Ryman Hospitality shares fall after launching 5.1 million-share offering

Ryman Hospitality Properties (NYSE:RHP) shares fell 3.3% in pre-market trading on Monday after the company launched an underwritten public offering of 5.1 million common shares to help finance its planned acquisition of two major Orlando resort properties.

The company intends to use the net proceeds from the equity raise to fund part of the approximately $1.38 billion purchase price for the previously announced acquisition of the JW Marriott Orlando Grande Lakes Resort and The Ritz-Carlton Orlando, Grande Lakes.

The underwriters will also receive a 30-day option to purchase up to an additional 765,000 shares, potentially increasing the size of the capital raise.

Proceeds from the share offering will cover only part of the $1.38 billion acquisition price.

Ryman Hospitality expects to finance the remaining amount through a combination of cash on hand and additional debt.

Potential sources include borrowings under the Operating Partnership's revolving credit facility, unsecured debt financing or the assumption of an existing secured loan attached to the properties.

The structure gives the company several financing options as it prepares to complete one of the larger transactions in its resort portfolio.

Completion of the equity offering is not conditional on the Grande Lakes transaction going ahead and is expected to occur before the acquisition itself closes.

Should the acquisition ultimately fail to proceed, Ryman Hospitality said the net proceeds raised through the offering would instead be allocated to general corporate purposes.

The offering remains subject to market and other customary conditions, meaning there is no guarantee regarding its completion, timing, final size or pricing.

BofA Securities, J.P. Morgan, Morgan Stanley and Wells Fargo Securities have been appointed as joint book-running managers for the offering.

Deutsche Bank Securities, BTIG, Credit Agricole CIB, Scotiabank, SMBC Nikko and Raymond James are also participating as bookrunners.

The 3.3% decline in Ryman Hospitality shares reflects the near-term dilution associated with issuing 5.1 million new shares, although the capital raise is intended to support the company's strategic expansion through the approximately $1.38 billion acquisition of the two Grande Lakes resorts.

Ryman Hospitality Properties stock price