Loading...
Loading...
CommonWealth REIT
today responded to various activities by Corvex
Management LP (“Corvex”) and Related Fund Management, LLC (“Related” and
together with Corvex, “Corvex/Related”), as follows:
Conditional offer to purchase CWH shares by Corvex/Related:
In a letter dated March 28, 2013, Corvex/Related made a conditional offer to
purchase all of the shares of CWH for $24.50/share, without disclosing any
specific financing plan. The Corvex/Related letter requested a meeting with
CWH that occurred on April 9, 2013. After considering the information provided
by Corvex/Related, CWH's Board of Trustees unanimously determined not to
pursue discussions with Corvex/Related about their conditional, not fully
financed, offer. After carefully considering alternatives, and with the advice
and assistance of financial and legal advisors, the CWH Board unanimously
determined that the interests of CWH and its shareholders will be best served
by continued implementation of CWH's current business plan to (i) concentrate
investments in CBD office properties, (ii) divest non-core properties and
other assets, and (iii) reduce debt, and not to pursue a sale of CWH at this
time.
When announcing its decision not to pursue a sale of CWH, the CWH Board noted
that the conditional offer from Corvex/Related appears to be part of a plan by
Corvex/Related to seize control of CWH for their own benefit, or,
alternatively, to realize a quick profit by forcing a sale of CWH before the
full benefits of CWH's current business plan are realized. During the past few
years, CWH has sold approximately $1.5 billion of primarily suburban office
and industrial properties and re-invested proceeds into high quality CBD
office properties with strong long term growth prospects. Now, as this
multi-year business plan is starting to demonstrate success, Corvex/Related
seem intent upon realizing these benefits for themselves or forcing a sale
before the benefits of the business plan can be fully realized by all
shareholders. In fact, simultaneously with presenting their conditional offer,
Corvex/Related have threatened to begin a shareholder consent solicitation to
remove the entire CWH Board if the Board does not agree to sell CWH to them or
to a third party.
The Maryland Unsolicited Takeovers Act:
At a CWH Board of Trustees meeting on April 12, 2013, CWH elected to classify
its Board pursuant to the Maryland Unsolicited Takeovers Act (the “Unsolicited
Takeovers Act”). CWH believes that after this election, members of its Board
may be removed only “for cause”. Accordingly, CWH believes the recent consent
solicitation filed by Corvex/Related with the Securities and Exchange
Commission (the “SEC”) which seeks removal of all of CWH's trustees “without
cause” is invalid and will have no force or effect.
The Unsolicited Takeovers Act was enacted in 1999. Among other provisions, the
Unsolicited Takeovers Act authorized the board of a Maryland REIT to elect to
opt into various protections from an unsolicited takeover attempt, including a
consent contest. The Unsolicited Takeovers Act provides that “notwithstanding
any provision in the charter or the bylaws” the board of a Maryland REIT may
elect to receive the protection of the Unsolicited Takeovers Act with the
creation of a classified board. CWH believes that this unsolicited takeover
protection intended to be accorded Maryland REITs would be illusory if the
entire classified board created by an Unsolicited Takeovers Act election could
be removed “without cause”.
CWH historically has had a classified Board; however, the historical CWH
classified Board was created by the CWH Declaration of Trust which was adopted
in 1986 and provided that its Trustees may be removed “with or without cause”.
The historical CWH classified Board existed under its 1986 Declaration of
Trust and not as a result of an election under the Unsolicited Takeovers Act
which did not exist until 1999. Accordingly, CWH believes that its election to
adopt a classified board under the Unsolicited Takeovers Act overrides the
historical provisions of the CWH Declaration of Trust.
