AUSTIN, Texas, Jan. 8, 2021 /PRNewswire/ -- Summit Hotel
Properties, Inc. (NYSE: INN) (the "Company") today announced the
pricing on January 7, 2021 of an underwritten public offering
of $250,000,000 aggregate principal
amount of its 1.50% Convertible Senior Notes due 2026 (the
"Notes"). The offering is expected to close on January 12, 2021 and is subject to customary
closing conditions. The Company has granted the underwriters a
13-day option to purchase up to an additional $37.5 million aggregate principal amount of the
Notes solely to cover over-allotments, if any.
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The Notes will be the Company's senior unsecured obligations and
will rank equally with all of its existing and future unsecured
debt that is not subordinated, senior to any future subordinated
debt and junior to all existing and future debt and preferred
equity of the Company's subsidiaries. The Notes will pay interest
semiannually at a rate of 1.50% per annum and will mature on
February 15, 2026, unless earlier
converted, purchased or redeemed. The Notes will have an initial
conversion rate of 83.4028 per $1,000
principal amount of the Notes (equivalent to a conversion price of
approximately $11.99 per share of the
Company's common stock, $0.01 par
value per share (the "Common Stock"), and a conversion premium of
approximately 37.5% based on the closing price of $8.72 per share of Common Stock on January 7, 2021). The initial conversion rate of
the Notes is subject to adjustment upon the occurrence of certain
events, but will not be adjusted for any accrued and unpaid
interest. Prior to August 15, 2025,
the Notes will be convertible only upon certain circumstances and
during certain periods, and thereafter will be convertible at any
time prior to the close of business on the second scheduled trading
day prior to maturity of the Notes. Upon conversion, holders will
receive cash, Common Stock or a combination thereof at the
Company's election.
BofA Securities and Deutsche Bank Securities are the joint
book-running managers of the offering. KeyBanc Capital Markets,
Regions Securities LLC and US Bancorp are the senior co-managers
and Capital One Securities, PNC Capital Markets LLC, Raymond James, BMO Capital Markets, RBC Capital
Markets, Baird and Bancroft
Capital are the co-managers.
In connection with the pricing of the Notes, the Company entered
into privately negotiated capped call transactions with certain of
the underwriters or their respective affiliates and another
financial institution (the "Option Counterparties"). The capped
call transactions cover, subject to customary adjustments, the
number of shares of Common Stock underlying the Notes. The capped
call transactions are generally expected to reduce the potential
dilution to the Common Stock upon any conversion of the Notes
and/or offset any cash payments the Company is required to make in
excess of the principal amount of such converted Notes, as the case
may be, with such reduction and/or offset subject to a cap. The cap
price of the capped call transactions will initially be
$15.26, which represents a premium of
75.0% over the last reported sale price of the Common Stock on the
New York Stock Exchange on January 7, 2021, and is subject to
certain adjustments under the terms of the capped call
transactions.
In connection with establishing their initial hedges of the
capped call transactions, the Option Counterparties or their
respective affiliates expect to purchase Common Stock and/or enter
into various derivative transactions with respect to the Common
Stock concurrently with or shortly after the pricing of the Notes.
This activity could increase (or reduce the size of any decrease
in) the market price of the Common Stock or the Notes at that
time.
In addition, the Option Counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to the Common Stock
and/or purchasing or selling shares of Common Stock or other
securities of the Company in secondary market transactions
following the pricing of the Notes and prior to the maturity of the
Notes (and are likely to do so following any conversion, purchase,
or redemption of the Notes, to the extent the Company exercises the
relevant election under the capped call transactions). This
activity could also cause or avoid an increase or a decrease in the
market price of the Common Stock or the Notes, which could affect
the ability of holders to convert the Notes. To the extent the
activity occurs during any observation period related to a
conversion of the Notes, it could also affect the number of shares
of Common Stock and value of the consideration that holders will
receive upon conversion of the Notes.
The Company intends to use a portion of the net proceeds from
the offering of the Notes to pay the cost of the capped call
transactions. If the underwriters exercise their over-allotment
option to purchase additional Notes, the Company expects to use a
portion of the net proceeds from the sale of such additional Notes
to enter into additional capped call transactions. The Company will
contribute the remaining net proceeds to its operating partnership.
The operating partnership will use the remaining net proceeds to
reduce its outstanding indebtedness, including amounts outstanding
under the Company's senior unsecured revolving credit facility and
term loans.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these securities, in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
The Notes will be issued under the Company's currently effective
shelf registration statement filed with the Securities and Exchange
Commission. Copies of the final prospectus supplement (when
available) and base prospectus relating to the Notes may be
obtained by contacting BofA Securities, NC1-004-03-43, 200 North
College Street, 3rd floor, Charlotte
NC 28255-0001, Attention: Prospectus Department, email:
dg.prospectus_requests@bofa.com and Deutsche Bank Securities,
Attention: Prospectus Group, 60 Wall Street, New York, NY 10005-2836, by email to
prospectus.cpdg@db.com, or by telephone at (800) 503-4611.
About Summit Hotel Properties, Inc.
Summit Hotel Properties, Inc. is a publicly traded real estate
investment trust focused on owning premium-branded hotels with
efficient operating models primarily in the Upscale segment of the
lodging industry. As of January 8,
2021, the Company's portfolio consisted of 72 hotels, 67 of
which were wholly owned, with a total of 11,288 guestrooms located
in 23 states.
This press release contains statements that are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended, pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on certain assumptions and can
include future expectations, future plans and strategies, financial
and operating projections or other forward-looking information.
These forward-looking statements are subject to various risks and
uncertainties, not all of which are known to the Company and many
of which are beyond the Company's control, which could cause actual
results to differ materially from such statements. For example, the
fact that the offering has priced may imply that the offering will
close, but the closing is subject to conditions customary in
transactions of this type and may be delayed or may not occur at
all. In addition, the fact that the underwriters have an
over-allotment option may imply that this option will be exercised.
However, the underwriters are not under any obligation to exercise
this option, or any portion of it, and may not do so. Investors
should not place undue reliance upon forward-looking
statements.
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SOURCE Summit Hotel Properties, Inc.