|
|
| The Lightstone Group Enters Into Agreement to Acquire Prime Retail, Inc. |
BALTIMORE, July 8 /PRNewswire-FirstCall/ -- Prime Retail, Inc. (the
"Company") (OTC Bulletin Board: PMRE, PMREP, PMREO) and The Lightstone Group,
LLC ("Lightstone"), a New Jersey-based real estate company, announced today
that an affiliate of Lightstone has agreed to acquire the Company (the
"Acquisition"). The Acquisition will be effected in accordance with the terms
of a merger agreement (the "Merger Agreement") entered into today between
Prime Outlets Acquisition Company, LLC (the "Buyer"), a Delaware limited
liability company which is an affiliate of Lightstone, and the Company, which
provides for the Company to be merged with and into the Buyer.
The transaction, which will result in aggregate consideration of
$115 million payable to the Company's shareholders and unit holders, has a
total value of approximately $638 million, including $523 million of debt
expected to be assumed by the Buyer. Under the terms of the agreement, each
holder of the Company Series A preferred stock will receive cash in the amount
of $16.25 per share, each holder of the Company Series B preferred stock will
receive cash in the amount of $8.66 per share, and each holder of the Company
common stock will receive cash in the amount of $0.18 per share.
The board of directors of the Company, as well as a special committee
comprised of disinterested members of the board of directors, have approved
the Acquisition and the Merger Agreement and recommended that the shareholders
vote in favor of the resolutions to be proposed at a special meeting of the
Company's shareholders. Because the Company's charter does not address the
allocation of consideration among the Company's various classes of capital
stock in the Acquisition, such allocation was recommended by the special
committee and approved by the board of directors. Houlihan Lokey Howard &
Zukin Capital acted as financial advisor to the special committee and Houlihan
Lokey Howard & Zukin Financial Advisors, Inc., an affiliate of Houlihan Lokey
Howard & Zukin Capital, has provided an opinion to the special committee and
the Company's board of directors that the consideration to be received by each
of the classes of the Company's stock, considered independently, is fair to
such respective classes, from a financial point of view.
Closing of the Merger Agreement is subject to a number of conditions
including the approval of the Acquisition and the Merger Agreement by the
holders of at least 66-2/3% of both the Series A preferred and the Series B
preferred, each voting separately as a class, and the approval of the holders
of a majority of the common stock of the Company voting to both amend the
charter of the Company and approve the transaction, as well as other customary
consents and approvals. The Acquisition is expected to be completed during
the third or fourth quarter of 2003. Formal documentation relating to the
Acquisition and the Merger Agreement will be sent to the shareholders and
limited partners of the Company. This documentation will include notices of
the special meeting and details of the Acquisition and the Merger Agreement
and related matters.
Concurrent with the consummation of the Acquisition, the agreement of
limited partnership of Prime Retail, L.P., the operating partnership through
which the Company conducts substantially all of its business (the "Operating
Partnership"), will be amended and restated (the "Amended Partnership
Agreement") pursuant to which holders of common units in the Operating
Partnership (other than common units held by the Company) will have the
opportunity to exchange all, but not less than all, of their units for a like
number of preferred units in the Operating Partnership ("Preferred Unit").
Each holder of Preferred Units will be entitled to require the Operating
Partnership to redeem all of such holder's Preferred Units for an amount per
unit equal to $0.18 (the consideration paid for a share of common stock of the
Company in the Acquisition) plus accrued and unpaid distributions at the rate
of 6% per annum. In addition, the Amended Partnership Agreement contains
certain tax related provisions that, subject to certain exceptions, will
benefit holders of Preferred Units for a period of seven years including
restrictions on the sale of properties and requirements to allocate debt in a
certain manner.
The Company has agreed to pay the Buyer a termination fee of $4.5 million,
plus expenses of up to $1.5 million, if the Acquisition is not completed under
certain circumstances, including the Company's election to pursue an
alternative transaction. In certain other circumstances in which the
Acquisition has not been completed, including the failure to obtain the
shareholder approval of the Acquisition, a termination fee will not be payable
but the Company has agreed to reimburse the Buyer for its expenses up to
$3.5 million.
Commenting on the transaction, Glenn Reschke, chairman and chief executive
officer of Prime Retail, stated, "We believe the proposed transaction will be
beneficial to all of the various constituents associated with our Company.
For the three classes of our shareholders, it offers an opportunity to realize
cash values that are well above the current market price for our securities in
that the offer represents a premium of 66%, 57% and 42%, respectively, over
the average closing price of $9.79 for the Series A preferred, $5.53 for the
Series B preferred, and $0.127 for the common stock for the month of June,
2003. For our tenants, the relationship with a well-capitalized real estate
organization such as The Lightstone Group will provide us with the access to
capital we need to finish the rehab of our centers and refine and expand our
marketing efforts aimed at improving sales. For our employees, the Buyer's
commitment to maintain the Company's headquarters in Baltimore will be good
news to the over 90 employees based here."
