UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE l3D
Under the Securities Exchange Act of 1934
LNR PROPERTY CORPORATION
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(Name of Issuer)
Common Stock, par value $0.10 per share
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(Title of Class of Securities)
501940100
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(CUSIP Number)
with a copy to:
Ronald Kravit, Managing Director Robert G. Minion, Esq.
Riley Property Holdings LLC Lowenstein Sandler PC
c/o Cerberus Capital Management, L.P. 65 Livingston Avenue
299 Park Avenue Roseland, New Jersey 07068
22nd Floor (973) 597-2424
New York, New York 10171
(212) 421-2600
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 29, 2004
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Cusip No. 501940100
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1) Names of Reporting Persons. I.R.S. Identification Nos. of above persons
(entities only):
Riley Property Holdings LLC (I.R.S. No. 22-3902783)
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2) Check the Appropriate Box if a Member of a Group (See Instructions):
(a) Not
(b) Applicable
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3) SEC Use Only
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4) Source of Funds (See Instructions): WC, OO
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5) Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e): Not Applicable
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6) Citizenship or Place of Organization: Delaware
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Number of 7) Sole Voting Power:
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Shares Beneficially 8) Shared Voting Power: 9,480,914*
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Owned by
Each Reporting 9) Sole Dispositive Power:
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Person With 10) Shared Dispositive Power: 9,480,914*
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11) Aggregate Amount Beneficially Owned by Each Reporting Person: 9,480,914*
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12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): Not Applicable
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13) Percent of Class Represented by Amount in Row (11): 32.6%*
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14) Type of Reporting Person (See Instructions): OO, CO
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* Riley Property Holdings LLC ("Riley") is a party to a Voting Agreement, dated
as of August 29, 2004 (the "Voting Agreement"), by and among Riley, LNR Property
Corporation (the "Company") and certain stockholders of the Company, which such
Voting Agreement was entered into in connection with a Plan and Agreement of
Merger, dated as of August 29, 2004 (the "Merger Agreement"), by and among
Riley, Riley Acquistion Sub Corp., a wholly-owned subsidiary of Riley, and the
Company. Pursuant to the Voting Agreement, Riley may be deemed to have shared
voting power and certain other rights with respect to 409,750 shares of the
Company's common stock, par value $0.10 per share (the "Common Stock"), and
9,071,164 shares of Class B common stock of the Company, par value $0.10 per
share (the "Class B Common" and, along with the Common Stock, the "Shares"), of
the Company that are the subject of the Voting Agreement. As a result, Riley may
be deemed to beneficially own such 9,480,914 Shares. Neither the filing of this
Schedule 13D nor any of its contents shall be deemed to constitute an admission
by Riley or any other person that it is the beneficial owner of any of the
Shares referred to herein for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended, or for any other purpose, and such beneficial
ownership is expressly disclaimed.
Item 1. Security and Issuer.
-------------------
The class of equity securities to which this Schedule 13D relates is
the common stock, par value $0.10 per share (the "Common Stock"), of LNR
Property Corporation, a Delaware corporation (the "Company"). The principal
executive offices of the Company are located at 1601 Washington Avenue, Suite
800, Miami Beach, Florida 33139.
Item 2. Identity and Background.
-----------------------
The name of the person filing this statement is Riley Property
Holdings, LLC ("Riley"), a Delaware limited liability company. The address of
the principal office of Riley is c/o Cerberus Capital Management, L.P., 299 Park
Avenue, 22nd Floor, New York, NY 10171.
Riley is a privately-held limited liability company formed for the
purpose of effecting the transactions described in this Schedule 13D. Set forth
on Schedule A annexed hereto, which is incorporated herein by reference, is the
information required by Item 2 of Schedule 13D for each executive officer and
director of Riley, each person controlling Riley, and each executive officer and
director (or other controlling person) of any corporation or other person
ultimately in control of Riley, in each case as of the date hereof.
During the past five years, neither Riley, nor to Riley's knowledge,
any person or entity named in Schedule A hereto, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
During the past five years, neither Riley, nor to Riley's knowledge, any person
or entity named in Schedule A hereto, was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
such person or entity was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Pursuant to an Agreement and Plan of Merger, dated as of August 29,
2004 (the "Merger Agreement"), by and among Riley, Riley Acquisition Sub Corp.
("Merger Sub") and the Company, which is incorporated by reference herein as
Exhibit 1 hereto, Riley, Merger Sub, the Company and certain stockholders of the
Company (collectively, the "Stockholders") entered into a Voting Agreement,
dated as of August 29, 2004 (the "Voting Agreement"), which is incorporated by
reference herein as Exhibit 2 hereto. As a result of the terms of the Merger
Agreement and the Voting Agreement, Riley may be deemed to be the beneficial
owner of 9,480,914 Shares.
