CLEVELAND, Dec. 6, 2016 /PRNewswire/ -- Forest City
Realty Trust, Inc., (NYSE: FCEA and FCEB) ("Forest City" or the
"Company") today announced that, following the unanimous
recommendation of a special committee comprised solely of
independent Class A directors (the "Special Committee"), the
Company's Board of Directors has authorized, and will recommend
that shareholders approve, a proposal to eliminate its current
dual-class share structure.
Under the terms of the proposed reclassification, all of the
outstanding shares of the Company's Class B Common Stock would be
converted into shares of the Company's Class A Common Stock, and
holders of Class B shares will exchange each of their Class B
shares for 1.31 shares of Class A Common Stock. In connection with
the reclassification, RMS, Limited Partnership ("RMS"), the
controlling shareholder of the Company's Class B shares, has agreed
to vote all shares of Class B shares owned by it in favor of the
proposal, representing a majority of the Class B shares
outstanding.
In a joint statement, Charles A.
Ratner, Chairman of the Forest City Board and a General
Partner of RMS, and Scott S. Cowen,
Chairman of the Special Committee, said, "Eliminating the
dual-class share structure is an important step in Forest City's
continued evolution. After carefully reviewing the Company's
options to further enhance value for shareholders, we determined
that now is the right time to collapse the dual-class structure.
Today's announcement will strengthen the Company's corporate
governance profile by aligning voting rights with the economic
interests of all our shareholders. We are pleased to have reached
an agreement and are confident that Forest City is well-positioned
for the future."
The Company will be seeking shareholder approval of the
reclassification at the Company's 2017 Annual Meeting of
Shareholders. The completion of the proposed reclassification is
subject to customary closing conditions, including required
approvals from a majority of the votes entitled to be cast by Class
A and Class B shareholders, voting separately, and that a majority
of Class A shareholders (excluding Class A shares owned by the
Ratner family) vote to approve the reclassification. Upon
completion of this transaction, all outstanding Forest City shares
will be entitled to one vote per share on all matters brought to
the Company's shareholders, including but not limited to,
composition of the entire Forest City Board of Directors. The
proposed reclassification is expected to be completed promptly
after the Company's 2017 Annual Meeting.
Board and Corporate Governance Changes
Forest City
also announced today that Charles
Ratner will retire from Forest City, effective December 31, 2016, after 50 years of service, and
will step down from the Board at that time.
"I am pleased we have reached agreement on these share structure
and governance matters through the diligent efforts of the Special
Committee and RMS," Charles Ratner
said. "It has always been my intention to retire in 2016 at age 75
and with the strong leadership of President and CEO David LaRue, ongoing guidance and oversight of
our majority-independent Board, and continued commitment from and
involvement by members of the founding family, we have set Forest
City on a strong path. I know the Company is in good hands."
Commenting on Charles Ratner's
decision to retire from the Board and active management, President
and CEO David J. LaRue said, "It's
hard to overstate how much Chuck
Ratner has contributed to Forest City. Our assets grew
four-fold under his leadership, we created extraordinary, visionary
real estate and he fostered a culture that made it all possible.
I'm one of many Forest City associates who benefited from his
leadership. I've known about his yearend retirement plan for some
time and I'm grateful he was still here to help us strengthen our
company by making these important changes."
The Board will appoint James A.
Ratner, Forest City Executive Vice President of Development,
to succeed Charles Ratner as
non-Executive Chairman. James Ratner
will relinquish his management responsibilities with the Company
upon his appointment to the Board.
The Company also announced that Bruce C.
Ratner, who has served as a Director since 2007, will also
step down from the Board by year-end. Bruce
Ratner will continue in his role at the Company's
New York subsidiary. In addition,
Stan Ross has decided not to stand
for re-election at the Company's 2017 Annual Meeting of
Shareholders, after 17 years as a Director. The Company intends to
fill these two board vacancies with new, independent directors and
has retained Ferguson Partners Ltd. to lead the search for highly
qualified candidates.
Following these actions, the Board will be comprised of thirteen
directors, eight of whom will be independent.
