|RATNER ALBERT B filed this Form PX14A6G on 11/13/2018|
“It is unfortunate that I have had to take this action in order to protect the interests of Forest City stockholders, who deserve adequate disclosures in the interest of ensuring full and fair value for their ownership of the company. No matter how you slice it, there is a gaping chasm in valuation between the figures and framework depicted in the proxy and the true value of the company. A vote on the proposed transaction cannot be allowed to proceed until the company remedies the serious defects in its proxy filing,” Mr. Ratner said.
Mr. Ratner also provided clear calculations, based on the most recent public information, revealing that the effective value of Brookfield’s offer is not $25.35 per share as announced, nor even $24.99 per share as was widely thought. “Brookfield’s offer price effectively is a paltry $23.092 per share – a staggering 50% haircut as compared with the estimated $46.03 per share (minus potential transaction costs) on an undiscounted basis that Forest City stockholders could receive over the coming roughly 25 months. And this gaping chasm of value is likely to only grow wider once fourth quarter results are in. That’s because during just the first nine months of 2018, Forest City could have paid a whopping $2.62 per share in dividends, not the $0.36 per share it paid for the first half of the year, or the $0.72 it was projected to pay for the full year.
Mr. Ratner continued, “To put this shameful value giveaway in different terms, Brookfield’s proposed $23.09 per share effective price is just $1.23 per share more than Forest City’s disclosed book value per share at cost (total equity plus accumulated depreciation) of $21.86 per share. In other words, all of the enormous value over cost – billions worth - that has been built up over decades in Forest City’s portfolio of iconic properties in the best markets – properties including MIT, the unencumbered New York Times building, MetroTech, The Yards in Washington, D.C., Stapleton in Denver, and many others, to say nothing of the development projects that already have high-density entitlements in place – would be given away for just $1.23 per share under this steal of a deal. No wonder the most experienced real estate investors on Forest City’s board of directors – including Adam Metz and Jamie Behar – voted no.
“To repeat, the question is not whether Forest City should be monetized, but whether Forest City stockholders should relinquish to Brookfield about half of the intrinsic value of their shares for the sake of whatever incremental certainty Brookfield’s expedient offer may provide. And the answer for me is clear: no,” Mr. Ratner said.
Mr. Ratner’s legal filing details a wide range of material defects within the company’s proxy, including:
2 Calculation of $23.09 per share effective price and related % differential: i) $43.78 per share (proxy p. 59); plus ii) $2.25 per share in estimated undiscounted dividends, from 3Q2018 through 4Q2020 (proxy p. 80); equals iii) $46.03; minus iv) $25.35 per share; minus v) $2.62 per share in Forest City’s net earnings attributable to common stockholders per share (diluted) for the nine months ended September 30, 2018; plus vi) $0.36 per share in dividends already paid for the first two quarters of 2018; equals vii) $23.09 per share; divided by $43.78 per share. Alternatively, $43.78 + $2.25 = $46.03 - $25.35 -$2.62 + $0.36 = $23.09 / $46.03 = 50.1%.