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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Quadra Realty TR | NYSE:QRR | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.00 | - |
o | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
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| that the Special Committee consists solely of independent directors who the Quadra Board has determined are disinterested in the transaction; | |
| that the members of the Special Committee will not personally benefit from the consummation of the Merger in a manner different from the Companys unaffiliated stockholders, other than through receipt of cash director fees for service on the Special Committee or the Quadra Board; | |
| that the Special Committee engaged and was advised by Bass Berry as its legal counsel to assist the Special Committee in, among other things, negotiating the Merger Agreement and evaluating legal matters relating to the Offer and the Merger; | |
| that the Special Committee engaged and was advised by Blackstone as its financial advisor to assist the Special Committee in, among other things, evaluating the Offer Price from a financial point of view and to render to the Special Committee an opinion as to the fairness, from a financial point of view, of the Offer Price to be received in the Offer and the Merger by holders of Common Stock (other than Parent and its affiliates); | |
| that in retaining its advisors, the Special Committee took into account the absence of conflicts of interest between Blackstone and Bass Berry, on the one hand, and the Company, Merger Sub, HRECC and Hypo Holding on the other; | |
| that Mr. Denner and other members of the Companys management team and their knowledge of the Company were available to the Special Committee at all times; | |
| that the Special Committee was involved in extensive deliberations and negotiations over a period of approximately two months regarding the proposed transaction, and the Special Committee and the Independent Directors held numerous meetings and additional informal discussions to consider and discuss the Offer, the Merger and related transactions; | |
| that the Quadra Board agreed that it would not approve or recommend to stockholders any transaction that had not been approved or recommended by the Special Committee; | |
| that the Quadra Board authorized the Special Committee to consider alternatives to a transaction with Purchaser or Parent; | |
| the Merger Agreement contains a provision allowing the Quadra Board, upon the recommendation of the Special Committee, to withdraw or change its recommendation, and to terminate the Merger Agreement, in certain circumstances relating to the presence |
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of a Superior Proposal, subject to a payment by the Company to Parent of various termination fees; |
| that initiating an auction process may have subjected the Companys business to risks and disruptions; | |
| that no decision had been made to sell the Company until an agreement had been reached with Purchaser on the $11.00 price per share and, in light of Purchasers stated desire to conclude a transaction quickly, that commencing an auction at such time could have jeopardized the transaction with Purchaser; | |
| that the negotiations with Purchaser were on an arms-length basis, led by the chairman of the Special Committee; | |
| that the Special Committee had ultimate authority to decide whether or not to proceed with a transaction with Purchaser or any other party; | |
| that the Special Committee was aware that it had no obligation to recommend the transaction with Purchaser or any other transaction and ultimately possessed the authority to reject any proposed transaction; and | |
| that the consummation of the Offer is dependent upon acceptance of the Offer by at least 55% of the stockholders of the Company unaffiliated with Purchaser or Parent. |
| The Companys original business model is not currently sustainable because of the closure of the CDO market, the overall disruption in the credit markets, generally, and the increased potential cost of long-term capital; |
| The issuance of equity securities by the Company would likely be at a price that would be highly dilutive to Unaffiliated Stockholders; |
| The cost of any long-term credit, including a renegotiated term credit facility with Wachovia, would likely be very high, if such credit could be obtained at all; |
| Due to the potential inability to obtain alternative or replacement financing to repay amounts owed to Wachovia between April and July 2008, there is a substantial risk that the Company could not continue to operate as a going concern, and the Special Committee and Quadra Board believed that the Offer Price represents a substantial premium to the Companys value as a going concern given the financing risks facing the Company; |
| The trading price of the Quadra Common Stock had declined 50% from its IPO price in February 2007, had last closed above the Offer price on July 27, 2007, and the Offer Price represents a 38% premium to the closing price of the Quadra Common Stock on the New York Stock Exchange on January 28, 2008 (the day immediately preceding the date on which the transaction was announced), a 41% premium to the average closing price of the Quadra Common Stock for the 30 trading days immediately preceding the date of announcement and a 42% premium to the average closing price of the Quadra Common Stock for the 60 trading days immediately preceding the date of announcement; |
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| Parent is a significant stockholder of the Company and manages the day-to-day business of the Company pursuant to the Management Agreement, and the Companys executive officers and the Hypo-Affiliated Directors are employees of Parent or Hypo Holding; |
| Parent is the prospective buyer with the lowest cost of capital together with the highest knowledge of the portfolio and the greatest ability to realize the greatest synergies from the transaction and, therefore, likely able to pay a higher price than other prospective buyers; |
| Credit market dislocation in Europe is likely to continue to worsen, and Hypo Holding could experience future credit losses that could inhibit its ability to acquire the Company at a later time; |
| Blackstone has been in communication with other prospective buyers since December 19, 2007, has received on January 28, 2008 a single indication of interest from a third party that it would be willing to pay $9.00 of consideration ($2.00 below the Offer Price) consisting entirely of common stock of the prospective buyer, and has received no other indications of interest in acquiring the Company; |
