SC 13D/A

0001193125-16-430608.txt : 20160115 0001193125-16-430608.hdr.sgml : 20160115 20160115100101 ACCESSION NUMBER: 0001193125-16-430608 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20160115 DATE AS OF CHANGE: 20160115 GROUP MEMBERS: JOHN PETRY GROUP MEMBERS: SESSA CAPITAL GP, LLC GROUP MEMBERS: SESSA CAPITAL IM GP, LLC GROUP MEMBERS: SESSA CAPITAL IM, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Ashford Hospitality Prime, Inc. CENTRAL INDEX KEY: 0001574085 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 462488594 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-87737 FILM NUMBER: 161344300 BUSINESS ADDRESS: STREET 1: 14185 DALLAS PARKWAY STREET 2: SUITE 1100 CITY: DALLAS STATE: TX ZIP: 75254 BUSINESS PHONE: (972) 490-9600 MAIL ADDRESS: STREET 1: 14185 DALLAS PARKWAY STREET 2: SUITE 1100 CITY: DALLAS STATE: TX ZIP: 75254 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Sessa Capital (Master), L.P. CENTRAL INDEX KEY: 0001618360 IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 1350 AVENUE OF THE AMERICAS STREET 2: SUITE 3110 CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-257-4410 MAIL ADDRESS: STREET 1: 1350 AVENUE OF THE AMERICAS STREET 2: SUITE 3110 CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D/A 1 d112577dsc13da.htm SC 13D/A SC 13D/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Schedule 13D

Under the Securities Exchange Act of 1934

(Amendment No. 3)*

Ashford Hospitality Prime, Inc.

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

044102101

(CUSIP Number)

Thomas R. Stephens

Bartlit Beck Herman Palenchar & Scott LLP

1899 Wynkoop, Suite 800

Denver, Colorado 80202

(303) 592-3100

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

January 14, 2016

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

(Continued on following pages)


CUSIP No. 044102101


1.	Names of Reporting Persons. Sessa Capital (Master), L.P.
2.	Check the Appropriate Box if a Member of a Group (See Instructions) (A) ¨ (B) x
3.	SEC Use Only
4.	Source of Funds (See Instructions) OO
5.	Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)
6.	Citizenship or Place of Organization: Cayman Islands
Number of Shares Beneficially Owned by Each Reporting Person With		7.	Sole Voting Power 2,330,726
		8.	Shared Voting Power
		9.	Sole Dispositive Power 2,330,726
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,330,726
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.	Percent of Class Represented by Amount in Row (11) 8.2%
14.	Type of Reporting Person (See Instructions) PN


CUSIP No. 044102101


1.	Names of Reporting Persons. Sessa Capital GP, LLC
2.	Check the Appropriate Box if a Member of a Group (See Instructions) (A) ¨ (B) x
3.	SEC Use Only
4.	Source of Funds (See Instructions) AF
5.	Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)
6.	Citizenship or Place of Organization: Delaware
Number of Shares Beneficially Owned by Each Reporting Person With		7.	Sole Voting Power 2,330,726
		8.	Shared Voting Power
		9.	Sole Dispositive Power 2,330,726
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,330,726
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.	Percent of Class Represented by Amount in Row (11) 8.2%
14.	Type of Reporting Person (See Instructions) OO


CUSIP No. 044102101


1.	Names of Reporting Persons. Sessa Capital IM, L.P.
2.	Check the Appropriate Box if a Member of a Group (See Instructions) (A) ¨ (B) x
3.	SEC Use Only
4.	Source of Funds (See Instructions) AF
5.	Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)
6.	Citizenship or Place of Organization: Delaware
Number of Shares Beneficially Owned by Each Reporting Person With		7.	Sole Voting Power 2,330,726
		8.	Shared Voting Power
		9.	Sole Dispositive Power 2,330,726
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,330,726
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.	Percent of Class Represented by Amount in Row (11) 8.2%
14.	Type of Reporting Person (See Instructions) IA


CUSIP No. 044102101


1.	Names of Reporting Persons. Sessa Capital IM GP, LLC
2.	Check the Appropriate Box if a Member of a Group (See Instructions) (A) ¨ (B) x
3.	SEC Use Only
4.	Source of Funds (See Instructions) AF
5.	Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)
6.	Citizenship or Place of Organization: Delaware
Number of Shares Beneficially Owned by Each Reporting Person With		7.	Sole Voting Power 2,330,726
		8.	Shared Voting Power
		9.	Sole Dispositive Power 2,330,726
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,330,726
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.	Percent of Class Represented by Amount in Row (11) 8.2%
14.	Type of Reporting Person (See Instructions) OO