Item 4. Purpose of Transaction.
----------------------
The Voting Agreement, which is described in Item 6 of this Schedule
13D, was an inducement and a condition precedent to the willingness of Riley to
enter into the Merger Agreement, whereby Merger Sub was merged with and into the
Company, with the Company as the surviving entity, and was entered into by the
parties thereto in order to increase the likelihood that the approval of the
Company's stockholders required in order to consummate the Merger (as defined in
the Merger Agreement) will be obtained.
Pursuant to the Merger Agreement, among other things, (i) the Merger
Sub will merge with and into the Company, (ii) the Company shall continue in
existence, as the surviving corporation in the Merger (the "Surviving
Corporation"), (iii) the Surviving Corporation will become a wholly owned
subsidiary of Riley, (iv) each Share will be converted into the right to receive
$63.10 in cash, (v) the directors and officers of the Surviving Corporation
shall be those directors and officers set forth in the schedules delivered by
Riley to the Company, (vi) the Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time shall remain in effect until it
is subsequently amended, and (vii) the by-laws of the Merger Sub shall be
amended to read in their entirety in the form attached as Exhibit A to the
Merger Agreement.
Item 5. Interest in Securities of the Issuer.
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Based upon the information set forth in the Company's quarterly report
on Form 10-Q for the quarterly period ended May 31, 2004 filed by the Company,
there were 29,095,600 shares of Common Stock issued and outstanding as of August
29, 2004. As a result of the provisions set forth in the Voting Agreement with
respect to the 9,480,9140 Shares which are the subject of the Voting Agreement,
Riley may be deemed to have certain shared power to vote and direct the
disposition of such 9,480,914 Shares. Thus, as of August 29, 2004, for the
purposes of Reg. Section 240.13d-3, Riley may be deemed to beneficially own
9,480,914 Shares, or 32.6% of the Shares deemed issued and outstanding as of
that date.
Neither the filing of this Schedule 13D nor any of its contents shall
be deemed to constitute an admission by Riley or any other person that it is the
beneficial owner of any of the Shares referred to herein for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended, or for any other
purpose, and such beneficial ownership is expressly disclaimed.
Except as described in this Schedule 13D, to the knowledge of Riley,
no other Shares are owned, beneficially or otherwise, by the persons or entities
listed on Schedule A annexed hereto.
Other than described in this Schedule 13D, neither Riley, nor to the
knowledge of Riley any person or entity named on Schedule A annexed hereto, has
effected any transactions of the type required to be reported in Item 5 of
Schedule 13D, in Shares, or securities convertible into, exercisable for or
exchangeable for Shares, during the sixty days prior to August 29, 2004.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
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Pursuant to the Voting Agreement, among other things, Riley, the
Company and the Stockholders agreed to the terms pursuant to which the
Stockholders shall, at any meeting of the holders of the Shares in which the
holders are asked to vote upon a proposal to adopt the Merger Agreement, appear
at the meeting or otherwise cause the Shares to be counted as present for
purposes of establishing a quorum and shall vote all of the Shares (i) in favor
of and to adopt the Merger Agreement and approve the merger and/or other
transactions contemplated by the Merger Agreement, and (ii) against the
following: (A) any Acquisition Proposal (as defined in the Merger Agreement),
(B) any change in a majority of the members of the Board of Directors of the
Company, (C) any action or agreement that would result in a breach of any
covenant, representation or warranty or any obligation or agreement of the
Company under the Merger Agreement or the Voting Agreement, or (D) any action
which is intended or could reasonably be expected, to impede, interfere with,
materially delay, materially postpone or materially adversely affect the Merger
and the transactions contemplated by the Merger Agreement. Pursuant to the terms
of the Voting Agreement, the Stockholders have agreed that each Stockholder will
not, with certain exceptions, sell, transfer, assign or otherwise dispose of, or
enter into any arrangement with respect to or consent to sell, transfer, assign
or otherwise dispose of, any or all of the Shares or any interest therein, grant
any proxy or power of attorney, deposit any Shares into a voting trust, or enter
into a voting agreement or arrangement with respect to the Shares. The
Stockholders have agreed, pursuant to the Voting Agreement, that no Stockholder
will, until the termination of the Merger Agreement, request that Company
register the transfer, via book-entry or otherwise of any certificate or
uncertificated interest representing any of the Shares unless in compliance with
the Voting Agreement.
Pursuant to the Merger Agreement and the Voting Agreement, among other
things, the Company and Stockholders agreed to certain covenants regarding the
termination of discussions, activities and negotiations regarding other
Acquisition Proposals and various other matters customary in agreements for
transactions such as or similar to the Merger, in each case as more particularly
set forth and described in the Merger Agreement incorporated by reference as
Exhibit 2 hereto.
