Weisman Confirms Offer for Ashford Hospitality Prime (AHP) - 13D

Weisman filed a 13D on Ashford Hospitality Prime (NYSE: AHP) confirming a takeover offer, reported earlier:

Dear Mr. Bennett:

Weisman Group, LLC., a Delaware limited liability company ("Weisman Group"), hereby proposes the consummation of an assets acquisition transaction (the "Transaction") with Ashford Hospitality Prime, Inc. ("AHP") substantially as follows:

A. We expect that the Transaction would be structured as an acquisition of assets (the “Acquisition”) of AHP by a controlled affiliated company of Weisman Group, anticipated to be called AHP Acquisition Company Inc. When completed the Acquisition will result in:

1. The Weisman Group, which may include affiliates and other partners, acquiring 100% of AHP assets for a total consideration of approximately $1.48 billion (including refinancing of all existing AHP debt), of which the shareholders of AHP shall receive a cash amount equal to: (i) $20.25 per share of common stock (the "Common Consideration"), gross before deductions, based on approximately 32,736,000 fully diluted shares outstanding on April 21, 2016 and about (ii) $25.00 per share of Series B Preferred stock (the "Preferred Consideration" and together with the Common Consideration, the "Shares Consideration", gross before deduction, based on 2,890,850 Series B shares outstanding on that date; and

2. Holders of options, or other outstanding rights, if any (collectively “options”) to purchase AHP common stock an amount per option that is equal to the positive difference between the strike price per option and the applicable Shares Consideration.

B. The Acquisition would be subject to the following material conditions:

1. Approval of the Acquisition by the unaffiliated shareholders of AHP holding a majority of the outstanding shares held by the unaffiliated shareholders;

2. The absence of any injunction preventing the Acquisition;

3. The approval of any applicable regulatory agencies whose approval is legally required to complete the Acquisition;

4. The absence of a material adverse effect affecting AHP since the date of the definitive agreement for the Acquisition;

5. Allocation of not more than $70 million of the Cash Consideration to the buy- out, termination and full satisfaction of the AHP Advisory Agreement with Ashford LLC;

6. The sale of the Courtyard Seattle, reported currently to be under contract of sale, and the Courtyard Marriott Hotel in downtown San Francisco; and

7. Such other reasonable conditions for transactions of this type as are customary and mutually agreed by the parties.

The terms and conditions of this letter of intent are based upon publicly available information and are intended to be a non-binding expression of the basic terms upon which Weisman Group proposes to continue further discussions with you and the board of directors of AHP regarding the Transaction. Any binding agreement with respect to the Transaction will be subject to, among other things, Weisman Group’s completion of its due diligence investigation of AHP referenced to herein, and AHP’s completion of its due diligence investigation of Weisman Group and its affiliates, as well as the negotiation of a definitive agreement setting forth the terms and conditions of the Transaction (the “Comprehensive Agreement”).

Weisman Group desires to proceed in the most expeditious manner practicable to complete due diligence and negotiate the terms of a Comprehensive Agreement. Unless and until the parties execute and deliver such a Comprehensive Agreement, neither party shall have any obligation to complete the Transaction or any other binding obligations to each other, other than the obligations of the parties that arise upon the execution and delivery of a confidentiality and non-disclosure agreement to be entered into between Weisman Group and AHP (the “NDA”) in the form of Annex A hereto. The NDA will be executed and delivered by the parties before commencing any due diligence investigations or further discussions.

1.1 Upon the execution and delivery of this letter and the NDA, Weisman Group would promptly commence its due diligence investigation of AHP, and AHP would promptly commence its due diligence investigation of Weisman Group and its applicable affiliates. The proposed initial due diligence period would be for up to sixty (60) days after such execution date (such period, the “Initial Evaluation Period”), unless either party elects to terminate discussions by notice to the other.

1.2 During the Initial Evaluation Period, AHP will cooperate with and provide Weisman Group reasonable access to its books, records and personnel (during normal business hours upon reasonable prior notice) to permit the other party to perform a reasonable due diligence investigation.