CUSIP No. 044102101


1.	Names of Reporting Persons. John Petry
2.	Check the Appropriate Box if a Member of a Group (See Instructions) (A) ¨ (B) x
3.	SEC Use Only
4.	Source of Funds (See Instructions) AF
5.	Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)
6.	Citizenship or Place of Organization: United States
Number of Shares Beneficially Owned by Each Reporting Person With		7.	Sole Voting Power 2,330,726
		8.	Shared Voting Power
		9.	Sole Dispositive Power 2,330,726
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 2,330,726
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
13.	Percent of Class Represented by Amount in Row (11) 8.2%
14.	Type of Reporting Person (See Instructions) IN

Items 4 and 7 of the statement on Schedule 13D relating to the Common Stock, $0.01 par value per share (the “Shares”) of Ashford Hospitality Prime, Inc., a Maryland corporation (“AHP”) previously filed by (i) Sessa Capital (Master), L.P. (“Sessa Capital”), a Cayman Islands exempted limited partnership, as a result of its direct ownership of Shares, (ii) Sessa Capital GP, LLC, a Delaware limited liability company (“Sessa Capital GP”), as a result of being the sole general partner of Sessa Capital, (iii) Sessa Capital IM, L.P. (“Sessa IM”), a Delaware limited partnership, as a result of being the investment adviser for Sessa Capital, (iv) Sessa Capital IM GP, LLC, a Delaware limited liability company (“Sessa IM GP”), as a result of being the sole general partner of Sessa IM, and (v) John Petry, as a result of being the manager of Sessa Capital GP and Sessa IM GP (Sessa Capital, Sessa Capital GP, Sessa IM, Sessa IM GP and Mr. Petry are collectively referred to as the “Reporting Persons”) is hereby amended as follows:

Item 4. Purpose of Transaction

No change except for the addition of the following:

On January 14, 2016, in compliance with AHP’s bylaws, Sessa Capital sent a letter to AHP notifying AHP that Sessa Capital intends to nominate five individuals for election as directors at AHP’s 2016 annual meeting of shareholders. A copy of Sessa Capital’s press release of January 15, 2016 relating to the notice is attached as Exhibit 1 and incorporated by reference in this Item 4 in its entirety.

The Reporting Persons intend to continue to closely monitor actions by AHP’s board in connection with the strategic alternatives project and corporate governance matters, and will consider taking further action to protect their interests and the interests of shareholders, which actions may involve plans or proposals of the type described in Item 4(a) through (j) of Schedule 13D.

Item 7. Exhibits

The following documents are filed as exhibits to this statement:


Exhibit 1		Press Release dated January 15, 2016 issued by Sessa Capital.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: January 15, 2016

/s/ John Petry

John Petry, individually, as manager of Sessa Capital GP, LLC, the general partner of Sessa Capital (Master), L.P., and as manager of Sessa Capital IM GP, LLC, the general partner of Sessa Capital IM, L.P.

EX-99.1 2 d112577dex991.htm EX-99.1 EX-99.1

Exhibit 1

SESSA CAPITAL, ONE OF ASHFORD HOSPITALITY PRIME’S LARGEST SHAREHOLDERS, NOMINATES

CONTROL SLATE OF FIVE HIGHLY QUALIFIED DIRECTOR CANDIDATES FOR ELECTION TO BOARD AT

2016 ANNUAL MEETING

Believes Overhaul of Board is Needed to Revive Stalled Strategic Review Process and

to Remedy Poor Corporate Governance and Conflicts of Interest

New York, NY, – January 15, 2016 – Sessa Capital (Master), L.P. (“Sessa”), owner of 8.2% of the outstanding common shares of Ashford Hospitality Prime, Inc. (NYSE: AHP) (“Ashford Prime” or the “Company”) and Ashford Prime’s third largest shareholder, today announced it will nominate a slate of five highly-qualified, independent directors for election at the Company’s 2016 Annual Meeting of Stockholders.

Sessa’s nominees will be Larry Cunningham, Phil Livingston, John Petry, Daniel Silvers and Chris Wheeler.

Sessa believes corporate governance failures have been an unshakable burden on Ashford Prime since it started trading as a public company in November 2013 and have only worsened over time. Therefore, Sessa has concluded that a sale process on a level playing field for all potential bidders is the best way to maximize value for all shareholders.

Despite a brief period of outperformance following the Company’s announcement of its decision to pursue strategic alternatives, the stock has since resumed the downward slide it has exhibited since it started trading.