To avoid a possible dispute about the application of the 1999 Unsolicited
Takeovers Act to CWH's 1986 Declaration of Trust, members of the Maryland
legislature were recently asked to pass a clarifying amendment to the
Unsolicited Takeovers Act. The legislators were fully informed that this
clarifying amendment could impact the takeover activities which Corvex/Related
were then threatening against CWH. A hearing was held on this clarifying
amendment on April 5, 2013, and testimony was presented about the history of
the Unsolicited Takeovers Act which confirmed CWH's understanding of that law;
however, the Maryland Legislature failed to act on this matter before the 2013
legislative session ended on April 8, 2013. Although the Maryland Legislature
did not act, CWH believes its election to receive the protections accorded by
the Unsolicited Takeovers Act and particularly the language of the Unsolicited
Takeovers Act --- “notwithstanding any provision in the charter or bylaws” ---
means that members of CWH's Board may only be removed “for cause”, and that no
such cause exists.
The attempted Consent Solicitation and other activities by Corvex/Related:
According to SEC filings by Corvex/Related, they first acquired shares of CWH
on January 16, 2013. On February 26, 2013, Corvex/Related disclosed their
ownership in SEC filings which also included materials which purported to
value CWH at between $40.00 and $55.00 per share (i.e., considerably more than
the $24.50/share recently “offered” by Corvex/Related). On March 1, 2013,
Corvex/Related brought litigation in the Federal District Court for the
District of Massachusetts to enjoin the closing of a long planned CWH equity
offering and alleging various violations of the federal securities laws. On
March 4, 2013, the injunction requested by Corvex/Related was denied after a
court finding of little likelihood of success on the merits of the
Corvex/Related allegations, and the case has since been stayed pending
arbitration.
Almost simultaneously with their federal court case in Massachusetts,
Corvex/Related began a separate litigation in a Maryland state court. In this
Maryland case, Corvex/Related made many of the same allegations as in the
Massachusetts case and they sought an emergency injunction to stay the
appointment of arbitrators and an emergency determination to invalidate
certain CWH Bylaws that require a shareholder seeking to remove Trustees to
have owned at least 3% of CWH's shares for at least three years. On March 18,
2013, the Maryland court denied Corvex/Related any emergency relief. Since
then, the Maryland court has set a briefing schedule for the questions of (i)
whether the disputes between Corvex/Related and CWH should be referred to
arbitration, and (ii) whether the CWH Bylaw ownership requirements being
challenged by Corvex/Related are valid. A hearing on these matters has been
scheduled for May 3, 2013.
Despite the fact that the Maryland court has not yet ruled on whether or not
Corvex/Related are eligible to initiate a consent solicitation to remove all
of CWH's Trustees, Corvex/Related filed a definitive consent solicitation
statement with the SEC and appear to be taking actions to mail to CWH
shareholders seeking consents in the near future. No record date has been set
for determining shareholders entitled to join the consent solicitation
proposed by Corvex/Related. No court or arbitration panel has ruled that
Corvex/Related are eligible to seek such consent. In the event Corvex/Related
solicit for such consents, CWH shareholders are urged to take no action on
their request. If and when it becomes appropriate to do so, CWH will
distribute a consent revocation statement which discloses facts relevant to
these matters.
