AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 11, 2003
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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LNR PROPERTY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 65-0777234
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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1601 WASHINGTON AVENUE, SUITE 800
MIAMI BEACH, FLORIDA 33139 (305) 695-5500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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JEFFREY P. KRASNOFF WITH A COPY TO:
LNR PROPERTY CORPORATION DAVID W. BERNSTEIN
1601 WASHINGTON AVENUE, SUITE 800 CLIFFORD CHANCE US LLP
MIAMI BEACH, FLORIDA 33139 (305) 695-5500 200 PARK AVENUE
(Name, address including zip code, and NEW YORK, NEW YORK 10166
telephone number,
including area code, of agent for service) (212) 878-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
OFFERING PRICE PER $100 PROPOSED MAXIMUM
TITLE OF CLASS OF AMOUNT TO BE PRINCIPAL AMOUNT OF AGGREGATE AMOUNT OF
SECURITIES BEING REGISTERED REGISTERED NOTES OFFERING PRICE REGISTRATION FEE
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5.5% Contingent Convertible Senior
Subordinated Notes Due 2023.............. $235,000,000(1) $106.75(3) $250,862,500(3) $20,295
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Common stock, par value $.10 per share.... (2)
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(1) Amount represents aggregate principal amount of LNR Property Corporation's
5.5% Contingent Convertible Senior Subordinated Notes Due 2023.
(2) Also being registered is an indeterminate number of shares of common stock
that may be issuable upon conversion of the Notes, which in accordance with
Rule 457(i) is not subject to an additional registration fee.
(3) Estimated, solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act, on the basis of the
bid and asked prices of the Notes on April 4, 2003.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITYHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL 11, 2003
PROSPECTUS
LNR PROPERTY CORPORATION
5.5% CONTINGENT CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2023
This prospectus relates to $235,000,000 aggregate principal amount of our
5.5% Contingent Convertible Senior Subordinated Notes Due 2023 and the shares of
our common stock into which those Notes are convertible. Notes and shares may be
offered and sold from time to time by the securityholders specified in this
prospectus or their successors in interest. See "Selling Securityholders." The
sales of Notes or shares are being registered pursuant to an agreement with the
initial purchasers of the Notes.
We will not receive any of the proceeds from sales of Notes or shares
offered by this prospectus. However, we have agreed to bear certain expenses in
connection with the registration of offers or sales by selling securityholders
of Notes or common stock into which Notes are converted.
Our common stock is listed on the New York Stock Exchange under the symbol
"LNR."
THE NOTES AND SHARES INVOLVE RISK. FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN NOTES OR SHARES, SEE
THE SECTION CAPTIONED "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
Our principal executive offices are located at 1601 Washington Avenue,
Suite 800, Miami Beach, Florida 33139 (telephone: 305-695-5500).
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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April , 2003
TABLE OF CONTENTS
PAGE
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Forward-Looking Information................................. 2
The Company................................................. 3
Risk Factors................................................ 4
Use of Proceeds............................................. 6
Ratios of Earnings to Fixed Charges......................... 6
Description of the Notes.................................... 6
Certain United States Federal Income Tax Considerations..... 24
Selling Securityholders..................................... 29
Plan of Distribution........................................ 30
Legal Matters............................................... 31
Experts..................................................... 31
Incorporation of Certain Documents by Reference............. 32
Information We File......................................... 32
FORWARD-LOOKING INFORMATION
Some of the statements contained in this prospectus and the documents we
incorporate by reference are "forward-looking statements" as that term is
defined in Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Generally, the words
"believe," "expect," "intend," "anticipate," "will," "may" and similar
expressions identify forward looking statements. Forward looking statements
inherently involve risks and uncertainties. The factors, among others, that
could cause actual results to differ materially from those anticipated by the
forward looking statements in this prospectus include, but are not limited to:
- changes in demand for commercial real estate nationally, in areas in
which we own properties, or in areas in which properties securing
mortgages directly or indirectly owned by us are located;
- changes in international, national or regional business conditions that
affect the ability of mortgage obligors to pay principal or interest when
it is due;
- the cyclical nature of the commercial real estate business;
- changes in interest rates;
- changes in the market for various types of real estate based securities;
- changes in the availability of capital or the terms on which it is
available;
- changes in the availability of qualified personnel;
- changes in government regulations, including, without limitation,
environmental regulations; and
- the other matters described under "Risk Factors," beginning on page 4.