Additionally, since Sessa’s initial investment, the Company has engaged in a number of conflict-of-interest transactions, reflecting poor corporate governance, and remained virtually silent on the status of the strategic review process announced by the Company on August 28, 2015. The Company’s actions appear to benefit Monty Bennett, the Chairman and CEO of the Company and Chairman and CEO of its external manager Ashford Inc., at the expense of all shareholders.

Despite Sessa’s repeated calls for the Company to address its corporate governance deficiencies and reverse the series of shareholder-unfriendly actions that have exacerbated the conflicts of interest inherent in Ashford Prime’s organizational structure, the Company has only made matters worse.

Since June 2015, Ashford Prime has:

•

Amended its advisory agreement with Ashford Inc., an entity dominated by Mr. Bennett, in an attempt to impose a large termination fee if shareholders elect directors not acceptable to Ashford Inc.;

•

Completed a share issuance dilutive to the Chairman’s own subsequent estimate of NAV in order to purchase an asset at a cap rate much richer than its own properties are valued by the market; and

•

Purchased $16.6 million of stock in Ashford Inc. at a 59% premium at the time and an 88% premium to yesterday’s close.

The termination fee payable to Ashford Inc. undercuts the integrity of the strategic review process. Management has estimated the termination fee to be up to $5 per share, or nearly 50% of the Company’s $11.21 closing share price as of January 14, 2016. Quite simply, this fee makes a fair strategic process virtually impossible. The estimated fee is about 17 times the Company’s annualized base advisory fee paid to Ashford Inc. Sessa believes a customary fee in the industry would be less than 1/5 that amount. If management’s numbers are correct, the Company would likely pay more to terminate the advisory agreement than it would pay in base fees for the remainder of the agreement’s entire 10-year term based on the Company’s current market capitalization.

Rather than use the three separate renegotiations of the advisory agreement in the past two years to fix the problems relating to the fee, the Company’s Board appears to have conceded to amendments which, as a whole, have significantly broadened and worsened the fee – to the Company’s detriment and to Ashford Inc.’s benefit. In fact, the Bennett family’s potential ownership of more than half of Ashford Inc. leaves them the primary beneficiaries of this termination fee, with the Bennetts’ proportional interest in the termination fee approaching $100 million.

John Petry, Sessa’s Founder and Managing Partner, commented: “Having witnessed Ashford Prime’s Board and management disenfranchise shareholders and take one self-serving action after another, the time for change and accountability at the Board-level has come. In our view, the only chance for a successful, fair and transparent strategic alternatives process requires independent, highly-qualified directors to oversee its execution. Our slate is comprised of such individuals that are not beholden to Monty Bennett, who has presided over a loss of approximately 45% of the Company’s share value since trading began. Our slate, if elected, would immediately pursue all options for renegotiating the termination fee, addressing the potential conflicts of interest, accelerating the strategic review process and seeking to eliminate the Company’s persistent discount to its net asset value.”

Nominee Bios


Lawrence A. Cunningham		Lawrence A. Cunningham is an expert on corporate governance and related matters, having published over forty related research articles, as well as dozens of other works on matters of corporate governance in such periodicals as Directors & Boards, The New York Times, and The Wall Street Journal. He is the Henry St. George Tucker III Research Professor at The George Washington University Law School in Washington D.C. and Executive Board Member of the University’s Center for Law, Economics and Finance (C-LEAF), and the Director of C-LEAF in New York. Previously, Mr. Cunningham served as Associate Dean of Boston College Law School and Director of the Samuel and Ronnie Heyman Center on Corporate Governance at Cardozo School of Law in New York City. Consulting assignments have included corporate governance matters for companies such as Bacardi, Charter Communications, and the Securities Investor Protection Corporation. Prior to his twenty years of writing and teaching, Mr. Cunningham served as of counsel for Roberts, Sheridan & Kotel for seven years and practiced corporate law with Cravath, Swaine & Moore for six years, engaging in the areas of governance, securities, and mergers and acquisitions in both roles. Mr. Cunningham has also authored a number of books, including The Essays of Warren Buffett: Lessons for Corporate America, in collaboration with Warren Buffett. He is a Member of the Dean’s Council of Lerner College of Business of the University of Delaware and a recent nominee to the Editorial Board of the Museum of Financial History in New York. Mr. Cunningham received a Bachelor’s degree in economics from the University of Delaware and a J.D. from Cardozo School of Law in New York City.