In line with corporate governance best practices, Forest City
will also implement a majority voting standard in the election of
directors following the 2017 Annual Meeting.
Under the terms of the agreement to eliminate the dual-class
stock structure, the Board will nominate James Ratner and the other three members of the
Ratner family who currently serve as directors, or other RMS
nominees as may be necessary, at the 2017, 2018 and 2019 Annual
Meetings of Shareholders. After 2019, provided the Ratner family
holds at least 60% of its post-conversion Forest City share totals,
the Board will nominate two members of the Ratner family at the
2020 and 2021 Annual Meeting of Shareholders.
Agreement with Scopia Capital Management
In connection
with today's announcement, the Company also announced an agreement
with Scopia Capital Management, a long-term Forest City
shareholder. Under the terms of the agreement, Scopia has agreed,
among other things, to vote its shares in favor of each of the
Forest City Board's nominees at the Company's 2017 Annual Meeting
of Shareholders and to vote in favor of the reclassification
proposal.
"We appreciate the constructive manner in which Scopia engaged
us on this issue and their support for these changes," LaRue
said.
In a joint statement, Matthew
Sirovich, Co-Founder and a Managing Partner of Scopia, and
Jerome Lande, Head of Special
Situations for Scopia, said, "We believe Forest City shareholders
will benefit from the proposed reclassification and having an
additional independent director on the Company's Board. We look
forward to improved performance from Forest City in the years ahead
as the management team and Board continue to work collaboratively
to enhance shareholder value."
Advisors
Goldman, Sachs & Co. served as financial
advisor to Forest City. Lazard served as financial advisor to the
Special Committee and provided a fairness opinion, and Sullivan
& Cromwell LLP acted as the Special Committee's legal advisor.
Morgan Stanley served as financial advisor to RMS and Fried, Frank,
Harris, Shriver & Jacobson LLP acted as its legal counsel.
Houlihan Lokey provided certain
financial advice to Forest City in respect of the Class B
Shareholders that are not members of RMS.
About James A.
Ratner
James A. Ratner
is an Executive Vice President of Development for Forest City and
has been with the Company more than 40 years. He holds a Bachelor's
degree from Columbia University and an
MBA from Harvard University. He serves
on the Board of NACCO Industries, Inc. (NYSE symbol NC).
Additionally, he currently serves as Chairman of the Board of
Trustees of The Playhouse Square Foundation, serves on the
Executive Committee and the Board of Trustees of The Cleveland
Museum of Art and serves on the Board of Trustees of Case Western Reserve University.
About Forest City
Forest City Realty Trust, Inc. is an
NYSE-listed national real estate Company with $8.6 billion in consolidated assets. The Company
is principally engaged in the ownership, development, management
and acquisition of commercial and residential real estate
throughout the United States. For
more information, visit www.forestcity.net.
