Ashford Hospitality Prime, Inc.
Robbins Arroyo LLP Is Investigating the Officers and Directors of Ashford Hospitality Prime, Inc. (AHP) on Behalf of Shareholders
Robbins Arroyo LLP is investigating whether certain officers and directors of Ashford Hospitality Prime, Inc. (NYSE: AHP) violated their fiduciary duties to shareholders related to a recent amendment to the partnership agreement for its operating partnership. Ashford Hospitality Prime, Inc. operates upscale hotels.
The Officers and Directors of Ashford Hospitality Prime May Have Violated Their Fiduciary Duties
On February 2, 2016, ahead of a board showdown with an activist investor, Ashford Prime announced amendments to the partnership agreement for its operating partnership, Ashford Hospitality Prime Limited Partnership. The amendment will give new voting interests to owners of limited partnership units, which are mostly executives. As a result, Ashford Prime’s Chief Executive Montgomery Bennett and Chief Operating Officer David Brooks will control about 13% of Ashford Prime’s voting power.
This change in voting rights comes ahead of a potential proxy fight with activist hedge fund Sessa Capital, which owns over 8% of Ashford Prime’s shares and is seeking five board seats. Sessa contends that Ashford is plagued by conflict of interest transactions and poor corporate governance, and Ashford’s creation of new voting rights will unfairly help the incumbent directors hold their positions.
In addition, on February 3, 2016, Sessa filed a lawsuit against Ashford Prime concerning a change-in-control provision pertaining to shareholder elections (the “Proxy Penalty”) in the company’s advisory agreement with its external advisor, Ashford, Inc. The Proxy Penalty imposes an outsized termination fee on the company if shareholders elect a majority of directors not approved by the incumbent directors and Ashford Inc. subsequently elects to collect the fee. The Proxy Penalty is allegedly excessive and unenforceable under Maryland law.
Ashford Hospitality Prime Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.