Quadra Realty Trust, Inc. - Amended Statement of Ownership: Solicitation (SC 14D9/A)
March 04 2008 - 4:28PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION
STATEMENT UNDER
SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
Quadra Realty Trust,
Inc.
(Name of Subject Company)
Quadra Realty Trust, Inc.
(Names of Persons Filing Statement)
Common Stock, par value $.001 per share
(Title of Class of Securities)
746945104
(CUSIP Number of Class of
Securities)
Evan F. Denner
President and Chief Executive Officer
622 Third Avenue, 30th Floor
New York, New York 10017
(212) 671-6400
(Name, Address and Telephone Number
of Person
Authorized to Receive Notices and
Communications
on Behalf of the Persons Filing
Statement)
COPY TO:
John A. Good, Esq.
Bass, Berry & Sims PLC
100 Peabody Place, Suite 900
Memphis, Tennessee 38103
(901) 543-5901
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Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
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This Amendment No. 1 amends and supplements the
Solicitation/Recommendation Statement on
Schedule 14D-9
filed on February 13, 2008 (the
Schedule 14D-9)
with the Securities and Exchange Commission by Quadra Realty
Trust, Inc., a Maryland corporation (Quadra or the
Company), relating to the offer by HRECC Sub Inc.
(Purchaser) to purchase any and all of the issued
and outstanding shares of common stock, par value $0.001 per
share (the Shares) of the Company not already owned
by Hypo Real Estate Capital Corporation (Parent) and
its affiliates, at a price of $10.6506 per share in cash
(without interest and less applicable withholding taxes), less
the amount of any dividends declared and paid (other than the
$0.3494 dividend to be paid by the Company pursuant to the terms
of the Agreement and Plan of Merger dated as of January 28,
2008 by and among Parent, Purchaser and Quadra) with respect to
the Shares on or between the date of the Offer and the
Acceptance Date (as defined in The Tender
Offer Section 1. Terms of the Offer; Expiration
Date in the Offer to Purchase), upon the terms and subject
to the conditions set forth in the offer to purchase dated
February 13, 2008, as amended (the Offer to
Purchase) and in the related letter of transmittal. Except
as otherwise indicated, the information set forth in the
Schedule 14D-9
remains unchanged. Capitalized terms used but not defined herein
have the meanings ascribed to them in the
Schedule 14D-9.
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Item 4.
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The
Solicitation or Recommendation.
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The second paragraph is hereby amended and restated in its
entirety as follows:
The Quadra Board (exclusive of the Hypo-Affiliated Directors who
did not participate in the evaluation of strategic alternatives
or vote on the proposal to approve the Merger Agreement),
adopted the conclusions and analysis of the Special Committee,
and upon the unanimous recommendation of the Special Committee,
(i) has determined by unanimous vote of the Independent
Directors that the Merger Agreement, and the transactions
contemplated thereby, including the Offer and the Merger, are
advisable, fair to and in the best interests of the Company and
its stockholders (other than Parent and its affiliates),
(ii) has approved by unanimous vote of the Independent
Directors the execution, delivery and performance of the Merger
Agreement and the consummation of the transactions contemplated
thereby, including the Offer and the Merger, and
(iii) recommends that the Companys stockholders
accept the Offer, tender their shares of the Companys
common stock in response to the Offer, and, if a vote is
required under Maryland law, vote for the consummation of the
Merger.
Reasons for
the Recommendation of the Special Committee and the Quadra
Board.
The first two paragraphs are hereby amended and restated in
their entirety as follows:
In evaluating the Merger and the Merger Agreement, the Special
Committee and the Quadra Board (excluding the Hypo-Affiliated
Directors) received information from the Companys
executive officers and consulted with the Special
Committees legal counsel and financial advisor and, in
reaching the recommendation described in this Item 4
regarding the Offer, the Merger and the Merger Agreement, the
Special Committee and the Quadra Board considered a number of
factors. The Special Committee and the Quadra Board considered
all of these factors and evaluated the interrelationships among
the factors, with no single factor being exclusive of any other
factor. In light of the variety of factors considered in
connection with its evaluation of the Offer and the Merger, the
Special Committee and the Quadra Board did not find it
practicable to, and did not, quantify or otherwise assign
relative weights to the specific factors considered in reaching
its determinations and recommendations. Moreover, each member of
the Special Committee and each Independent Director applied his
own personal
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business judgment and experience to the process and may have
given different weight to different factors.
The following is a discussion of the information and factors
considered by the Special Committee and the Quadra Board in
evaluating the Merger and the Merger Agreement. This discussion
is not intended to be exhaustive.