Forward-Looking Statements
This document contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements relate to future, not past, events and often address our
expected future actions and expected future business and financial
performance. Forward-looking statements may be identified by the
use of words, such as "potential", "expect", "intend", "plan",
"may", "subject to", "continues", "if" and similar words and
phrases. These forward-looking statements are not guarantees of
future events and involve risks, uncertainties and assumptions that
are difficult to predict. All statements regarding the
reclassification and expected associated costs and benefits, the
likelihood of satisfaction of certain conditions to the completion
of the reclassification, whether and when the reclassification will
be completed and expected future financial performance are forward
looking. Discussions of strategies, plans or intentions often
contain forward-looking statements. Actual results, developments
and business decisions may differ materially from those expressed
or implied by such forward-looking statements. Important factors,
among others, that could cause the Company's actual results and
future actions to differ materially from those described in
forward-looking statements include, but are not limited to: failure
to receive the requisite approval of its stockholders necessary to
achieve the reclassification, any other delays with respect to, or
the failure to complete, the reclassification, the ability to carry
out future transactions and strategic investments, as well as the
acquisition related costs, unanticipated difficulties realizing
expected benefits anticipated when entering into a transaction, its
ability to qualify or to remain qualified as a REIT, its ability to
satisfy REIT distribution requirements, the impact of issuing
equity, debt or both, and selling assets to satisfy its future
distributions required as a REIT or to fund capital expenditures,
future growth and expansion initiatives, the impact of the amount
and timing of any future distributions, the impact from complying
with REIT qualification requirements limiting its flexibility or
causing it to forego otherwise attractive opportunities beyond
rental real estate operations, the impact of complying with the
REIT requirements related to hedging, its lack of experience
operating as a REIT, legislative, administrative, regulatory or
other actions affecting REITs, including positions taken by the
Internal Revenue Service, the possibility that its Board of
Directors will unilaterally revoke its REIT election, the
possibility that the anticipated benefits of qualifying as a REIT
will not be realized, or will not be realized within the expected
time period, the impact of current lending and capital market
conditions on its liquidity, its ability to finance or refinance
projects or repay its debt, the impact of the slow economic
recovery on the ownership, development and management of its
commercial real estate portfolio, general real estate investment
and development risks, using modular construction as a new
construction methodology, litigation risks, vacancies in its
properties, risks associated with developing and managing
properties in partnership with others, competition, its ability to
renew leases or re-lease spaces as leases expire, illiquidity of
real estate investments, bankruptcy or defaults of tenants, anchor
store consolidations or closings, the impact of terrorist acts and
other armed conflicts, its substantial debt leverage and the
ability to obtain and service debt, the impact of restrictions
imposed by its revolving credit facility, term loan facility and
senior debt, exposure to hedging agreements, the level and
volatility of interest rates, the continued availability of
tax-exempt government financing, its ability to receive payment on
the notes receivable issued by Onexim in connection with their
purchase of the company's interests in the Barclays Center and the
Nets, the impact of credit rating downgrades, effects of uninsured
or underinsured losses, effects of a downgrade or failure of its
insurance carriers, environmental liabilities, competing interest
of its directors and executive officers, the ability to recruit and
retain key personnel, risks associated with the sale of tax
credits, downturns in the housing market, the ability to maintain
effective internal controls, compliance with governmental
regulations, increased legislative and regulatory scrutiny of the
financial services industry, changes in federal, state or local tax
laws, volatility in the market price of its publicly traded
securities, inflation risks, cybersecurity risks, cyber incidents,
conflicts of interest, and risks related to its organizational
structure including operating through its Operating Partnership and
its UPREIT structure. These risks and uncertainties, as well as
others, are discussed in more detail in our documents filed with
the SEC, including our Annual Report on Form 10-K for the year
ended December 31, 2015, our
quarterly reports on Form 10-Q, and our Current Reports on Form
8-K. We expressly disclaim any obligation to update any
forward-looking statement contained in this document to reflect
events or circumstances that may arise after the date hereof, all
of which are expressly qualified by the foregoing, other than as
required by applicable law.
Important Additional Information
This document does
not constitute an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote or approval nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. The Company intends to file with the U.S. Securities
and Exchange Commission a Registration Statement on Form S-4, which
will contain a proxy statement/prospectus in connection with the
proposed reclassification. Stockholders are urged to read the
proxy statement/prospectus when it becomes available because it
will contain important information. Stockholders will be able
to obtain a free copy of the proxy statement/prospectus (when
available), as well as other filings containing information about
the Company, without charge, at the SEC's website, www.sec.gov, and
on the Investor Relations page of the Company's website at
http://ir.forestcity.net/.
Participants In The Solicitation
The directors and
executive officers of the Company and other persons may be deemed
to be participants in the solicitation of proxies from stockholders
in respect of the proposed reclassification. Information regarding
the Company's directors and executive officers is available in the
Company's most recent proxy statement, dated April 7, 2016, for the Annual Meeting of
Stockholders held on May 25, 2016,
which was filed with the SEC on April 7,
2016, and the Company's other filings with the SEC. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests will be
contained in the proxy statement/prospectus when it becomes
available.
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SOURCE Forest City Realty Trust, Inc.