"The merger with Prime Retail will provide a solid platform for Lightstone
to further expand its real estate holdings into the retail arena, an area
where I see great opportunity in the future," said David Lichtenstein,
president and chief executive officer of The Lightstone Group.
"In the past three years, the current management team at Prime Retail has
done a good job of financially stabilizing the Company and reducing its
considerable debt. However, the Company nonetheless still lacks sufficient
capital to reinvest in its assets to grow income and realize its full
potential. Our plan is to work with the talented team of professionals that
the Company has assembled in Baltimore and provide the financial platform and
capital needed to grow and expand the Company into other complementary forms
of retail and entertainment. I share the Company's vision to become a
dominant owner/operator of retail properties."
Howard Amster and Gary Skoien, the two members of the Company's board of
directors who were elected by the Company's preferred stockholders and who
collectively own, 6% of the Company's Series A preferred stock and 15% of the
Company's Series B preferred stock, have recommended approval of the
transaction by all the shareholders of the Company. They have also agreed to
vote their shares in favor of the Acquisition, unless the recommendation of
the Company's board of directors is withdrawn.
Prime Retail is a self-administered, self-managed real estate investment
trust engaged in the ownership, leasing, marketing and management of outlet
centers throughout the United States. Prime Retail currently owns and/or
manages 37 outlet centers totaling approximately 10.4 million square feet of
GLA. Prime Retail also owns 154,000 square feet of office space. Prime
Retail has been an owner, operator and a developer of outlet centers since
1988. For additional information, visit Prime Retail's website at
http://www.primeretail.com.
Founded in 1988, The Lightstone Group has become one of the largest,
private real estate companies in the industry. The Company owns/manages a
diversified portfolio of 15,000 apartments as well as office, industrial and
retail properties totaling more than 8.5 million square feet of space in
16 states and Puerto Rico. Headquartered in Lakewood, New Jersey, The
Lightstone Group employs over 400 professionals and maintains offices in
Maryland, Virginia, California, and New York. The Lightstone Group is
currently embarked on an aggressive acquisition and expansion program
throughout the United States. For additional information, visit The
Lightstone Group's website at http://www.lightstonegroup.com.
Some of the statements contained herein which are not statements of
historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that reflect management's
current views with respect to future events and financial performance. The
words "believes," "expects," "anticipates," "estimates" and similar words or
expressions are generally intended to identify forward-looking statements.
Actual results may differ materially from those expected because of various
risks and uncertainties, including, but not limited to, changes in general
economic conditions, adverse changes in real estate markets as well as other
risks and uncertainties included from time to time in the Company's filings
with the Securities and Exchange Commission. Prime Retail accepts no
responsibility for updating forward-looking statements.
INVESTOR NOTICE
Prime Retail plans to file with the SEC a proxy statement and other
relevant documents concerning the Acquisition. Investors of Prime Retail are
urged to read the proxy statement when it is filed and any other relevant
documents filed with the SEC because they will contain important information.
You will be able to obtain the documents, when they become available, free of
charge at the website maintained by the SEC at http://www.sec.gov. In addition, you
may obtain documents filed with the SEC by Prime Retail free of charge by
accessing the Company's website or by requesting such documents in writing
from Prime Retail, Inc., 100 East Pratt Street, 19th Floor, Baltimore,
Maryland 21202 or by telephone at (410) 234-0782.
Prime Retail, its directors and executive officers and certain of Prime
Retail's employees may be deemed to be participants in the solicitation of
proxies from the stockholders of Prime Retail in connection with the
Acquisition. These participants may have interests in the Acquisition, if
consummated, including interests resulting from holding equity interests in
Prime Retail or its operating partnership. Information about the interests of
directors and executive officers of Prime Retail and their ownership of
securities of Prime Retail will be set forth in the proxy statement.
Investors should read the proxy statement carefully when it becomes
available before making any voting or investment decisions.
SOURCE Prime Retail, Inc.
back to topRelated links:
Company News On-Call:
CONTACT:
Prime Retail, Inc.: Investors: Robert A.
Brvenik, President and Chief Financial Officer, +1-410-234-1750,
or Media: Steven A. Sless, Director - Public Relations,
+1-410-234-8333; or The Lightstone Group, LLC: David W.
Lichtenstein, President and Chief Executive Officer,
+1-732-367-0129, or Media: Michael D. Beckerman, Beckerman Public
Relations, +1-908-781-6420, michael@beckermanpr.com
