Gaylord Entertainment Company announced Tuesday that it rejected a proposal from a Texas billionaire seeking to double his nearly 15 percent stake in the hotel chain and take three seats on its board.
In a move that could have handed him long-term strategic control of the Nashville-based hotelier, Texas billionaire Robert Rowling, which owns investment firm TRT Holdings Inc., met with Gaylord executives 2½ weeks ago to propose altering a shareholder protection plan — called a poison pill — that would have allowed
him to increase TRT Holdings' stake in Gaylord to around 30 percent.
The plan also would have given TRT Holdings a way around a complex corporate law that would have required an 85 percent stake to take control of the company, and it would have given TRT Holdings three of nine board seats, Gaylord Chairman and CEO Colin V. Reed said in an interview Tuesday.
"The proposal basically delivered no value to our shareholders," Reed said.
TRT Holdings, which owns the Omni hotel chain and competes with Gaylord in the Orlando, Fla.; Dallas; and Washington, D.C., markets, began buying chunks of Gaylord stock over the summer, ultimately increasing its stake to just under 15 percent — a point that would trigger a shareholder rights plan passed in response to TRT Holdings' initial stock purchases.
Asked whether TRT Holdings had made any formal attempt to acquire Gaylord, Reed said, "If they wanted to buy the company, they haven't said so."
TRT Holdings issued a statement in response to Gaylord's late-afternoon news release regarding the proposal: "We are disappointed that management chose to communicate by means of a public press release. We did not ask management to make their release and we believe that they were not required to do so."
The statement continued, "We are acting in the best interest of all company shareholders and believe that we can positively influence the management and future of the company. We met with management and expressed our views in good faith. We will be evaluating what courses of action are available to us."
Aside from the questionable value of the proposal for Gaylord shareholders, Reed said the company's board, which unanimously rejected TRT Holdings' plans, was uncomfortable with the idea of including three board members from a rival company.
"These folks compete with us," Reed said. "It would make no sense for us to consider having competitors on our board."
Division revenue dropsIn a separate announcement, Gaylord released October operating results for the company's hospitality division in an effort to provide more communication with shareholders beyond quarterly reports.
Revenue from the division declined 1.2 percent from the same month last year, to $61 million, while preliminary November results show a 5.4 percent drop to $54.9 million. Despite the losses, Reed said the company is performing well compared with others in the hospitality industry, which he said have experienced even sharper declines.
Gaylord shares are trading at historic lows, though, after a brutal few weeks on Wall Street. The company's stock closed at $8.52 per share on Tuesday, down from a price of $21.41 per share on Oct. 31.
Shares took a plunge the week before Thanksgiving after Gaylord announced that it would cancel a $1 billion deal to build a hotel and convention center in the San Diego suburb of Chula Vista, Calif.
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