Cerberus Capital Management, L.P. ("Cerberus") and Cerberus Capital
Management II, L.P. ("Cerberus II") entered into a letter agreement, dated
August 29, 2004, a copy of which is attached hereto as Exhibit 3, pursuant to
which Cerberus agreed to commit, on behalf of one or more of its affiliated
funds or managed accounts, to contribute capital to Riley in the amount of $550
million (the "Capital Contribution") in exchange for strips of membership
interests in Riley (as described in the Merger Agreement). The proceeds of such
Capital Contribution will be used to fund, in part, the Merger Consideration (as
defined in the Merger Agreement). Cerberus II agreed to be liable to the Company
for the failure by Riley and/or Merger Sub to perform their obligations under
the Merger Agreement required to be performed by them prior to the Effective
Time (as defined in the Merger Agreement), not to exceed in the aggregate $125
million for any reason.
The descriptions of the transactions and agreements set forth in this
Schedule 13D are qualified in their entirety by reference to the complete
agreements governing such matters, each of which is incorporated by reference to
this Schedule 13D as an exhibit pursuant to Item 7 hereof.
Item 7. Material to be Filed as Exhibits.
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1. Plan and Agreement of Merger, dated as of August 29, 2004, by and
among Riley Property Holdings LLC, Riley Acquisition Sub Corp., and LNR Property
Corporation, incorporated by reference to Exhibit 99.1 to the Form 8-K filed by
LNR Property Corporation on September 1, 2004.
2. Voting Agreement, dated as of August 29, 2004, by and among Riley
Property Holdings LLC, LNR Property Corporation and certain stockholders of LNR
Property Corporation identified therein, incorporated by reference to Exhibit
99.2 to the Form 8-K filed by LNR Property Corporation on September 1, 2004.
3. Letter Agreement of Cerberus Capital Management, L.P. and Cerberus
Capital Management II, L.P. dated August 29, 2004.
Signature
After reasonable 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.
September 8, 2004
RILEY PROPERTY HOLDINGS LLC
By: /s/ Ronald Kravit
----------------------------------
Name: Ronald Kravit
Title: Managing Director
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (See, 18 U.S.C. 1001).
SCHEDULE A
The sole member of Riley Property Holdings LLC, a Delaware limited
liability company ("Riley"), is CB Riley Investor LLC, a Delaware limited
liability company ("CB Riley"). Cerberus Partners, L.P. ("Cerberus Partners"), a
Delaware limited partnership, as nominee for various private investment funds
and/or accounts managed by Cerberus Capital Management, L.P. ("Cerberus") and/or
affiliates of Cerberus (the "Funds"), is the sole member of CB Riley. Stephen
Feinberg, a citizen of the United States, serves as (i) the managing member of
Cerberus Associates, L.L.C., the general partner of Cerberus Partners, and (ii)
the investment manager for the Funds. As a result, Stephen Feinberg possesses
sole power to vote and direct the disposition of all securities of Riley which
may be deemed to be beneficially owned by Cerberus Partners and the Funds.
The business address of each of the above named entities and person is c/o
Cerberus Capital Management L.P., 299 Park Avenue, 22nd Floor, New York, New
York 10171.
Cerberus Partners and the Funds are engaged in the investment in personal
property of all kinds, including but not limited to capital stock, depository
receipts, investment companies, mutual funds, subscriptions, warrants, bonds,
notes, debentures, options and other securities of whatever kind and nature. Mr.
Feinberg also provides investment management and other services for various
other third parties.
Mr. Ronald Kravit serves as the managing director of Riley and CB Riley.
Mr. Kravit is a citizen of the United States with a business address at c/o
Cerberus Capital Management, L.P., 299 Park Avenue, 22nd Floor, New York, New
York 10171. Mr. Kravit serves under the ultimate direction and control of
Stephen Feinberg.
A-1
EXHIBIT 3
CERBERUS CAPITAL MANAGEMENT, L.P.
299 Park Avenue
New York, New York 10171
CERBERUS CAPITAL MANAGEMENT II, L.P.
299 Park Avenue
New York, New York 10171
August 29, 2004
Riley Property Holdings LLC
c/o Cerberus Capital Management, L.P.
299 Park Avenue
New York, New York 10171
Gentlemen:
Reference is made to that certain Agreement and Plan of Merger (the
"Merger Agreement"), dated as of August 29, 2004, by and among LNR Property
Corporation (the "Company"), Riley Property Holdings LLC ("Parent") and Riley
Acquisition Sub Corp. ("Acquisition Sub") providing for the acquisition of all
of the outstanding stock of the Company (the "Acquisition"). Reference is also
made to (i) that certain commitment letter (the "GS Commitment Letter"), dated
the date hereof, from Goldman Sachs Mortgage Company committing to provide debt
financing (the "GS Loan") of up to $2.9 billion to finance the Acquisition and
(ii) that certain commitment letter (the "DB Commitment Letter"), dated the date
hereof, from Deutsche Bank AG to provide debt financing (the "DB Loan") of up to
$3.07 billion to finance the Acquisition.
