CommonWealth REIT (NYSE: CWH) today issued an open letter to its
shareholders urging them to take no action on Corvex Management LP
and Related Fund Management, LLC (together, “Corvex/Related”)’s
purported consent solicitation. The company noted that there is no
valid consent solicitation at this time, and no record date has
been set by the CommonWealth Board of Trustees. The full text of
the letter is below:
June 17, 2013
Dear Shareholder,
You may have received materials from Corvex
Management LP and Related Fund Management, LLC (together,
“Corvex/Related”) purportedly seeking your written consent to
remove without cause all of the
duly elected members of your Board of Trustees.
THE BOARD OF TRUSTEES OF COMMONWEALTH URGES
YOU NOT TO TAKE ANY ACTION AT THIS TIME.
THE BOARD HAS NOT SET A RECORD DATE AND THE
CORVEX/RELATED CONSENT SOLICITATION IS NOT VALID AT THIS
TIME.
The validity of the Corvex/Related consent
solicitation depends upon a court or an arbitration panel making a
number of findings, including that certain of CommonWealth's bylaws
are invalid and that CommonWealth's Board may be removed without
cause.
WE BELIEVE CORVEX/RELATED ARE MASKING THEIR
INTENT TO SEIZE CONTROL OF COMMONWEALTH WITHOUT PAYING A CONTROL
PREMIUM.
Corvex/Related first started accumulating
shares of CommonWealth in January 2013. Since then, Corvex/Related
announced several highly conditional, unfinanced purported “offers”
to acquire the Company. In their latest such “offer,”
Corvex/Related offered to acquire the Company for $24.50 per share,
despite that they had previously estimated the Company’s net asset
value at between $35.00 and $44.00 per share. Your Board, after
consultation with its legal and financial advisors and after
meeting with Corvex/Related, carefully considered this purported
“offer” and determined that it was illusory and that the interests
of CommonWealth and its shareholders would best be served by the
Company continuing to implement its business plan. Many weeks have
passed since Corvex/Related first publicly announced their
purported desire to purchase CommonWealth and they have still not
provided a concrete, fully financed offer, let alone an offer at an
appropriate premium.
Conveniently, Corvex/Related now claim that
they “are not attempting a hostile takeover.” Yet, they made an
ultimatum to the CommonWealth Board:
(1) negotiate to sell CommonWealth
to Corvex/Related;(2) sell CommonWealth to a third
party willing to pay more than Corvex/Related; or(3)
face a consent solicitation to remove the entire CommonWealth
Board.
In fact, when representatives of CommonWealth
and Corvex/Related met, Corvex/Related advised that no amount of
corporate governance changes would be an acceptable alternative to
the three “alternatives” described above. Given Corvex/Related’s
actions, CommonWealth’s Board continues to believe that
Corvex/Related’s primary motivation is to gain control of the
CommonWealth Board without paying a control premium and without
disclosing to shareholders their future plans for
CommonWealth.
THE PRINCIPALS OF RELATED AND CORVEX HAVE A
POOR TRACK RECORD OF GOVERNING PUBLIC REAL ESTATE
COMPANIES.
Jeff Blau, the principal of Related and CEO
of the Related Companies, previously served as Chairman, CEO and a
Trustee of American Mortgage Acceptance Company ("AMAC"). During
Mr. Blau’s tenure at AMAC, AMAC funded loans to affiliates of the
Related Companies which subsequently defaulted and became
worthless. Shortly thereafter, AMAC ceased
operations and filed for bankruptcy. Additionally, Mr.
Blau and Stephen Ross, the Chairman of the Related Companies,
served as Managing Trustees on the board of Centerline Holding
Company (f/k/a Charter Municipal Mortgage Acceptance Company, or
"CharterMac"); during which time, Centerline/CharterMac provided
financing to affiliates of the Related Companies. During Jeff
Blau’s and Stephen Ross’s combined tenure on the
Centerline/CharterMac board between 2003 and 2009, the total returns realized by public shareholders were
a LOSS of 97.7%.
Corvex has limited real estate industry
experience. Corvex’s Managing Partner, Keith Meister, and his
former employer first made a tender offer for WCI Communities,
Inc., which they later withdrew. Mr. Meister was then elected to
the board of WCI in 2007 following a proxy contest; and within
approximately one year of his joining the WCI board, WCI was forced into bankruptcy and essentially all WCI
shareholder value was lost.
COMMONWEALTH REMAINS COMMITTED TO EXECUTING
ON ITS STRATEGIC PLAN TO ENHANCE VALUE FOR ALL COMMONWEALTH
SHAREHOLDERS.
CommonWealth has made substantial progress in
executing its business plan to focus on the ownership and operation
of high quality central business district (“CBD”) office
properties, to divest its suburban office and industrial properties
and other assets, and to repay debt. Since January 1, 2008,
CommonWealth has increased its portfolio concentration of CBD
office properties by acquiring $3.7 billion of primarily Class A,
CBD office properties, principally from distressed sellers, and
selling $1.5 billion of primarily suburban office properties for
significant gains.
Despite Corvex/Related’s claims regarding the
Company’s performance, CommonWealth’s operating results have been
competitive with its peer group. In fact, CommonWealth has been
more effective in leasing its portfolio than many of its peer
group, and CommonWealth’s total return per year has outperformed
its peer group and the S&P 500 Index.
If you would like more information about
CommonWealth’s historical performance, activities and business
plan, please visit www.cwhreit.com to view our investor
presentations.
Thank you,
THE BOARD OF TRUSTEES OF COMMONWEALTH
REIT
If you have any questions, please call
Innisfree M&A Incorporated, which is assisting us, toll-free at
1-877-750-5836.
Additional Information Regarding the Consent
Solicitation
CommonWealth REIT (the “Company”), its trustees and certain of
its executive officers and Reit Management & Research LLC and
certain of its directors, officers and employees may be deemed to
be participants in the solicitation of consent revocations from
shareholders in connection with the consent solicitation conducted
by Corvex/Related and certain of their affiliates. On April 1,
2013, the Company filed a revised preliminary consent revocation
statement with the Securities and Exchange Commission (the “SEC”)
in response to the consent solicitation. The Company will furnish a
definitive consent revocation statement to its shareholders,
together with a BLUE consent revocation card, when they become
available. SHAREHOLDERS ARE URGED TO READ THE CONSENT REVOCATION
STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY
OTHER RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE WITH THE SEC
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Additional information regarding the identity of these
potential participants and their direct or indirect interests, by
share holdings or otherwise, is set forth in the revised
preliminary consent revocation statement filed with the SEC and
other materials to be filed with the SEC. Shareholders will be able
to obtain, free of charge, copies of the consent revocation
statement and any other documents to be filed by the Company with
the SEC in connection with these matters at the SEC’s website
(http://www.sec.gov), at the Company’s website
(http://www.cwhreit.com) or by requesting materials from the firm
assisting the Company in the solicitation of consent revocations,
Innisfree M&A Incorporated, toll-free at 877-750-5836.
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