The following bullet points are hereby amended and restated in
their entirety as follows:
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The Companys Operating and Financial Condition;
Prospects of the Company
. The Special Committee
and the Quadra Board (excluding the Hypo-Affiliated Directors)
considered the Companys financial plan and prospects as a
going concern if it were to remain an independent company and
the Companys short-term and long-term capital needs. The
Special Committee and the Quadra Board discussed the
Companys current financial plan, including the risks
associated with achieving and executing upon the Companys
business plan. The Special Committee and the Quadra Board
considered, among other factors, that if the Company continued
as a going concern, the holders of Shares would continue to be
subject to the risks and uncertainties of the Companys
business plans, capital needs and sources and the Companys
prospects unless the Shares were acquired for cash. These risks
and uncertainties included the following as well as the other
risks and uncertainties discussed in the Companys filings
with the SEC:
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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;
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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;
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Any alternative involving the liquidation
and/or
sale
of existing assets carries a high risk of not producing cash
quickly enough to allow the Company to meet its obligation to
repurchase loans from Wachovia on the stated repurchase dates
pursuant to the Wachovia Facility. In addition, liquidity
projections for 2008 created concern among the Special Committee
and the Quadra Board that the Company could not continue to
operate as a going concern and created the risk that the
Companys 2007 audited financial statements would carry a
going-concern qualification, which would be an event of default
under the Wachovia Facility;
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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;
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Blackstone has been in communication with other prospective
buyers since December 19, 2007 and has not received any
indication that any other prospective buyer is or will likely be
interested in paying a price as high as Hypo Holding has offered
for the Companys outstanding stock;
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The issuance of equity would likely be at a price that would be
highly dilutive to existing stockholders; and
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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.
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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
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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 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) and
an approximately 41% premium to the average closing price of the
Quadra Common Stock for the 30 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 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
believed that the Offer Price was within the range of
liquidation values as supported by the discounted cash flow
analysis prepared by Blackstone and set forth in the section
entitled Financial Analyses of Blackstone.
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Timing of Completion.
The Special Committee
and the Quadra Board considered the anticipated timing of
consummation of the transactions contemplated by the Merger
Agreement and the structure of the transaction as a cash tender
offer for all of the Shares, which should allow stockholders to
receive the transaction consideration in a relatively short
timeframe, followed by the Merger in which stockholders would
receive the same consideration as received by stockholders who
tender their Shares in the Offer. The Special Committee and the
Quadra Board considered that the potential for closing in a
relatively short timeframe could also reduce the amount of time
in which the Companys business would be subject to the
potential uncertainty of closing and related disruption and
continuing risks of the business, including the risk of default
under the Wachovia Facility.
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The following disclosure has been added to Item 4.
The Solicitation or Recommendation Reasons for the
Recommendation of the Special Committee and the Quadra
Board:
In the course of reaching the determinations and recommendations
described above, the Special Committee also considered the
following factors relating to the procedural safeguards that the
Special Committee believed were present to ensure the fairness
of the Offer and the Merger and to permit the Special Committee
to represent the Companys unaffiliated stockholders, each
of which factors the Special Committee believed supported such
determinations and favorable recommendations and provided
assurance of the fairness of the Offer and the Merger to the
Companys unaffiliated stockholders:
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that the Special Committee consists solely of independent
directors who the Quadra Board has determined are disinterested
in the transaction;
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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;
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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;
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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);
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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;
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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;
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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;
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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;
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that the Quadra Board authorized the Special Committee to
consider alternatives to a transaction with Purchaser or Parent;
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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 of a Superior Proposal, subject to a payment by the
Company to Parent of various termination fees;
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that initiating an auction process may have subjected the
Companys business to risks and disruptions;
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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;
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that the negotiations with Purchaser were on an
arms-length basis, led by the chairman of the Special
Committee;
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that the Special Committee had ultimate authority to decide
whether or not to proceed with a transaction with Purchaser or
any other party;
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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
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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.
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Item 8.
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Additional
Information.
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Opinion of the
Special Committees Financial Advisor
The first paragraph has been amended and restated in its
entirety as follows:
The Special Committee retained Blackstone, by agreement dated
November 29, 2007, to provide it with financial advisory
services in connection with the Special Committees
consideration of strategic alternatives available to the
Company. The Special Committee selected Blackstone to act as its
financial advisor based on Blackstones qualifications,
expertise, and reputation as a financial advisor to special
committees. The Company had no prior relationship with, and had
within the past two years paid no fees to, Blackstone. At the
meeting of the Special Committee on January 27, 2008,
Blackstone rendered its oral opinion, subsequently confirmed in
writing, that as of January 27, 2008, the aggregate
consideration of $11.00 per Share in cash to be received by
holders of Shares, other than Parent and its affiliates,
pursuant to the Offer, the Merger and the Dividend was fair to
such holders from a financial point of view.
