Bay Area lodge proprietor lands funding right after personal bankruptcy warning

The proprietor of seven major-notch resorts in and close to the Bay Spot has warned regulators that it faces a critical funds squeeze and probable bankruptcy — but also claims it hopes a financing package provided by a key trader could enable ward off its dollars struggles.

The scramble by Ashford Hospitality to land financing in the wake of its warning that it was struggling with potential individual bankruptcy are the hottest indicators of the coronavirus-linked monetary and economic roller coaster that confronts the lodging and travel sectors.

Texas-centered Ashford Hospitality Have confidence in, which owns hotels in 27 states such as California, warned in a Dec. 22 filing with the Securities and Trade Commission that it is struggling liquidity complications that are serious adequate to shove the business into a Chapter 11 bankruptcy filing.

However, in a Dec. 28 submitting with the SEC, Ashford Hospitality mentioned that it experienced secured a financing determination of at least $200 million from Oaktree Cash Administration that could significantly simplicity the lodging company’s monetary squeeze.

“We believe that this strategic funding determination offers considerable money and sufficient liquidity for Ashford Believe in to capitalize on the approaching recovery in the hospitality business,” mentioned J. Robison Hays, chief govt officer with Ashford Hospitality Belief.

Texas-primarily based Ashford Hospitality’s lodging houses consist of 6 inns in the Bay Place and one particular lodge in the Monterey Bay space, according to the company’s web-site.

The lodge owner reported it thinks it has adequate funds to fund its operations “into the early part of fiscal yr 2021,” Ashford Hospitality stated in a the latest SEC filing Ashford’s fiscal yr is identical to the calendar 12 months.

The corporation owns the Courtyard Oakland Airport in Oakland Courtyard Newark and Home Inn Newark, equally in Newark Embassy Suites Santa Clara in Santa Clara Marriott Fremont in Fremont Embassy Suites Walnut Creek in Walnut Creek and Hilton Santa Cruz/Scotts Valley in Santa Cruz.

“We will require significant additional funding to continue on our working activities,”  Ashford Hospitality Belief stated in the SEC submitting.

It is possible that at the very least some of the added essential financing is becoming offered by Oaktree Cash Administration, a world expense organization with $140 billion in property beneath administration.

Oaktree Cash agreed to provide at least $200 million in funding and could supply another $150 million, for a offer that could potentially achieve $350 million.

Intense problems could arise without having a hard cash infusion or other initiatives such as resort property product sales, or initiatives to influence its lenders and creditors to restructure loans or halt collections of house loan payments, Ashford Hospital warned in the regulatory filing on Dec. 22.

“Due to our existing monetary constraints, there is a sizeable danger that it could be necessary for us to seek out safety below Chapter 11 of the U.S. Bankruptcy Code,” Ashford Hospitality stated in the SEC submitting.

In excess of the 12 months that finished on Sept. 30, Ashford Hospitality Have faith in misplaced $448.5 million and created revenue of $772.2 million, according to the Yahoo Finance web-site. For the 3-month time period ending in September, Ashford’s income nose-dived by 75% as opposed to the exact same quarter the year in advance of.

“Since late February 2020, we have professional a considerable drop in occupancy and income per out there home,” Ashford Hospitality stated in the SEC submitting.

Even worse, financial woes and consumer fears linked with the coronavirus outbreak are continuing to impact the company’s inns.

“We are recording important reservation cancellations relative to prior expectations as very well as a substantial reduction in new reservations,” Ashford Hospitality mentioned.

The problems won’t conclude any time before long, Ashford warned in the SEC documents.

“The continued outbreak of the virus in the U.S. has and will continue on to even more decrease travel and demand from customers at our lodges,” Ashford Hospitality Have faith in stated.

Even so, Ashford Hospital now sees some home for optimism with the propagation of vaccines to overcome the coronavirus.

The lodging operator also mentioned it is producing some headway with regards to a number of initiatives, such as negotiations with its creditors.

“Ashford Belief now has a seem stability sheet and adequate money methods to productively navigate the pandemic and go after extensive-expression advancement,” Hayes said.