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Item 1A. Risk Factors
TExcept as described below, there have been no material changes to tin or additions to the risk factors disclosed in Risk included in our Quarterly Report on Form 10-Q for the period ended June 30, 2024 or our Annual Report on Form 10-K for the year ended December 31, 2023.
Following discussions with our independent registered public accounting firm, we have included in the notes to our financial statements an explanatory paragraph indicating that the occurrence of any future event of default under our 2022 Credit Facility that is not waived by lenders thereunder would raise substantial doubt about our ability continue as a going concern.
If the Company breaches any financial covenant under the 2022 Credit Facility in the future and is unable to obtain a further waiver from the lenders thereunder with respect to such breach, an event of default would occur under the 2022 Credit Facility, which would allow lenders under the 2022 Credit Facility to, among other remedies, declare the unpaid principal amount of all outstanding loans, and all interest accrued and unpaid thereon, to be immediately due and payable. The occurrence of any future event of default would raise substantial doubt about the Companys ability to continue as a going concern. Management plans to address any possible future event of default under the 2022 Credit Facility by entering into new financing arrangements to repay amounts outstanding under the 2022 Credit Facility. The Company is in the process of obtaining refinancing for the Companys hotel in Sacramento, California (the Sheraton Refinancing). If completed, the Company intends to use the proceeds of the Sheraton Refinancing to repay part of the amount outstanding under the 2022 Credit Factors in Part I, Item 1A of tility and to pay for the Hotel Renovation described below. In addition, the Company is in the process of obtaining refinancing (the Los Angeles Refinancing) for three of its properties in Los Angeles, California. If completed, the proceeds of the Los Angeles Refinancing, along with a portion of the proceeds from the Sheraton Refinancing, are anticipated to be in an amount sufficient to repay all amounts outstanding under the 2022 Credit Facility, with the rest to be used for general corporate purposes. The Company expects that each of the Sheraton Refinancing and the Los Angeles Refinancing will close by the end of the first quarter of 2025.
We may not be able to complete the Sheraton Refinancing and the Los Angeles Refinancing on terms acceptable to us or on the timeline necessary to repay amounts outstanding under the 2022 Credit Facility prior to an event of default thereunder.
Our ability to complete each of the Sheraton Refinancing and the Los Angeles Refinancing will depend upon market conditions, prevailing economic and competitive conditions and financial, business and other factors beyond our control. In addition, while we are in the process of obtaining new financing for each of the Sheraton Refinancing and the Los Angeles Refinancing, the transactions remain subject to completion of final due diligence by lenders thereunder and finalization of definitive documentation, and there can be no assurance that we will enter into such definitive documentation or complete the refinancings on acceptable terms or at all. If we are unable to complete each of the Sheraton Refinancing and the Los Angeles Refinancing and as a result do not have sufficient funds to repay the amounts outstanding under the 2023 Form 10-K2 Credit Facility and the Company breaches a financial covenant thereunder and is unable to obtain a further waiver from the lenders thereunder, the lenders under the 2022 Credit Facility may, among other remedies, declare the unpaid principal amount of all outstanding loans, and all interest accrued and unpaid thereon, to be immediately due and payable.