Item 9 is amended and restated in its entirety as follows:
The following Exhibits are filed with this
Schedule 14D-9:
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(a)(1)(A)
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Offer to Purchase, dated February 13, 2008 (incorporated by
reference to Exhibit(a)(1)(A) to the Schedule TO.*
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(a)(1)(B)
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Letter of Transmittal (incorporated by reference to
Exhibit(a)(1)(B) to the Schedule TO.*
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(a)(1)(C)
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Notice of Guaranteed Delivery (incorporated by reference to
Exhibit(a)(1)(C) to the Schedule TO).*
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(a)(1)(D)
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Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (incorporated by
reference to Exhibit(a)(1)(D) to the Schedule TO).*
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(a)(1)(E)
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Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees (incorporated by
reference to Exhibit(a)(1)(E) to the Schedule TO).*
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(a)(1)(F)
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Guidelines for Certification of Taxpayer Identification Number
on Substitute
W-9
(incorporated by reference to Exhibit(a)(1)(F) to the
Schedule TO).*
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(a)(1)(G)
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Joint Press Release issued by the Company and Parent, dated
January 29, 2008 (incorporated by reference to the
Schedule 14D-9
filed by the Company on January 29, 2008).*
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(a)(2)(A)
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Letter to Stockholders of the Company, dated February 13,
2008 from Robert H. Mundheim, Chairman of the Board of Directors
of the Company (incorporated by reference to Annex III
attached to this
Schedule 14D-9).*
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(a)(2)(B)
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Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and
Rule 14f-1
thereunder (incorporated by reference to Annex I attached
to this
Schedule 14D-9).*
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(a)(5)
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Opinion of The Blackstone Group, financial advisor to the
special committee of the Quadra Board, dated January 27,
2008 (incorporated by reference to Annex II attached to
this
Schedule 14D-9).*
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(e)(1)
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Agreement and Plan of Merger, dated January 28, 2008, by
and among Quadra Realty Trust, Inc., Hypo Real Estate Capital
Corporation and HRECC Sub Inc. (incorporated by reference to
Exhibit 2.1 to the
Form 8-K
filed by Quadra Realty Trust, Inc with the SEC on
January 29, 2008).*
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(e)(2)
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Form of Management Agreement between Quadra Realty Trust, Inc.
and Hypo Capital Real Estate Capital Corporation (incorporated
by reference to Exhibit 10.2 to Amendment No. 2 to the
Registration Statement on
Form S-11
(Registration
No. 333-138591)
filed by Quadra Realty Trust, Inc. with the SEC on
February 1, 2007).*
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(e)(3)
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Form of Restricted Stock Award Agreement under Quadra Realty
Trust, Inc. Manager Equity Plan between Quadra Realty Trust,
Inc. and Hypo Real Estate Capital Corporation (incorporated by
reference to Exhibit 10.9 to Amendment No. 2 to the
Registration Statement on
Form S-11
(Registration
No. 333-138591)
filed by Quadra Realty Trust, Inc. with the SEC on
February 1, 2007).*
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(e)(4)
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Form of Registration Rights Agreement between Quadra Realty
Trust, Inc. and Hypo Real Estate Capital Corporation
(incorporated by reference to Exhibit 10.1 to Amendment
No. 2 to the Registration Statement on
Form S-11
(Registration
No. 333-138591)
filed by Quadra Realty Trust, Inc. with the SEC on
February 1, 2007).*
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(e)(5)
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Confidentiality Agreement, between Hypo Real Estate Holding AG
and the Company, dated November 16, 2007.*
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(e)(6)
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Form of Contribution Agreement between the Company and Parent
(incorporated by reference to Exhibit 10.3 to Amendment
No. 2 to the Companys Registration Statement on
Form S-11
(File
No. 333-138591)
filed by Quadra Realty Trust, Inc. on February 1, 2007)*
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(g)
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None.
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(x)
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Resolution authorizing the Chairman of the Board to sign and
file certain documents (incorporated by reference to
Exhibit x to the Companys
Schedule 14D-9
filed February 13, 2008).*
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SIGNATURE
After inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is
true, complete and correct.
QUADRA REALTY TRUST, INC.
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By:
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/s/
Robert
H. Mundheim
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Robert H. Mundheim
Chairman of the Board of Directors
Date: March 4, 2008
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