Except as the context may otherwise require, when we refer to "LNR" or the
Company," "we," "us" or "our" in this prospectus, we mean LNR Property
Corporation and its consolidated subsidiaries.
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THE COMPANY
We are a real estate investment, finance and management company, which
structures and makes real estate and real estate-related investments and,
through our expertise in developing and managing properties and working out
underperforming and non-performing commercial loans, seeks to enhance the value
of those investments.
Our real estate investment activities include:
- Real Estate Properties: acquiring, developing, repositioning, managing
and selling commercial and multi-family residential real estate.
- Real Estate Loans: investing in high-yielding real estate loans and
acquiring at a discount portfolios of loans backed by commercial or
multi-family residential real estate.
- Real Estate Securities: investing in unrated and non-investment grade
rated commercial mortgage backed securities, or CMBS, as to which we have
the right to be special servicer (i.e., to oversee workouts of
underperforming and non-performing loans).
We adjust our investment focus from time to time to adapt to changes in
markets and phases of the real estate cycle.
Lennar Corporation formed our company in June 1997 to separate Lennar's
real estate investment, finance and management business from its homebuilding
business. On October 31, 1997, Lennar distributed our stock to Lennar's
stockholders in a tax-free spin-off. We treat activities conducted by Lennar, as
our predecessor, of the type we currently conduct as our own historical
activities.
We have a stock repurchase program in place. Through March 31, 2003, we
have repurchased 9.1 million shares of our common stock, including shares of our
common stock that we purchased with a portion of the proceeds from our sale of
the Notes. We are authorized to buy back up to an additional 3.4 million shares
under a recent Board authorization.
We are a Delaware corporation, with our principal executive offices at 1601
Washington Avenue, Suite 800, Miami Beach, Florida 33139. Our main telephone
number at those offices is (305) 695-5500.
You can get more information regarding our business by reading our Annual
Report on Form 10-K for the fiscal year ended November 30, 2002 and other
reports we file with the SEC. See "Information We File" on page 32 of this
prospectus.
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RISK FACTORS
Our Annual Report on Form 10-K for the fiscal year ended November 30, 2002,
which is incorporated by reference into this prospectus, contains under the
caption "Some Things Which Could Adversely Affect Us" a discussion of some
factors which can significantly affect us. You should consider them before you
invest in Notes or shares of our common stock. In addition, you should consider
the following factors in determining whether or not to purchase Notes or shares
of our common stock.
WE ARE SUBJECT TO RISKS FROM HAVING SIGNIFICANT INDEBTEDNESS
We use borrowings to finance almost all the investments we make. At
November 30, 2002, we had total indebtedness of $1,485 million, which was
approximately 56.9% of our debt and stockholders' equity. In addition, we had
guaranteed $35.7 million of debt of partnerships that are not subsidiaries (and
which, therefore, is not reflected in our consolidated financial statements).
While this leverage substantially increases the potential returns on our cash
invested, it exposes us to increased risks if, because of changes in market
conditions, changes in interest rates or for any other reason, the value of our
investments declines.
