Close

DIAMONDROCK HOSPITALITY: Needs Covenant Waivers for Going Concern

Subscribe or sign up for a free trial.

DiamondRock Hospitality Company filed its quarterly report on Form 10-Q, disclosing a net loss (attributable to common stockholders) of $34,559,000 on $169,995,000 of total revenues for the three months ended March 31, 2020, compared to a net income (attributable to common stockholders) of $8,945,000 on $202,375,000 of total revenues for the same period in 2019.

At March 31, 2020, the Company had total assets of $3,671,041,000, total liabilities of $1,794,444,000, and $1,876,597,000 in total equity.

The Company said, “Although we are in compliance with the financial covenants of our debt as of March 31, 2020, we have determined that it is probable the continuing effect of the COVID-19 pandemic on our hotel operating results will lead to our inability to satisfy certain financial covenants under the credit agreements for our senior unsecured credit facility and unsecured term loans beginning with the quarter ending June 30, 2020. If we were to violate a covenant, the lenders have the right to declare us in default and require repayment of the outstanding amounts under the credit agreements. We are in negotiations with our lenders to obtain a waiver of the financial covenants prior to any violation. However, because any required waiver would be granted at the sole discretion of the lenders, and such waivers may not be granted, there is substantial doubt about the Company’s ability to continue as a going concern, within one year from the date of these financial statements, without additional equity or debt financing or property sales. As of May 11, 2020, we have a term sheet for an amendment to our credit agreements that provides for covenant waivers for the subsequent four quarters through March 31, 2021 and certain other modifications to the covenants thereafter. We expect the amendment to be approved by a majority of our lenders and executed prior to any covenant violation, although we can provide no assurances that such amendment will be executed. If we are successful in obtaining the waivers, the substantial doubt about the Company’s ability to continue as a going concern without additional equity or debt financing or property sales will be removed.”

A copy of the Form 10-Q is available at:

https://is.gd/BNrVFw

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations. The Company owns 31 premium quality hotels with over 10,000 rooms. The Company has strategically positioned its hotels to be operated both under leading global brand families as well as unique boutique hotels in the lifestyle segment. The Company is based in Bethesda, Maryland.

Leave a Reply

Your email address will not be published. Required fields are marked *