MHI Hospitality Corporation Announces Amendment to Warrant

Williamsburg-based MHI Hospitality Corporation announced an amendment to increase the number of shares investors can purchase in accordance with an earlier warrant agreement.

The initial warrant, a financial agreement to sell a company's shares at a specific, guaranteed price, provided investor groups Essex Illiquid and Richmond Hill Capital Partners the right to purchase 1.9 million shares of MHI Hospitality Corporation's common stock as issued April 18, 2011. This new amendment allows the investor group to purchase additional shares.

According to a July 13 press release from the company, the amount of additional shares purchased will be the lesser of either an additional 500,000 shares of common stock or 5 percent of the issued and outstanding shares of common stock. With 10 million shares in the market, the warrant and subsequent amendment would give the named investor group control of nearly 20 percent of the company's common stock.

However, in the agreement, the company announced it would limit the ownership rights of investors holding any additional authorized shares when the warrant is exercised. The investors also agreed that any future shareholder votes coinciding with shares purchased in addition to those authorized in the warrant would be made to mirror proportionately the votes of the company's other shareholders.

The company made its announcement on the same day it released information regarding a new $14.3 million secured loan with Fifth Third Bank.

“We are very pleased with the terms of this transaction,” said Andrew M. Sims, CEO of MHI Hospitality Corporation, in a press release on the loan, “as it results in an annual interest savings of approximately $650,000 on a normalized basis.”

Since 2004, MHI Hospitality Corporation has focused on acquiring full-service hotels in the mid-Atlantic and southern U.S. It's current portfolio consists of ten hotel properties. These properties operate under brands such as Hilton Worldwide, InterContinental Hotels Group and Starwood Hotels and Resorts.

MHI Hospitality Corporation, headquartered at 410 W. Francis St., will release a report of its second quarter earnings prior to the market's open August 7. A conference call will be held following the release at 10 a.m.

For more information, visit the investor relations portion of the company's website at www.mhihospitality.com.

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