Sam Zell: “I am not sure that I am on seven
boards. I believe I am only on one…two…three…maybe three public
companies.”
CommonWealth REIT (NYSE:CWH) today issued a statement regarding
comments made by Sam Zell on CNBC’s “Squawk Box” program on
February 28, 2014.
Sam Zell, age 72, recently accepted over $17 million of
in-the-money options to serve as a trustee nominee on behalf of
Related Fund Management, LLC and Corvex Management LP (together,
“Related/Corvex”). In the CNBC interview he was asked if he is on
too many other boards to devote the time required to serve as
Chairman of the CWH Board if Related/Corvex are successful in their
effort to remove the entire CWH Board, without cause, and elect
their hand-picked slate at a subsequent shareholders’ meeting. Zell
said:
“I am not sure that I am on seven
boards. I believe I am only on one…two…three…maybe three public
companies.” – Sam Zell, CNBC, Squawk Box, February 28, 2014
CWH notes that Zell currently serves as Chairman of four
publicly traded companies: (1) Equity Residential (NYSE:EQR); (2)
Equity LifeStyle Properties, Inc. (NYSE: ELS); (3) Anixter
International, Inc. (NYSE:AXE); and (4) Covanta Holding Corporation
(NYSE:CVA). He is also the Chairman of at least two private
companies, including Equity International Inc. and Equity Group
Investments, LLC and was the Chairman of The Tribune Company until
it emerged from Chapter 11 bankruptcy. CWH further notes that Zell
is an active owner of a number of international real estate
businesses, and is involved in litigation related to his
sponsorship of the leveraged buyout and subsequent bankruptcy of
The Tribune Company.
Adam Portnoy, Managing Trustee and President
of CWH, made the following statement:
“Sam Zell’s inability to recollect the number
of public company boards on which he serves should be deeply
troubling to investors in those companies. Further, this lapse in
Zell’s memory and his existing commitments to other business
activities, some of which appear to compete with CWH, underscores
our belief that he is ‘over-boarded’ and overcommitted and would be
unable to devote the necessary time, if elected, to serve as
Chairman of the CWH Board.
“Notably, when invited by CWH to discuss the
Company’s strategy and the Board’s commitment to enhancing
governance, Zell refused and indicated he was too ‘busy’ to meet.
We believe it is clear that Zell has been induced to serve as front
man for Related/Corvex with a lucrative agreement, including $17
million of in-the-money options.”
CWH believes that certain other comments made by Zell during the
CNBC interview also do not stand up to careful scrutiny. For
example, when Zell was asked to explain why he sold all of the
192,158 CWH common shares he owned just two business days before
the public announcement of his agreement to join the hostile
takeover campaign, Zell said:
“We thought maybe we could build a position.
We quickly found out that the liquidity of the stock in terms of
its availability to build a position didn't seem likely at all. And
consequently, rather than hold a minor share and have the filing
requirements that go with that, we just eliminated the position. It
was such a very minor position.” – Sam Zell, CNBC, Squawk Box,
February 28, 2014
The facts are as follows: (i) the trading volume in CWH common
shares for the last three months was approximately 1 million shares
per day; (ii) if elected as a CWH trustee, Zell would not avoid any
filing requirements by selling his shares in CWH; (iii) Zell sold
his shares in CWH, which were purchased about two weeks earlier,
for approximately $4.9 million and he realized a profit of almost
$400,000; and (iv) Zell purchased his shares in CWH at $23.53 per
share and he sold his shares at $25.50 per share, and Zell’s
agreement with Related/Corvex provide him the opportunity to
purchase over 4 million common shares of CWH at prices of $21.00
and $24.00 per share.
Adam Portnoy further commented:
“We believe that Zell’s motivations for his
trading activity in CWH common shares in the days prior to joining
the Related/Corvex campaign to take control of CWH have not been
adequately addressed.”
CWH will file today with the Securities and
Exchange Commission (SEC) a transcript of the February 28, 2014 Sam
Zell interview pertaining to CWH.
CommonWealth REIT is a real estate investment
trust that primarily owns office properties located throughout the
United States. CWH is headquartered in Newton, MA.
WARNING REGARDING
FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE INCLUDES 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 PRESENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT
GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS REASONS,
INCLUDING SOME REASONS BEYOND CWH’S CONTROL.
ADDITIONAL INFORMATION
REGARDING THE CONSENT SOLICITATION
CWH, 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 solicitation being conducted by Related/Corvex. On January
29, 2014, CWH filed a definitive consent revocation statement with
the SEC in response to the Related/Corvex solicitation and has
mailed the definitive consent revocation statement and form of
WHITE consent revocation card
to each shareholder entitled to deliver a written revocation in
connection with the consent solicitation. SHAREHOLDERS ARE URGED TO
READ THE DEFINITIVE CONSENT REVOCATION STATEMENT FILED WITH THE
SEC, AND ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY OTHER
RELEVANT DOCUMENTS THAT CWH MAY FILE WITH THE SEC WHEN THEY BECOME
AVAILABLE, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Additional
information regarding the identity of the potential participants
and their direct or indirect interests, by share holdings or
otherwise, is set forth in the definitive consent revocation
statement filed by CWH with the SEC in connection with the
solicitation of revocations of consents.
Shareholders may obtain free of charge copies of the definitive
consent revocation statement and any other documents filed by CWH
with the SEC in connection with the Related/Corvex solicitation at
the SEC’s website (http://sec.gov), at CWH’s website
(http://cwhreit.com) or by requesting these materials from Timothy
Bonang, by phone at (617) 796-8222, or by mail at Two Newton Place,
255 Washington Street, Newton, MA 02458 or by requesting materials
from the firm assisting CWH in the solicitation of consent
revocations, Morrow & Co., LLC, toll free at (800) 276-3011
(banks and brokers call collect at (203) 658-9400).
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the New York
Stock Exchange.No shareholder, Trustee or officer is personally
liable for any act or obligation of the Trust.
Media Contacts:Joele Frank Wilkinson Brimmer KatcherAndrew
Siegel/Jonathan Keehner, 212-355-4449orInvestor
Contacts:CommonWealth REITTimothy Bonang, 617-796-8222Vice
President, Investor RelationsorJason Fredette,
617-796-8222Director, Investor Relationswww.cwhreit.com
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