| The Merger Agreement permits the Company to continue to solicit higher offers until February 27, 2008 and to terminate the Merger Agreement and the Offer if the Company receives a competing proposal from another offeror that the Special Committee and the Quadra Board (excluding the Hypo-Affiliated Directors) believes is superior from a financial point of view to the Offer and the Merger, and the termination fees payable in the event of such termination are reasonable under the circumstances and not likely to deter a prospective buyer from making a superior offer; |
| The structure of the proposed transaction as an all cash tender offer for 100% of the outstanding Quadra Common Stock not owned by Parent and its affiliates, the requirement that a minimum of 55% of the total number of shares of outstanding Quadra Common Stock not owned by Parent and its affiliates be validly tendered and not withdrawn in order to close the Offer, the willingness and ability of Parent and Merger Sub to close such transaction and the opportunity to effectuate the Merger following consummation of the Offer for the same cash consideration as the Offer Price, provided Unaffiliated Stockholders with the potential to recognize fair value for their shares of Quadra Common Stock in cash within a reasonably short timeframe, while at the same time mitigating the risk of loss of stockholder value caused by collapsing credit markets, a potential default under the Wachovia Facility, the possibility of a going concern qualification in the Companys auditors report with respect to its 2007 financial statements, uncertainty regarding ongoing financing and uncertainty in the value of stock or other securities that might have been given as consideration by other offerors; |
| The all-cash transaction would be taxable to the Unaffiliated Stockholders and would preclude Unaffiliated Stockholders from participating in any future appreciation in the value of the Companys business; |
| The Merger Agreement and the Offer contain certain conditions to closing which if not met could result in the Offer and/or the Merger not closing, which could have a material adverse effect on the Companys business and the market price of the Quadra Common Stock; |
| The Merger Agreement contains pre-closing covenants that require the Company to conduct business in the ordinary course and to refrain from taking certain actions without Parents consent, including incurrence of debt, entry into material contracts and payment of dividends, which restrictions could adversely affect the Companys ongoing operation of its business; and |
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| The Special Committee received an opinion from Blackstone that the aggregate consideration of $11.00 per Share in cash to be received by Unaffiliated Stockholders pursuant to the Offer, the Merger and the Dividend was fair to Unaffiliated Stockholders from a financial point of view. |
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| Transaction Financial Terms; Premium to Market Price. The Special Committee and the Quadra Board (excluding the Hypo-Affiliated Directors) considered the relationship of the Offer Price to the current and historical market prices of the Shares. In light of the Companys activities to date, the fact that no other person has expressed serious interest in acquiring the Company for a higher price, and the fact that Parent is in the best position to realize synergies in the acquisition of the Company and, therefore, likely able to provide the best offer, the Special Committee and the Quadra Board determined that the Offer Price and Merger Consideration to be paid in the Offer and the Merger represented the best per share price currently obtainable for the Companys stockholders. In making that determination, the Special Committee and the Quadra Board considered that the trading price of the Quadra Common Stock had declined 50% from its IPO price in February 2007, had last closed above the Offer Price on July 27, 2007, and the Offer Price and Merger Consideration, respectively, represent a premium of approximately 38% to the closing price of the Quadra Common Stock on the New York Stock Exchange on January 28, 2008 (the date immediately preceding the date on which the transaction was announced), an approximately 41% premium to the average closing price of the Quadra Common Stock for the 30 trading days ending on such date and an approximately 42% premium to the average closing price of the Quadra Common Stock for the 60 trading days ending on such date. The Special Committee and the Quadra Board also considered the relationship of the Offer Price to the Companys implied price per share based on various financial metrics, including dividend yield, earnings and book value per share, of comparable companies. The Special Committee and the Quadra Board considered the relationship of the Offer Price to book value per share, but believed that book value per share was not a proper measure of fair value due to changes in market interest rates and marketability of assets of the nature held by the Company, which changes would result in a decrease in the fair value of those assets below their book value. The Special Committee and the Quadra Board did not consider the liquidation value of the Company, inasmuch as they believed that the orderly liquidation of the Company through collection of existing loans was not a feasible option for the Company due to its substantial short term obligations and the lack of affordable financing. However, the Special Committee and the Quadra Board believed that Blackstones loan-by-loan discounted cash flow analysis as set |
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forth in the section entitled Financial Analyses of Blackstone provided an approximation of the liquidation value of the Company because it assumed no further asset acquisitions by the Company, valued the existing loan portfolio at current interest rate spreads, which the Special Committee believed approximated what the assets could be sold for over time in liquidation, and included the operating expenses that would be required to liquidate the loan portfolio. |
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By: |
/s/
Robert
H. Mundheim
|
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1 Year Quadra Realty TR Chart |
1 Month Quadra Realty TR Chart |
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