Other Matters:
CWH has engaged BofA Merrill Lynch as financial advisor and to assist it in
responding to the activities by Corvex/Related. Skadden Arps Slate Meagher &
Flom LLP and Saul Ewing LLP are serving as legal counsel.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES
LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON CWH'S CURRENT BELIEFS
AND EXPECTATIONS BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR
VARIOUS REASONS, INCLUDING SOME REASONS BEYOND CWH'S CONTROL. FOR EXAMPLE:
* THIS PRESS RELEASE STATES THAT CWH'S BOARD HAS DETERMINED THAT THE
INTERESTS OF CWH AND ITS SHAREHOLDERS WOULD BE BEST SERVED BY CONTINUED
IMPLEMENTATION OF CWH'S CURRENT BUSINESS PLAN AND NOT TO PURSUE A SALE OF
CWH AT THIS TIME. THE IMPLICATION OF THIS STATEMENT MAY BE THAT CWH WILL
SUCCESSFULLY IMPLEMENT ITS BUSINESS PLAN AND THAT, AS A RESULT, CWH AND
ITS SHAREHOLDERS WILL REALIZE GREATER VALUE THAN PURSUING A SALE AT THIS
TIME. MANY ELEMENTS OF CWH'S BUSINESS PLAN REQUIRE THE PARTICIPATION OF
THIRD PARTIES WHO ARE BEYOND CWH'S CONTROL: DIVESTING NON-CORE PROPERTIES
AND OTHER ASSETS REQUIRES FINDING BUYERS FOR THESE PROPERTIES AND ASSETS
AT ACCEPTABLE PRICES; CONCENTRATING INVESTMENTS IN CBD OFFICE PROPERTIES
MAY REQUIRE THAT CWH LOCATE ADDITIONAL CBD PROPERTIES WHICH ARE AVAILABLE
FOR SALE AT REASONABLE PRICES; ETC. ALSO, MARKET CONDITIONS BEYOND CWH'S
CONTROL AND UNRELATED TO CWH'S ACTIVITIES MAY ADVERSELY AFFECT THE VALUE
CWH AND ITS SHAREHOLDERS MAY REALIZE IN THE FUTURE. THE DECISION OF CWH'S
BOARD TO CONTINUE ITS BUSINESS PLAN AND NOT TO PURSUE A SALE IS BASED UPON
THE BUSINESS JUDGMENT OF CWH'S BOARD, BUT BUSINESS JUDGMENTS MAY BE
MISTAKEN.
* THIS PRESS RELEASE STATES THAT CWH BELIEVES ITS ELECTION TO ADOPT A
CLASSIFIED BOARD UNDER THE MARYLAND UNSOLICITED TAKEOVERS ACT OVERRIDES
THE HISTORICAL PROVISIONS OF CWH'S DECLARATION OF TRUST SO THAT CWH'S
TRUSTEES MAY ONLY BE REMOVED FOR CAUSE AND NOT WITHOUT CAUSE. CWH'S LEGAL
CONCLUSIONS REGARDING THE EFFECT OF ITS ELECTION TO BE SUBJECT TO THE
UNSOLICITED TAKEOVERS ACT MAY BE CHALLENGED IN LITIGATION. THE RESULTS OF
LITIGATION ARE DIFFICULT TO PREDICT AND CWH CAN PROVIDE NO ASSURANCE THAT
ITS LEGAL CONCLUSIONS WILL BE UPHELD.
* THIS PRESS RELEASE STATES THAT NO RECORD DATE HAS BEEN SET FOR DETERMINING
SHAREHOLDERS ENTITLED TO JOIN THE CONSENT SOLICITATION PROPOSED BY
CORVEX/RELATED AND THAT NO COURT OR ARBITRATION PANEL HAS RULED THAT
CORVEX/RELATED ARE ELIGIBLE TO SOLICIT FOR SUCH CONSENTS. AS NOTED IN THIS
PRESS RELEASE, THE ISSUE OF WHETHER CORVEX/RELATED ARE ELIGIBLE TO SOLICIT
CONSENTS TO REMOVE ALL OF CWH'S TRUSTEES HAS BEEN SET FOR HEARING IN THE
MARYLAND STATE COURT. VARIOUS STATEMENTS IN THIS PRESS RELEASE MAY IMPLY
THAT CORVEX/RELATED WILL BE INELIGIBLE TO SOLICIT CONSENTS FOR THE REMOVAL
OF ALL OF CWH'S TRUSTEES. HOWEVER, CWH CANNOT GUARANTEE THE OUTCOME OF ANY
COURT PROCEEDING.
FOR THESE REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE. EXCEPT AS MAY
BE REQUIRED BY APPLICABLE LAW, CWH DOES NOT INTEND TO UPDATE THE FORWARD
LOOKING STATEMENTS IN THIS PRESS RELEASE AS A RESULT OF NEW INFORMATION WHICH
MAY COME TO ITS ATTENTION.
Loading...
Loading...
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in