OUR OBLIGATIONS UNDER THE NOTES ARE UNSECURED, ARE SUBORDINATE TO ALL OF OUR
EXISTING AND FUTURE SENIOR INDEBTEDNESS, AND ARE STRUCTURALLY SUBORDINATE TO
SUBSIDIARY DEBT
The Notes are unsecured and are subordinate to all of our existing and
future Senior Indebtedness. At November 30, 2002, giving pro forma effect to the
issuance of the Notes and the use of the net proceeds from their issuance to
repay indebtedness and repurchase common stock, we had $708.3 million of Senior
Indebtedness outstanding, including $621.8 million of our subsidiaries' debt
which we guaranteed. There is no restriction in the Indenture governing the
Notes on our ability to incur additional Senior Indebtedness. For a description
of the types of obligations that are Senior Indebtedness, see "Subordination"
beginning on page 11 of this prospectus.
In addition, we are a holding company whose primary assets consist of
shares of stock or other equity interests in our subsidiaries. Accordingly, we
will be dependent upon receipt of dividends or advances from our subsidiaries to
be able to meet our debt obligations, including our obligations under the Notes.
The Notes are not guaranteed by our subsidiaries and our subsidiaries are not
obligated to pay dividends or make advances to us. A significant amount of our
consolidated indebtedness at November 30, 2002, was indebtedness of our
subsidiaries, including $272.3 million principal amount which we had not
guaranteed (as well as indebtedness which we had guaranteed and which,
therefore, was Senior Indebtedness). Creditors of a subsidiary are entitled to
be paid what is due to them before assets of the subsidiary become available for
creditors of its parent. Therefore, even liabilities which are not Senior
Indebtedness, and preferred stock, of subsidiaries will, in effect, be prior in
right of payment to the Notes with regard to the assets of those subsidiaries.
This can substantially reduce the portion of our consolidated assets which are
available for payment of the Notes. Also, any agreements of subsidiaries which
prohibit or limit the subsidiaries' payment of dividends will eliminate or
reduce our access to cash flows of those subsidiaries to pay interest or
principal with regard to the Notes.
IF WE EXPERIENCE A CHANGE IN CONTROL, WE MAY BE UNABLE TO PURCHASE THE NOTES
AS REQUIRED UNDER THE INDENTURE
Upon a change in control prior to March 1, 2010, each holder of Notes will
have the right to require us to repurchase the holder's Notes. If there were a
change in control of us, but we did not have sufficient funds to pay the
repurchase price for all the Notes which are tendered, that failure would
constitute an event of default under the Indenture governing the Notes. In
addition, a change in control would breach a covenant under our existing
revolving credit facility and is otherwise restricted by that facility, and may
be prohibited or limited by, or create an event of default under, other
agreements relating to borrowings into which we may enter from time to time. The
borrowings under the revolving credit facility are, and other borrowings are
likely to be, Senior Indebtedness. Therefore, a change in control at a time when
we cannot pay for Notes which are tendered as a result of the change in control
could result in holders of Notes' receiving substantially less than the
principal amount of the Notes.
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OUR REPORTED EARNINGS PER SHARE MAY BE MORE VOLATILE BECAUSE OF THE CONVERSION
CONTINGENCY PROVISION OF THE NOTES
Holders of the Notes are entitled to convert the Notes into our common
stock, among other circumstances, if the common stock price for the periods
described in this prospectus is more than 120% of the conversion price per share
of our common stock. Until this contingency or another conversion contingency is
met, the shares underlying the Notes are not included in the calculation of our
basic or fully diluted earnings per share. Should this contingency be met, fully
diluted earnings per share would, depending on the relationship between the
interest on the Notes and the earnings per share of our common stock, be
expected to decrease as a result of the inclusion of the underlying shares in
the fully diluted earnings per share calculation. Volatility in our stock price
could cause this condition to be met in one quarter and not in a subsequent
quarter, increasing the volatility of fully diluted earnings per share.
