CommonWealth REIT Announces Proposed Public Offering of 27,000,000 Common Shares
NEWTON, Mass.--(BUSINESS WIRE)-- CommonWealth REIT (CWH) today announced it has commenced a public offering of 27,000,000 common shares. CWH expects that the underwriters will also be granted a 30-day option to purchase up to an additional 4,050,000 common shares.
CWH expects to use the proceeds of this offering to purchase up to $450 million of unsecured senior notes due between 2014 and 2016 in a tender offer CWH has also announced today. The tender offer is conditioned upon this offering. However, the completion of the tender offer is not a condition of the sale of the common shares being sold in this equity offering. Proceeds from the sale of common shares not used to repurchase notes in the tender offer will be used to repay other debt and to fund general business purposes. This press release is not an offer to buy or solicitation of an offer to sell any of the notes subject to the tender offer; for more information about the tender offer, please see a separate press release regarding the tender offer and the documents referenced therein.
The joint book running managers for the common share offering are Citigroup, BofA Merrill Lynch, UBS Investment Bank and Morgan Stanley. The joint lead managers are Jefferies and RBC Capital Markets.
This press release is neither an offer to sell nor a solicitation of an offer to buy CWH common shares, nor shall there be any sale of these securities in any state or jurisdiction in which the offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. The preliminary prospectus supplement relating to this offering and related prospectus are expected to be filed with the Securities and Exchange Commission (SEC) and copies can be obtained by contacting the offices of: Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, telephone: (800) 831-9146; BofA Merrill Lynch, Attn: Prospectus Department, 222 Broadway, New York, NY 10038; email dg.prospectusrequests@baml.com; UBS Investment Bank, Attn: Prospectus Department, 299 Park Avenue, New York, NY 10171, telephone: (888) 827-7275; or Morgan Stanley, Attn: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014, telephone (866) 718-1649, email: prospectus@morganstanley.com.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS 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 CWHS PRESENT BELIEFS AND EXPECTATIONS, BUT THESE STATEMENTS ARE NOT GUARANTEED. FOR EXAMPLE, ALTHOUGH THIS PRESS RELEASE REFERS TO AN OFFERING OF 27,000,000 COMMON SHARES, GREATER OR LESS THAN 27,000,000 COMMON SHARES MAY BE SOLD OR THIS OFFERING MAY BE WITHDRAWN. INVESTORS SHOULD NOT PLACE UNDUE RELIANCE UPON ANY FORWARD LOOKING STATEMENT.
A Maryland Real Estate 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.
CommonWealth REIT
Timothy A. Bonang, Vice President, Investor
Relations
Carlynn Finn, Senior Manager, Investor Relations
617-796-8222
www.cwhreit.com
Source: CommonWealth REIT
Copyright Business Wire 2013
By Tess Stynes
Corvex Management LP and Related Fund Management LLC said they sent a letter to CommonWealth REIT (CWH) threatening to push to oust the board and acquire all the company's shares at a "significant premium," if the company doesn't respond to its demands to call off a planned stock offering and debt repurchase.
New York-based hedge fund Corvex Management LP and investment firm Related Fund Management LLC disclosed a combined 9.8% stake in the real-estate investment trust, which primarily owns office properties. They maintain that CommonWealth REIT's real-estate assets are "significantly undervalued due to the misalignment of incentives between the company and its externally advised management structure, and track record of underperformance."
CommonWealth REIT shares were up 18% at $18.70 in recent premarket trading.
A representative from CommonWealth REIT wasn't immediately available to comment.
The activist shareholders said in the letter that a property-by-property analysis led the group to conclude that CommonWealth REIT's net-asset value was $40 a share as of Monday, compared with Monday's closing price of $15.85. The firms said if CommonWealth implemented, among other changes, an internal management structure, basic operating performance enhancements and a more shareholder-friendly capital allocation policy, its shares could reach more than $50 a share over a two-year period.
CommonWealth REIT on Monday had unveiled plans to sell 27 million shares to raise funds to repurchase as much as $450 million of senior notes that mature between next year and 2016.
In the letter, the firms said, "The proposal to raise equity when the stock trades at such a large discount to its intrinsic value is absurd."