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DEFM14A
FOREST CITY REALTY TRUST, INC. filed this Form DEFM14A on 10/12/2018
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including discussion and deliberation with respect to the advantages and considerations relating to merger and tender offer structures and the uncertainty that would be experienced by our stakeholders if the June 15 proposal was made available to our stockholders without an affirmative recommendation of our Board and the effect of such uncertainty on stockholder value, our Board approved, by a seven to five vote, re-opening negotiations with Brookfield with a view toward finalizing definitive transaction documentation on the terms and pricing of the June 15 proposal (with Mr. LaRue, who previously did not support re-opening negotiations, voting with the majority), subject to robust disclosures to our stockholders regarding the reasons why five directors voted against, including disclosure regarding the NAV estimates previously prepared by our management and reviewed with our Board (including market-based input regarding the selected assets presented by a nationally recognized commercial real estate services firm engaged by the initial transaction committee) and the gap that existed between those estimates and the price proposed by Brookfield, and Brookfield’s confirmation that it would accept the Company’s position with respect to the treatment of equity and long-term incentive cash awards in the merger and certain employee compensation, retention and severance matters, including with respect to both executive and non-executive level employees (the “employee matters proposal”) (with all directors supporting the employee matters proposal). As of this meeting, the employee matters proposal had been reviewed by the Compensation Committee of our Board, which was supportive of the employee matters proposal. Prior to the conclusion of the strategic process, the Company and Brookfield had not made significant progress in negotiations regarding the matters covered by the employee matters proposal.

In connection with our Board’s determination to provide for robust disclosures to our stockholders regarding the reasons why five directors voted against the merger, including disclosure regarding the NAV estimates previously prepared by our management and reviewed with our Board (including market-based input regarding the selected assets presented by a nationally recognized commercial real estate services firm engaged by the initial transaction committee), following the execution of the merger agreement, our Board engaged the Advisory Group of Green Street Advisors solely to assist us in preparing the disclosure contained in this proxy statement regarding NAV estimates.

On July 2, 2018, as directed by our Board, representatives of Lazard and Goldman Sachs conveyed the employee matters proposal to representatives of Brookfield.

On July 3, 2018, Brookfield re-affirmed it was interested in re-opening negotiations with the Company with a view toward finalizing definitive transaction documentation on the terms and pricing of the June 15 proposal.

During July 2018, in order to facilitate a transaction on the terms and pricing of the June 15 proposal, representatives of Brookfield were provided with updated information about the Company to permit them and the Brookfield Parties’ debt financing sources to perform confirmatory financial, accounting, tax, legal and organizational diligence.

On July 9, 2018, as directed by our Board, representatives of Sullivan & Cromwell provided a revised draft merger agreement (the “July 9 draft”) to representatives of Skadden. The July 9 draft incorporated Brookfield’s concessions in its April 16 proposal that neither our procurement of consents from any third party nor our completion of a pre-closing internal reorganization would be a condition precedent to the Brookfield Parties’ obligation to close the merger. The July 9 draft also included the Specific Performance Proposal, as described above, which Mr. Ordan had previously confirmed would be acceptable to Brookfield. The July 9 draft also proposed a Reverse Termination Fee of 9% of the equity value of the Company at the merger consideration (rather than 8% as proposed in the March 7 draft). With respect to deal protections, the July 9 draft accepted the Reimbursement Proposal, including the cap of up to 1% of the equity value of the Company at the merger consideration, as included in the March 7 draft. With respect to dividends and distributions, the July 9 draft accepted the dividend and distribution terms provided for in the March 7 draft, which are described above. Concurrently, as directed by our Board, representatives of Sullivan & Cromwell provided to representatives of Skadden comments to the draft equity commitment letter and draft limited guaranty, which were provided by representatives of Skadden on March 7, 2018. The equity commitment letter and the limited guaranty were

 

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