1.3 Either party may terminate discussions regarding the Transaction and any further due diligence by the other party at any time in its discretion, by notifying the other party of that decision, without any liability to the other party or any continuing obligations, other than those under the NDA.

2. The parties may engage in discussions and negotiations regarding the terms and conditions for the Transaction and prepare definitive documents therefor (the "Comprehensive Agreement") during the Initial Evaluation Period; provided, that any such discussions may be terminated by either party at any time upon notice to the other party.

3. If either party gives notice to the other party that it is no longer interested in pursuing discussions with respect to the Transaction, then this Agreement shall terminate upon such notice and each party shall bear its own costs and expenses, and neither party shall have any liability to the other. Any such termination shall not affect the NDA or the parties’ respective obligations thereunder.

4. Weisman Group proposes that the Comprehensive Agreement shall allow AHP and a special committee of the Board of Directors of AHP (the “Special Committee”) a 30 day period, extending from the day of execution of the Comprehensive Agreement (the "go shop period"), during which the Special Committee and its representatives would be permitted to affirmatively solicit alternative proposals from other bidders. If the Special Committee has commenced discussions during the go shop period for a transaction that the Special Committee believes is reasonably likely to be superior to the Transaction, the Special Committee would be permitted to unilaterally extend the go shop period for up to an additional 15 days to complete negotiations with such purchaser. If AHP terminates the agreement to accept an alternative proposal during the go-shop period, AHP shall promptly reimburse Weisman Group for its reasonable actual out of pocket costs and expenses incurred in connection with the Transaction, and a customary, reasonable breakup fee in an amount to be negotiated as part of the Comprehensive Agreement.

5. Assuming the Comprehensive Agreement was not terminated as a result of the go shop, after the go shop period AHP would agree to customary restrictions on soliciting acquisition, recapitalization, change of control or other extraordinary transaction offers or proposals other than with Weisman Group or its affiliates, and AHP would not allow third parties access to non-public due diligence information regarding AHP, subject to customary “fiduciary out” exceptions to be negotiated and set forth in the Comprehensive Agreement.

6. The parties would take such customary steps as are necessary to effectuate the Transaction and as are set forth in the Comprehensive Agreement, including (subject in each case to customary exceptions for fiduciary considerations) AHP’s Board of Directors making a favorable recommendation of the Transaction to the shareholders of AHP, AHP soliciting the votes of AHP shareholders with respect to the Transaction in accordance with applicable law and regulations, and each party making and distributing any required SEC filings as required under applicable law.

7. AHP would be permitted to conduct financial due diligence on Weisman Group and any applicable affiliated buyer entity, and Weisman Group and any such buyer(s) shall provide firm commitment letters from lenders (if applicable) and personal guarantees from the principals or beneficial owners of the buyer entities, or such other financial assurances as the Special Committee shall require to confirm the availability of funds and the buyer’s performance.

8. If the parties enter into a Comprehensive Agreement l, and AHP does not close in breach of the Comprehensive Agreement, then AHP would pay a customary break up fee, on terms to be negotiated and set forth in the Comprehensive Agreement. Similarly, if the parties enter into a Comprehensive Agreement, and buyers fails to complete the Transaction in breach of the Comprehensive Agreement, then AHP could bring an action for damages or seek specific performance, or elect to be paid as liquidated damages a reverse break up fee on terms to be negotiated and set forth in the Comprehensive Agreement.

9. This document is intended to be merely an expression of the general terms upon which the parties currently propose to commence due diligence and pursue discussions regarding the potential terms and conditions of the Transaction. Nothing contained herein shall obligate either party to continue discussions or complete the Transaction, nor imply a joint venture, partnership or association between the parties.

If the terms described above are an acceptable basis on which to commence due diligence and continue discussions, please acknowledge as much by signing in the space below and by signing and returning a copy of the attached NDA.

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