YOU SHOULD CONSIDER THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF OWNING NOTES
We intend to treat the Notes as contingent payment debt instruments for
U.S. federal income tax purposes. As a result of this treatment, if you acquire
Notes, you will be required to include amounts in income, as ordinary income, in
advance of the receipt of cash or other property attributable to them. The
amount of interest income you are required to include each year will exceed the
stated interest (and contingent interest, if any) that accrues on the Notes. You
will recognize gain or loss on a sale, purchase by us at your option, exchange,
conversion or redemption of a Note in an amount equal to the difference between
the amount realized on the sale, purchase by us at your option, exchange,
conversion or redemption, including the fair market value of any of our common
stock received upon conversion, and your adjusted tax basis in the Note. Any
gain you recognize generally will be ordinary interest income; any loss will be
ordinary loss to the extent of interest on the Notes previously included in
income and, thereafter, capital loss. There is some uncertainty as to the proper
application of the Treasury regulations governing contingent payment debt
instruments, and if our treatment were successfully challenged by the Internal
Revenue Service, it might be determined that, among other things, you should
have accrued interest income at a lower rate, should not have recognized
ordinary income upon the conversion, and should have recognized capital, rather
than ordinary, income or loss upon a taxable disposition of the Notes. Certain
U.S. federal income tax consequences of ownership of the Notes are summarized in
this prospectus beginning on page 24 under the heading "Certain United States
Federal Income Tax Considerations."
WE EXPECT THAT THE TRADING VALUE OF THE NOTES WILL BE SIGNIFICANTLY AFFECTED
BY THE PRICE OF OUR COMMON STOCK AND OTHER FACTORS
The market price of the Notes is expected to be significantly affected by
the market price of our common stock. This may result in greater volatility in
the trading value of the Notes than would be expected for nonconvertible debt
securities. In addition, the Notes have a number of features, including
conditions to conversion, which, if not met, could result in a holder receiving
less than the value of our common stock into which a Note would otherwise be
convertible. These features could adversely affect the value and the trading
prices of the Notes.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
If the Notes are traded, they may trade at a discount from their principal
amount, depending upon prevailing interest rates, the market for similar
securities, our performance and other factors. Historically, the market for
non-investment grade debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to the Notes. It is
very possible that, if a market for the Notes develops, that market will be
subject to similar disruptions. Any such disruptions may have an adverse effect
on holders of the Notes. We do not intend to apply for listing of the Notes on
any securities exchange or for the inclusion of the Notes in any automated
quotation system.
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THE FORMAT OF OUR INCOME STATEMENT IS GOING TO CHANGE
On December 1, 2002, we became subject to Statement of Financial Accounting
Standards No. 144, Accounting for Impairment or Disposal of Long-Lived Assets.
SFAS No. 144 requires that whenever we sell or hold for sale, a commercial real
estate property that has its own operations and cash flows, we must reclassify
the revenues and expenses of that property, both with regard to the current
period and with regard to the past, as elements of earnings from discontinued
operations, and we must treat our profits or losses on sales of those properties
as gains or losses from discontinued operations. Because our real estate
property business consists of continuously acquiring properties, enhancing their
value and selling them, sales of individual properties are an important part of
our real estate property business. Therefore, we believe, reclassifying our
operating results from properties we sell or hold for sale, and treating our
gain or loss from sale of those properties as discontinued operations, makes it
difficult to determine and evaluate from our statements of earnings the
performance of our real estate property business. The effects of our accounting
for our commercial real estate properties in accordance with SFAS No. 144 will
include (a) virtually every quarter, our historical financial statements will be
revised to transfer the operating results we previously recorded with regard to
properties we sell or hold for sale during the current quarter from continuing
operations to discontinued operations, and (b) the transfers of prior years'
operating results to discontinued operations may make it appear that current
years' earnings before income taxes from our real estate property business is
greater in comparison to prior years than actually is the case. We expect to
provide, in our quarterly Management's Discussion and Analysis of Financial
Condition and Results of Operations, information that combines revenues,
expenses and gains on sales with regard to properties we have sold or hold for
sale, which are reflected on our statements of earnings as discontinued
operations, with the operating income from commercial properties we continue to
own which are not classified as held for sale. However, you will have to read
our MD&A to get this combined information. Further, our year-end MD&A does not
cover all the periods that are the subject of the five year table of Selected
Financial Data that appears in our Annual Report on Form 10-K that we file with
the SEC.
