AUSTIN, Texas, Jan. 12, 2021 /PRNewswire/ -- Summit Hotel
Properties, Inc. (NYSE: INN) (the "Company") today announced that
it has closed its previously announced underwritten public offering
of $287,500,000 aggregate principal
amount of its 1.50% Convertible Senior Notes due 2026 (the
"Notes"), including $37,500,000
aggregate principal amount of Notes sold pursuant to the exercise
in full of the underwriters' over-allotment option to purchase
additional Notes.
The Notes are the Company's senior unsecured obligations and
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 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 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 are 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.
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 was initially approximately
$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.
The Option Counterparties or their respective affiliates may
modify their hedge positions by entering into or unwinding various
derivatives with respect to Common Stock and/or purchasing or
selling Common Stock or other securities of the Company in
secondary market transactions 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 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 share of Common Stock and
value of the consideration that holders will receive upon
conversion of the Notes.
The Company used a portion of the net proceeds from the offering
of the Notes to pay the cost of the capped call transactions,
including the additional capped call transactions the Company
entered into pursuant to the exercise in full of the underwriters'
over-allotment option to purchase additional Notes. The Company
contributed the remainder of the net proceeds to its operating
partnership. The operating partnership will use the net proceeds to
reduce amounts outstanding under the Company's senior revolving
credit facility and term loans.
BofA Securities and Deutsche Bank Securities were the joint
book-running managers of the offering. KeyBanc Capital Markets,
Regions Securities LLC and US Bancorp were the senior co-managers
and Capital One Securities, PNC Capital Markets LLC, Raymond James, BMO Capital Markets, RBC Capital
Markets, Baird and Bancroft
Capital were the co-managers.
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 12,
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.
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SOURCE Summit Hotel Properties, Inc.