Philip Livingston		Philip Livingston has significant public and private company board experience having served as a director for Broadsoft Corporation, Insurance Auto Auction, Cott Corporation, MSC Software and Seitel Inc. He is currently a director of SITO Mobile and Rand Worldwide Inc. and most recently served as Chief Executive Officer and a director of Ambassadors Group, a provider of People To People educational travel services from May 2014 to October 2015. Prior to joining Ambassadors Group, he was Chief Executive Officer of LexisNexis Web Based Marketing Solutions until October 2013. Previously, Mr. Livingston served as Chief Financial Officer for Celestial Seasonings, Inc., Catalina Marketing Corporation and World Wrestling Entertainment. From 1999 to 2003 he served as President of Financial Executives International, the leading professional association of chief financial officers and controllers. In that role he led the organization’s support of regulatory and corporate governance reforms culminating in the Sarbanes-Oxley Act. Mr. Livingston earned a BA in Business Management and a BS in Government and Politics from the University of Maryland and a MBA in Finance and Accounting from the University of California, Berkeley.


John Petry		John Petry founded Sessa Capital in November 2012 and is the sole portfolio manager responsible for portfolio management, risk management, and overseeing research. Prior to launching Sessa Capital, Mr. Petry was a Principal at Columbus Hill Capital Management from November 2010 to February 2012, an opportunistic credit hedge fund that focused on distressed investing. Previously, he was a Partner at Gotham Capital from 1997 to October 2010, where he employed a value-based approach to investing. During that time, Mr. Petry managed hedge fund Sissa Capital. Prior to Gotham Capital, he was an Analyst at Opus Capital, a value-oriented hedge fund, from 1995 to 1997 and an Associate at Conning and Company from 1993 to 1995. Mr. Petry graduated from University of Pennsylvania, Wharton School, with a B.S in Economics in 1993.

Daniel B. Silvers		Daniel B. Silvers brings significant operational and investing experience in the hospitality sector. He is the Founder and Managing Member of Matthews Lane Capital Partners LLC. He currently serves on the boards of directors of Forestar Group Inc. and India Hospitality Corp. He has previously served on the boards of directors of International Game Technology, Universal Health Services, Inc. and bwin.party digital entertainment plc, as well as serving as President of Western Liberty Bancorp, an acquisition-oriented company which bought and recapitalized Service1st Bank of Nevada, a community bank in Las Vegas, NV. In 2015, Mr. Silvers was featured in the National Association of Corporate Directors’ “A New Generation of Board Leadership: Directors Under Age 40” list of emerging corporate directors. Prior to founding Matthews Lane, Mr. Silvers was the President of SpringOwl Asset Management LLC, having joined a predecessor entity in 2009. Previously, Mr. Silvers was a Vice President at Fortress Investment Group, a leading global alternative asset manager, where he worked from 2005 to 2009. Prior to joining Fortress, he was a senior member of the real estate, gaming and lodging investment banking group at Bear, Stearns & Co. Inc., where he worked from 1999 to 2005. Mr. Silvers holds a B.S. in Economics and an M.B.A. in Finance from The Wharton School of the University of Pennsylvania. He has also received a Corporate Governance certification through the Director Education & Certification Program at the UCLA Anderson School of Management. Mr. Silvers is active in a number of not-for-profits, including Horace Mann School, University of Pennsylvania and UJA-Federation of New York.


Chris D. Wheeler		Chris D. Wheeler has over thirty-five years of experience in real estate M&A, development, management and financing. He is the former Chairman and Chief Executive Officer of Gables Residential Trust, a publicly-traded multifamily REIT, which was sold to ING Clarion in 2005 for $2.8 billion. Most recently, Mr. Wheeler served as a senior real estate advisor to the CEO of a family office and to the senior executives of a Fortune 50 company. Previously, Mr. Wheeler worked at Trammell Crow in a number of roles, most recently as Group Managing Partner for Trammell Crow Residential where he oversaw its multifamily residential operations throughout the Southeast, Mid-Atlantic and Northeast regions. He formerly served as Director on the Executive Committee of the National Multi Housing Council (NMHC) and on the Board of Governors for the National Association of Real Estate Investment Trusts (NAREIT). Mr. Wheeler graduated with honors from California Institute of Technology with a degree in applied physics and received an MBA from Harvard Business School.

Media Contacts:

Sard Verbinnen & Co

Dan Gagnier / Mark Harnett

212.687.8080

Daniel Goldstein

310.201.2040

Investor Contacts:

Innisfree M&A Incorporated

Scott Winter / Jonathan Salzberger

212.750.5833