1. This letter will confirm the commitment of Cerberus Capital
Management, L.P., on behalf of one or more of its affiliated funds or managed
accounts ("Cerberus"), to contribute capital to Parent in the amount of $550
million (the "Capital Contribution") in exchange for strips of membership
interests in Parent, 95% of which shall be designated as preferred units and 5%
of which shall be designated as common units. The proceeds to Parent from the
Capital Contribution will be used to fund, in part, the Merger Consideration (as
defined in the Merger Agreement).
2. Cerberus' commitment to make the Capital Contribution is subject
to the funding, at Cerberus' discretion, of either the GS Loan in an amount not
less than $2.9 billion (other than the failure to fund as a result of Cerberus'
9679723.7
failure to agree to reasonable documentation containing the terms described in
the GS Commitment Letter or to fulfill its obligations under that documentation)
or the DB Loan in an amount not less than $3.05 billion (other than the failure
to fund as a result of Cerberus' failure to agree to reasonable documentation
containing the terms described in the DB Commitment Letter or to fulfill its
obligations under that documentation) and the satisfaction, or waiver by Parent,
of all of the conditions to its or Acquisition Sub's obligations contained in
the Merger Agreement.
3. Cerberus Capital Management II, L.P. ("Cerberus II") agrees to be
liable to the Company for the failure by Parent and/or Acquisition Sub to
perform their obligations under the Merger Agreement required to be performed by
them prior to the Effective Time.
4. The Company is an intended third party beneficiary of paragraph 3
of this letter agreement, and will have the right to enforce paragraph 3 of this
letter agreement, subject to the limitations set forth in paragraph 5 below.
5. Notwithstanding any other term or condition of this letter
agreement, (i) under no circumstances shall the maximum liability of Cerberus
and Cerberus II to the Company hereunder or for any breach of Parent's or
Acquisition Sub's obligations under the Merger Agreement exceed in the aggregate
$125 million for any reason and (ii) under no circumstances shall Cerberus or
Cerberus II be liable for punitive, indirect or consequential damages. There is
no express or implied intention to benefit any other third party and nothing
contained in this letter agreement is intended, nor shall anything herein be
construed, to confer any rights, legal or equitable, in any person other than
Parent and the Company.
6. Neither Cerberus nor Cerberus II will amend, modify or terminate
this letter in any respect that would adversely affect the probability that the
Acquisition will close or will delay the closing without the prior consent of
the Company.
7. This letter agreement will be effective upon Parent's acceptance
of the terms and conditions of this letter agreement and will expire on the
earliest to occur of (i) the closing of the Merger or (ii) the termination of
the Merger Agreement pursuant to its terms. Any claim against Cerberus and/or
Cerberus II arising under this letter agreement shall be barred if not brought
in a court of competent jurisdiction on or before the day that is 60 days
following the termination of the Merger Agreement.
8. This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without giving effect to the
conflict of laws principles thereof that would apply the laws of any other
jurisdiction). Each party to this letter agreement hereby irrevocably and
unconditionally agrees that any action, suit or proceeding, at law or equity,
arising out of or relating to this letter agreement or any agreements or
transactions contemplated hereby shall only be brought in any federal court of
the Southern District of New York or any state court located in New York County,
State of New York, and hereby irrevocably and unconditionally expressly submits
to the personal jurisdiction and venue of such courts for the purposes thereof
and hereby irrevocably and unconditionally waives (by way of motion, as a
defense or otherwise) any and all jurisdictional, venue and convenience
objections or defenses that such party may have in such action, suit or
proceeding. Each party hereby irrevocably and unconditionally consents to the
9679723.7
service of process of any of the aforementioned courts. Nothing herein contained
shall be deemed to affect the right of any party to serve process in any manner
permitted by law or commence legal proceedings or otherwise proceed against any
other party in any other jurisdiction to enforce judgments obtained in any
action, suit or proceeding brought pursuant to this section.
Sincerely,
CERBERUS CAPITAL MANAGEMENT, L.P.
By:---------------------------------------------
Name: Mark A. Neporent
Title: Chief Operating Officer
CERBERUS CAPITAL MANAGEMENT II, L.P.
By: Craig Court GP, LLC, its general partner
By: Craig Court, Inc., its managing member
By:------------------------------------
Name: Mark A. Neporent
Title: V.P./Chief Operating Officer
ACCEPTED:
RILEY PROPERTY HOLDINGS LLC
By:--------------------------------
Name: Ronald Kravit
Title: Managing Director