Ryman plans big buyback

Board of former Gaylord Entertainment also sets out guidelines for future dividends

The directors of Ryman Hospitality Properties have voted to launch a share repurchase program of up to $100 million and buy back some of the company's debt while spelling out the guidelines for how they will determine dividend payments after RHP's conversion to a real estate investment trust.

Ryman, the former Gaylord Entertainment, will use cash on hand and revolving debt to fund its buyback plan. If fully executed at today's prices — Ryman shares (Ticker: RHP) were up more than 2 percent this morning to about $37.80 — the buybacks will remove from the market almost 6 percent of the company's outstanding shares.

Ryman officials also said they will use their revolving credit line to redeem $152 million of debt that would have matured in 2014. That purchase will be wrapped up mid-January.

The buyback plan suggests Ryman Chairman, President and CEO Colin Reed and his team will not be an aggressive buyer of hotel properties in the company's early stages. In a statement, Reed said Ryman's shareholder value priorities are — in order — dividends, buyback and acquisitions. On the first of those items, the board said it will decree quarterly dividends that are the greater of one of two numbers: 50 percent of adjusted funds from operations or all of REIT taxable income.

"We are putting in place a capital allocation policy that we believe is in the best interest of our shareholders and our business," Reed said. "We believe establishing a sustainable dividend policy and using additional capital to repurchase our shares represents the right strategic use of capital given our present trading multiple and hotel valuation. These actions reflect the strength of our balance sheet and our continued confidence in the stability and cash flow generation capabilities of our business model."