that's tantamount to a sale of the company. The problem when you decide to "just sell the hotels" is that it triggers all the change of control provisions in every mortgage and every franchise agreement, plus every employment agreement. Everyone at SPPR will quit. Every executive with a change of control provision in his/her employment agreement will sue for performance and stop coming to work. Just selling the hotels is not as easy as it sounds. Unwinding a public company, even one this small carries with it substantial burdens, and i didn't even mention the legal costs. "Just selling the hotels" becomes a fire sale.
Time to put all the hotels up for sale. They should sell for at least book value. No one seems interested in buying the whole company even at this bargain price. As hotels sell pay back the debt, redeem the preferred and reduce management expenses. Can management liquidate themselves out of their jobs for the good of the shareholders?
Not really sure, notthing has come out yet.
The FFO is getting better.
This was the first profit in a long time.
I have a number of these, and at this point I am holding on.
I am hoping for restatement in a year or two, but I could be really stupid.
This is a very small company.
The answer to that is quite simple. First, their existing business model was baloney...they thought they would recycle capital out of crummy assets into slightly less crummy assets, get better/bigger cash flow, better price multiples on the stock and then raise money less dilutively. That was a Hail Mary pass. When you self liquidate a portfolio that has little equity value (because you over paid for it prior to the recession) and then buy "nicer" properties with what little cash you get from distressed sales...all you have done is decreased your asset base..the company just gets smaller. There is no free lunch here. You cannot just wash away the balance sheet and put lipstick on a pig and hope your stock will go up. Sell 5 lousy assets and buy one less lousy asset...not a winning strategy. This company was doomed in 2009. The money that was more recently invested by the foreign institution was designed to keep the public shell a going concern, because the public structure has value....to someone. That was probably what they were thinking...save the company from the pink sheets and then reverse merge. But now no one will do that. That preferred investor is probably steaming mad.
I was disappointed they didn't use round C money to payoff rounds A&B which carry much higher interest. Instead, they used that money to buy more hotels which they thought can turn the business around. Well we know how that went.
Why do you think managers in most companies want to hire more people even when they don't need it. There's a clear difference in motivation/goal between owners and managers.
why do you then suppose they used valuable asset money to buy the mid-upscale properties? Wonder why it wasn't used to pay down debt and buy back the preferred. Then sell off all the motels except perhaps those they could cluster in let us say 1 or 2 geographical area and thereby maintain easier oversight?
Why would HT pay a cent for this portfolio? maybe SPPR should pay HT to take it off their hands, get rid of the public company costs and the Board. NOBODY wants these assets, they are spread out all over the country, they are non-institutional grade assets in hick towns, there are no barriers to entry, no way to keep the so-called hotel manager in hicksville from stealing, there are no economies of scale, they are low-end economy properties with no revpar...the entire business model is bad. The company is worth perhaps the debt on the portfolio..the equity is negative, the preferred stock is probably $0 too. There is no upside here, regardless of the price. This company was in a black hole for the past 6 years. The recession just masked the real problem that the business model was faulty, but the Board and Mgmt believed they were smarter than the market and could pull a rabbit out of their respective hat and not dilute the shareholders when they tried to recap the company. Then when they finally had to give up the ghost and actually pulled the trigger, there were no buyers for the stock...that shed the last of the "Emperor's New Clothes" and what we see is what the true value of this equity has really been for years...going to zero fast. Now there is no way out. They cant sell equity, cant sell the company and can't merge. They will get de listed in short order ...at some point the non-traded equity will get wrapped up at zero, along with some nominal 10 cents on the dollar offer for the preferred, and someone will come in and take the assets and sell them off and make a little money. But it wont be anyone on this Board.
I have been following this stock for 5 years. I used to trade it. But I stopped for the past 1.5 years. I am amazed by its Y-2-Y RevPAR performance comparing to the industry average. SPPR was left behind every single quarters for the past 1.5 years. They used to blame it on legacy properties. Well, their 10-Q clearly shows even its newly acquired mid-to-high end properties have negative Y-2-Y RevPAR growth. The management has nobody to blame but themselves.
I tried to short it. But my brokerage refused, claiming they couldn't borrow the shares for me to short.
namll71 would you like to restate your support of this company from your Oct 14th post when the shares were at $6.50? I said this equity is worth $0.00, you said it would get bought out at $8.00...any comments?