Ashford Hospitality's CEO Responds To Lawsuit, Notes It's 'Another Distracting Tactic By One Shareholder'

Shares of Ashford Hospitality Prime Inc AHP were trading higher by more than 2 percent on Thursday despite the company being on the receiving end of a lawsuit.

Sessa Capital, an activist investor and 8.2 percent owner of Ashford Hospitality released an open letter on Tuesday. The fund's managers noted they are "deeply troubled" by the company's recent announcement that it has amended its operating partnership agreement to enable holders of its Operating Partnership units to acquire voting shares of the company for $0.01 per share.

Asfhord Hospitality has been evaluating strategic alternatives, including a potential sale of itself, since August 2015.

"The timing of this action makes it apparent the action was designed to help the incumbent directors hold their positions, including Ashford Prime's Chairman Monty Bennett," Sessa Capital's Managing Partner John Petry wrote in his letter. "Simply put, when faced with a proxy fight, Ashford Prime's incumbent directors sold nearly 13.3% of the Company's voting stock to a group of predominantly insiders for $43,750."

Sessa previously announced its intentions to nominate a slate of five directors for election at the company's 2016 annual meeting of shareholders.

According to

"We believe this lawsuit is without merit and yet another distracting tactic by one shareholder to prioritize its own short-term interests," the company stated. "Sessa launched its campaign after the Company had already announced a strategic review process focused on determining the best path to maximize shareholder value. In contrast, we believe based on our limited interactions that Sessa is only interested in seeking an immediate sale of the Company, regardless of whether it is in the best interest of all shareholders or is the best long-term solution."