(Adds details, background)
By Michael Flaherty
Feb 16 Ashford Hospitality Prime Inc has
reached a deal with hedge fund Sessa Capital, agreeing to add
three directors to the real estate investment trust's board in
exchange for a two-year truce in a shareholder dispute.
The agreement ends a feud that unfolded last year between
the REIT and the hedge fund, which is Ashford Prime's fourth
Sessa, which owned 8.5 percent of the stock as of late last
year, began a proxy fight against Dallas-based Ashford Prime
last spring, nominating five directors to serve on the board.
Ashford Prime invests in luxury hotels and resorts.
A legal spat emerged from the fight, causing Sessa to sue
the company in a case that the hedge fund ultimately lost. As a
result, Sessa was unable to put its directors up for a
Other Ashford Prime shareholders nevertheless displayed
their frustration with the company and its board. The company
said in a release after the annual meeting last June that
"withheld" votes exceeded the "for" votes for each of its
Sessa prepared to launch another proxy fight this year,
according to people familiar with the matter, but the two sides
entered talks last month to avoid another contest.
According to the settlement deal struck on Thursday, two of
Sessa's previous director nominees will be appointed to Ashford
Prime's board. The deal also allows the company and the hedge
fund to jointly select an additional director.
Two incumbent directors have agreed to step down.
Ashford Prime and Sessa Capital have agreed to dismiss all
pending litigation and to various provisions until before its
2019 annual meeting, the company said in a statement.
Ashford Hospitality Prime spun off from fellow REIT Ashford
Hospitality Trust Inc in 2013. The assets of both REITs
are managed by Ashford Inc whose CEO Monty Bennett is the
chairman of all three companies.
"We believe these new independent directors will add
additional valuable experience and a fresh perspective to the
Ashford Prime board," Bennett said on Thursday. The market value
of all three companies is around $1 billion.
Sessa's original fight was aimed at the fee Ashford Prime is
forced to pay Ashford Inc in the event it is no longer the
REIT's asset manager.
Sessa said last year that shares of the REIT are undervalued
and that it should seek a buyer.
(Reporting by Michael Flaherty; editing by Chris Reese and