USE OF PROCEEDS
The selling securityholders will receive all of the net proceeds from sales
of Notes and shares offered by this prospectus. See "Selling Securityholders"
beginning on page 29 of this prospectus. We will not receive any of the proceeds
from resales. Nonetheless, we have agreed to bear certain expenses in connection
with the registration of the Notes and the shares of common stock issuable upon
conversion of the Notes so they can be offered and sold to the general public by
the selling securityholders.
RATIOS OF EARNINGS TO FIXED CHARGES
YEARS ENDED NOVEMBER 30,
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2002 2001 2000 1999 1998
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Ratio of earnings to fixed charges(1)....................... 3.3x 2.7x 2.2x 2.2x 2.9x
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(1) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of income from continuing operations before income taxes
plus "fixed charges" and certain other adjustments. "Fixed charges" consist
of interest incurred on all indebtedness related to continuing operations,
including amortization of original issue discount (we did not have any
material capitalized lease obligations during the periods presented).
There was no preferred stock outstanding for any of the periods shown
above. Accordingly, the ratio of earnings to combined fixed charges and
preferred stock dividends is identical to the ratio of earnings to fixed
charges.
DESCRIPTION OF THE NOTES
We issued the Notes under an Indenture between us and U.S. Bank Trust
National Association, as trustee. The following description is only a summary of
the material provisions of the Notes, the related
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Indenture and the registration rights agreement. We urge you to read the
Indenture, the Notes and the registration rights agreement in their entirety
because they, and not this description, define your rights as holders of the
Notes. You may request copies of these documents at our address shown under the
caption "Incorporation of Certain Documents by Reference" on page 32 of this
prospectus. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended. For purposes of this section, references to "we," "us," "our"
and "LNR" include only LNR Property Corporation and not its subsidiaries.
GENERAL
We issued the Notes in an aggregate principal amount of $235,000,000. The
Notes are our senior subordinated obligations and will mature on March 1, 2023,
unless earlier redeemed at our option as described under "-- Optional Redemption
of the Notes" beginning on page 13 of this prospectus, repurchased by us at a
holder's option on certain dates as described under "-- Repurchase of Notes at
the Option of the Holder" beginning on page 13 of this prospectus, or upon a
change in control of LNR as described under "-- Right to Require Purchase of
Notes upon a Change in Control" beginning on page 15 of this prospectus or
converted at a holder's option as described under "-- Conversion Rights"
beginning on page 8 of this prospectus.
Interest on the Notes will accrue at 5.5% per annum and will be payable
semiannually in arrears on March 1 and September 1 of each year, commencing on
September 1, 2003. Interest on the Notes accrues from the initial date of
issuance or, if interest has already been paid, from the date on which it was
most recently paid. We will make each interest payment to persons who are
holders of record of the Notes on the immediately preceding February 15 and
August 15, whether or not this day is a business day. Interest payable upon
redemption will be paid to the person to whom principal is payable unless the
redemption date is between the close of business on any record date for the
payment of interest and the opening of business on the related interest payment
date, in which case we will pay interest to the person that is the record holder
of the Notes on the record date. Interest on the Notes is computed on the basis
of a 360-day year comprised of twelve 30-day months. We will pay the principal
of, and interest (including contingent interest, if any) on, the Notes at the
office or agency maintained by us in the Borough of Manhattan in New York City.
Holders may register the transfer of their Notes at the same location. We
reserve the right to pay interest to holders of the Notes by check mailed to the
holders at their registered addresses. However, a holder of Notes with an
aggregate principal amount in excess of $1,000,000 may request payment by wire
transfer in immediately available funds. Except under the limited circumstances
described below, the Notes will be issued only in fully registered book-entry
form, without coupons, and may be represented by one or more Global Notes. There
is no service charge for any registration of transfer or exchange of Notes. We
may, however, require holders to pay a sum sufficient to cover any tax or other
governmental charge payable in connection with any transfer or exchange.
