Oaktree Sets Expiration Date For Interep Offer
April 12, 2006 at 4:14 PM (PT)
OAKTREE CAPITAL MANAGEMENT has informed INTEREP's board that its offer to buy INTEREP's outstanding shares for $1.10/share will expire at 5p ET on APRIL 21. Exhibiting impatience with INTEREP's board, OAKTREE, which owns shares and notes in INTEREP through funds it manages ("the OCM Funds"), issued a release stating that "despite the OCM Funds' continued efforts to complete the above-referenced transaction, the Company's Board has permitted four months of unnecessary delay. Consequently, if the Company's Board chooses not to finalize the transaction before the end of next week, the OCM Funds will withdraw the OCM Offer and will reserve their rights to pursue claims against the Company and its directors and officers."
"Our patience is running out," OAKTREE Managing Dir. B. JAMES FORD said in his letter to INTEREP's board. "The OCM Funds are still prepared to complete the transaction at $1.10 in cash per share (which represents a 439% premium to yesterday's closing price), subject only to limited customary conditions for transactions of this type.... My colleagues and I firmly believe that this transaction is in the best interests of the Company's shareholders and that any further delay in finalizing the transaction will cause irreparable damage to the shareholders. Accordingly, we urge you to take very seriously your fiduciary duties to INTEREP's shareholders."
Later in the day, INTEREP responded to OAKTREE's release, stating that the companies' joint NOVEMBER 10, 2005 Letter of Intent "obligated INTEREP to negotiate with OAKTREE CAPITAL MANAGEMENT in good faith, not to accept an unsatisfactory deal." INTEREP went on to say that, because the Letter of Intent was non-binding, "INTEREP has the right and the obligation to look at possible alternatives to OAKTREE’s deal."
The response continued, with INTEREP stating, "Despite OAKTREE's statements to the contrary, INTEREP and its Board of Directors have acted in good faith throughout their negotiations with OAKTREE. Over the past four months, INTEREP has been confronted by significant issues relating to the terms and conditions of the transaction, many raised by OAKTREE itself. Some of these issues have not been resolved."
"The Board's duty is to act in the best interests of all of INTEREP's shareholders -- and it has done so. While OAKTREE’s offer of $1.10 per share does represent a premium over the current market share price, the Board will continue to evaluate the intrinsic value of the company with a view to determine a fair valuation. This requires the Board to continue to explore alternatives that could result in greater value for the company's shareholders and employees.
"For these reasons and others, OAKTREE's claim -- that a failure to do a deal with them will result in irreparable harm to INTEREP’s shareholders -- is simply untrue. The Board believes that it has carried out its fiduciary duties to the shareholders and that OAKTREE does not have valid claims against the Board or the Company."