|FOREST CITY REALTY TRUST, INC. filed this Form PREM14A on 09/21/2018|
On February 14, 2018, the initial transaction committee agreed that the Company waive the requirement under the exclusivity agreement that Brookfield confirm that it was continuing to pursue an all-cash acquisition of the Company for $26.00 per share in order for the Exclusivity Period to continue for an additional 15 days beyond the initial Exclusivity Period of 30 days ending February 14, 2018. The initial transaction committee permitted this waiver because, although Brookfield had not yet provided such confirmation, the initial transaction committee recognized that Brookfield had committed a significant amount of time, internal resources and expenses as part of its confirmatory due diligence to date and appeared to be continuing its due diligence efforts in good faith, including working with our senior management to address Brookfields remaining confirmatory diligence requests.
On February 18, 2018, the initial transaction committee convened a meeting, together with members of our senior management and representatives of Lazard, Goldman Sachs and Sullivan & Cromwell. During the meeting, representatives of Lazard updated the initial transaction committee on the status of Brookfields confirmatory due diligence and reviewed various preliminary financial analyses of Brookfields Round 2 indication and Strategic As Round 2 indication, which were informed by the RemainCo plan. Representatives of Lazard and Goldman Sachs also reviewed unsolicited feedback received from Starboard and reviewed matters and considerations related to certain large stockholders, including the possibility that a large stockholder could initiate a proxy contest to replace a majority of our directors at the 2018 annual meeting of our stockholders. The initial transaction committee, in consultation with our senior management and representatives of Lazard and Goldman Sachs, also discussed the market-based input regarding the selected assets provided by the nationally recognized commercial real estate services firm that was engaged by the initial transaction committee.
On February 19, 2018, a representative of Brookfield informed Lazard that it would no longer be partnering with Sponsor A and asked a representative of Lazard to terminate Sponsor As access to the online data room, which had previously been granted during the Exclusivity Period at Brookfields request, pursuant to the terms of the exclusivity agreement. Sponsor As access was terminated later that day.
Also on February 19, 2018, representatives of Skadden provided representatives of Sullivan & Cromwell with a revised draft merger agreement (the February 19 draft). With respect to closing certainty, the February 19 draft contemplated: (1) that our sole recourse in the event all conditions precedent to the Brookfield Parties obligation to close the merger were satisfied and the Brookfield Parties failed to close the merger would be a reverse termination fee payable by the Brookfield Parties to the Company (the Reverse Termination Fee) of 8% of the equity value of the Company at the merger consideration, which would also be payable in other customary circumstances, and not specific performance (the Pure Option Proposal); (2) that closing of the merger would not occur prior to the completion of a marketing period with respect to the Brookfield Parties debt financing without the Brookfield Parties consent (the Marketing Period Proposal) and (3) that the Brookfield Parties obligation to close the merger would be conditioned on our receipt of certain unidentified third party consents, which was bracketed as subject to ongoing due diligence (the Third-Party Consents Proposal). With respect to deal protections, the February 19 draft contemplated: (1) a termination fee payable by the Company to the Brookfield Parties in customary circumstances (the Company Termination Fee) of 4.5% of the equity value of the Company at the merger consideration and (2) a termination fee of 1% of the equity value of the Company at the merger consideration payable by the Company to the Brookfield Parties if a stockholder meeting was convened to approve the merger and we failed to obtain stockholder approval at such stockholder meeting (such termination fee, if paid, would reduce dollar-for-dollar the Company Termination Fee). With respect to dividends and distributions, the February 19 draft contemplated: (1) that the per share consideration payable upon the closing of the merger would be reduced by the per share amount of any quarterly dividend paid by us between the signing of the merger agreement and the closing of the merger and (2) that we would make the special REIT taxable income distribution, if applicable. In addition, on February 20, 2018, representatives of Skadden informed a representative of Sullivan & Cromwell that Brookfield would require that a merger support agreement be entered into by certain Ratner family stockholders.