Feldman to Privately Place Securities
APR 24, 2012 - 07:30 ET
FOR: FELDMAN MALL PROPERTIES, INC.
CHADDS FORD, PA--(Marketwire - April 24, 2012) - Feldman Mall Properties, Inc. (
On April 23, 2012, the Company and its operating partnership, Feldman Equities Operating Partnership, LP, and Trade Street Capital, LLC, Trade Street Property Fund I, LP, and BCOM Real Estate Fund, LLC (collectively, "Trade Street") executed a Contribution Agreement (the "Definitive Agreement"), pursuant to which Trade Street would contribute to the Company (a) ownership interests in multifamily residential properties containing an aggregate 2,978 apartment units located in the Mid-Atlantic, Southeastern and Southwestern United States, (b) parcels of realty in the same geographic areas in pre-development and development stages for the construction of approximately 1,288 additional apartment units, and (c) related multifamily management and advisory assets, in exchange for the issuance by the Company of shares of common and preferred stock and/or common and preferred limited partnership interests in a newly formed Delaware limited partnership owned by the Company and the Company's wholly owned subsidiary. The transaction is structured as a private placement in which the shares of common and preferred stock and/or common and preferred limited partnership interests to be issued will not be registered under the Securities Act of 1933, as amended. The existing multifamily properties, development parcels, and the other assets to be contributed to the Company at Closing total more than $265 million with an estimated equity value of approximately $109.0 million. Existing shareholders will retain shares of common stock of the Company valued at approximately $1.8 million in the aggregate (at $0.12 per share), plus rights to receive the $0.05 per share special distribution and warrants to purchase common stock of the Company described below.
After Closing under the Definitive Agreement, the Company will pay shareholders who are of record on the business day prior to Closing, a special distribution in an amount equal to $0.05 per share payable upon the earlier of the date the Company sells its 9.089 acre Northgate parcel, in which case the distribution will be payable in cash no later than five business days following the closing of the sale of the property (but in no event more than 60 days after the record date), or 60 days after the record date, in which case the distribution will be payable in shares of the Company's common stock based upon a price per share of common stock equal to $0.12. Additionally, under the Definitive Agreement, the Company will issue to its shareholders who are of record on the business day prior to Closing, non-transferrable two-year warrants to purchase 1.37 shares of common stock for each share owned by them on that date at a strike price of $0.144 per share, subject to adjustment in the event of any recapitalization, reorganization, reclassification, stock split, stock dividend or reverse stock split by the Company.
Until Closing, or the earlier termination of the Definitive Agreement, the Company may not initiate, invite, solicit, entertain, negotiate, accept or discuss directly or indirectly any proposal to acquire all or any significant part of the business or properties, capital stock or capital stock equivalents of the Company. However, the Company retains the right to terminate the Definitive Agreement should the Company's board of directors determine in good faith that the failure to so terminate will constitute a breach of the board's fiduciary duties under applicable law. In the event of termination, the Definitive Agreement provides for the Company to pay a termination fee to Trade Street in the amount of $1,500,000.
Closing under the Definitive Agreement is subject to customary conditions for a transaction of this type, including the receipt of third party consents and approvals, and delivery of fairness opinions. Consequently, there can be no assurance that the contemplated transaction will be completed or if completed that it will be consummated on the terms contained in the Definitive Agreement. In the event Closing shall not have occurred by July 31, 2012, either party has the right to terminate the Definitive Agreement.
Upon completion of the transaction, the Company will be an internally managed and advised real estate investment trust. It is anticipated that the Company will change its name to Trade Street Residential, Inc., the management team of Trade Street will comprise the management team of the Company, and that the board of directors of the Company will consist of seven members, five of whom will be independent directors as defined by the listing standards of the major national securities exchanges.
Trade Street was advised by the investment banking firm of Sandler O'Neill & Partners, L.P. and the law firms of Bass, Berry & Sims, PLC and Greenspoon Marder. The Company was advised by the investment banking firm of New Centurion Capital Partners, LLC and the Company's General Counsel, and the law firm of Clifford Chance USA LLP as special counsel.
About Feldman Mall Properties, Inc.
The Company's shares of common stock are quoted on Pink OTC Markets, a privately-owned company formerly known as Pink Sheets, which operates Pink Quote. For more information on Feldman Mall Properties, Inc. visit the Company website at www.feldmanmall.com.