional investments. The
Amendment also adds mandatory prepayments that require the Company
to prepay and reduce the balance of the Credit Facility by an
amount equal to 50% of net proceeds from any asset sales, equity
offerings (including preferred equity offerings) or incurrence of
indebtedness (including refinancings), except that the first $50
million of any common equity offering (including sales of shares of
common stock under the Company’s “at-the-market” equity
distribution program) is subject to a mandatory prepayment in an
amount equal to 25% of net proceeds.
The
Amendment has the same maturity date of October 25,
2022 but removes the two one-year extension options and also
removes the Company’s ability to reborrow amounts that have been
repaid.
The Amendment is filed with this Current Report on Form 8-K as
Exhibit 10.1 and is incorporated herein by reference. This
summary does not purport to be complete and is qualified in its
entirety by reference to the actual amendment.
|
Item 2.03. |
Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant. |
The information in Item 1.01 is incorporated herein by
reference.
|
Item
7.01 |
Regulation FD
Disclosure. |
On
June 11, 2020, the Company issued a press release announcing
hotel re-opening plans, the Amendment to the Credit Facility and
the completion of forbearance agreements on five mortgage
loans. The press release is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
The information in Item 7.01 of this Current Report on
Form 8-K and Exhibit 99.1 is being furnished and shall
not be deemed to be “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, not shall it be deemed
incorporated by reference in any filing under the Securities Act of
1933, as amended.
On June 11, 2020, the Company announced that seven of its
hotels are currently open and that it has planned re-opening dates
for another four hotels. Ritz-Carlton Sarasota, the Notary Hotel,
Hilton La Jolla Torrey Pine, Pier House Resort, Bardessono Hotel,
Hotel Yountville and Chicago Sofitel Magnificent Mile are currently
open and the Company intends to opens Park Hyatt Beaver Creek on
June 12, 2020, Ritz-Carlton St. Thomas on June 15, 2020,
Ritz-Carlton Lake Tahoe on June 19, 2020 and Seattle Marriott
Waterfront on June 25, 2020. These planned re-opening dates are
only estimates and are subject to change based on a variety of
factors, including, among others, room demand, local governmental
restrictions and requirements, considerations regarding the health
and safety of guests, hotel employees and local communities. We can
make no assurance that any of the hotels will actually re-open on
the planned date or, as the Company's hotels do re-open, what the
operating performance of each hotel will be.
Additionally, the Company announced that it has signed forbearance
agreements on five mortgage loans on the Hotel Yountville,
Bardessono Hotel, Ritz-Carlton Lake Tahoe, Ritz-Carlton Sarasota,
and Pier House Resort. The forbearance agreements allow the Company
to defer interest on the loans for an initial period of three
months and up to six months subject to certain conditions and to
utilize lender and manager held reserve accounts, which are
included in restricted cash on the Company’s balance sheet, in
order to fund operating shortfalls at the hotels.
Safe Harbor for Forward-Looking Statements
Certain statements made in this Current Report on Form 8-K,
including all exhibits attached hereto, could be considered
forward-looking and subject to certain risks and uncertainties that
could cause results to differ materially from those projected. When
the Company uses the words “will,” “may,” “anticipate,” “estimate,”
“should,” “could,” “expect,” “believe,” “intend,” “potential,” or
similar expressions, it intends to identify forward-looking
statements. .
These forward-looking statements are subject to known and unknown
risks and uncertainties, which could cause actual results to differ
materially from those anticipated including, without limitation:
the impact of COVID-19 on our business and investment strategy; our
ability to open our hotels in accordance with our announced
re-opening schedule; anticipated or expected purchases or sales of
assets; our projected operating results; completion of any pending
transactions; our ability to obtain future financing arrangements
or restructure existing property level indebtedness; our
understanding of our competition; market trends; projected capital
expenditures; and the impact of technology on our operations and
business. Such forward-looking statements are based on the
Company’s beliefs, assumptions, and expectations of its future
performance taking into account all information currently known to
it. These beliefs, assumptions, and expectations can change as a
result of many potential events or factors, not all of which are
known to the Company. If a change occurs, the Company’s business,
financial condition, liquidity, results of operations, plans, and
other objectives may vary materially from those expressed in its
forward-looking statements. You should carefully consider this risk
when you make an investment decision concerning the Company’s
securities. These and other risk factors are more fully discussed
in the Company’s filings with the Securities and Exchange
Commission.
The forward-looking statements included in this report are only
made as of the date of this report. The Company can give no
assurance that these forward-looking statements will be attained or
that any deviation will not occur. The Company is not obligated to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or circumstances,
changes in expectations or otherwise.
|
Item
9.01 |
Financial Statements and
Exhibits. |
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
|
BRAEMAR HOTELS & RESORTS INC. |
|
|
|
|
By: |
/s/ Robert G. Haiman |
|
|
Robert
G. Haiman |
|
|
Executive Vice President, General Counsel & Secretary |
Date: June 11, 2020
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