The Indenture does not contain any restriction on the payment of dividends,
the incurrence of indebtedness or the repurchase of our securities, and does not
contain any financial covenants. Other than as described under "-- Right to
Require Purchase of Notes upon a Change in Control" beginning on page 15 of this
prospectus, the Indenture contains no covenants or other provisions that afford
protection to holders of Notes in the event of a highly leveraged transaction.
CONTINGENT INTEREST
Subject to the accrual and record date provisions described below, we will
pay contingent interest to the holders of Notes for any six-month period from
March 1 to, but excluding, September 1 and from September 1 to, but excluding,
March 1, commencing March 1, 2008, if the average of the note price (as
determined below) per $1,000 principal amount of Notes for the five trading days
ending on the second trading day immediately preceding the start of the relevant
six-month period equals $1,200 or more. Notwithstanding the above, if we declare
a dividend for which the record date falls prior to the first day of a six-month
period but the payment date falls within such six-month period, then the
five-trading-day period for determining the average note price will be the five
trading days ending on the second trading day immediately preceding such record
date.
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The amount of contingent interest payable per $1,000 principal amount of
Notes in respect of any six-month period equals 0.1875% of the average note
price for the five-trading-day period referred to above.
Contingent interest for a six-month period, if any, accrues from the first
day of the six-month period and is payable on the last day of the six-month
period to the persons who are holders of record of Notes on the February 15 or
August 15, as the case may be, during the six-month period.
If we determine that Note holders will be entitled to receive contingent
interest during a six-month period, on or prior to the start of such six-month
period, we will issue a press release and publish the determination on our web
site at www.lnrproperty.com.
The "note price" of the Notes on any date of determination means the
average of the secondary market bid quotations per $1,000 principal amount of
Notes obtained by the conversion agent for $5,000,000 principal amount of the
Notes at approximately 3:30 p.m., New York City time, on such determination date
from three independent nationally recognized securities dealers we select,
provided that if at least three such bids cannot reasonably be obtained by the
conversion agent, but two such bids are obtained, then the average of the two
bids shall be used, and if only one such bid can reasonably be obtained by the
conversion agent, this one bid shall be used. If the conversion agent cannot
reasonably obtain at least one bid for $5,000,000 principal amount of the Notes
from a nationally recognized securities dealer or, in our reasonable judgment,
the bid quotations are not indicative of the secondary market value of the
Notes, then the note price will be determined in good faith by the conversion
agent acting as calculation agent taking into account in such determination such
factors as it, in its sole discretion after consultation with us, deems
appropriate.
CONVERSION RIGHTS
A holder may convert any outstanding Notes into shares of our common stock
at an initial conversion price per share of $45.28. This represents a conversion
rate of approximately 22.0848 shares per $1,000 principal amount of the Notes.
The conversion price (and resulting conversion rate) is, however, subject to
adjustment as described below. A holder may convert Notes only in denominations
of $1,000 and integral multiples of $1,000.
General
Holders may surrender Notes for conversion into shares of our common stock
prior to the maturity date in the following circumstances:
- during any quarter, if the closing common stock price (described below)
of our common stock for at least 20 trading days in the period of 30
consecutive trading days ending on the twelfth trading day of such
quarter is more than 120% of the conversion price per share on that 30th
trading day;
- if we have called the particular Notes for redemption and the redemption
has not yet occurred;
- if none of Moody's Investors Service, Inc., Standard & Poor's Ratings
Services or Fitch Ratings Ltd. assigns a credit rating to any of our debt
securities; or
- upon the occurrence of specified corporate transactions.
In addition, in respect of any Note presented for conversion prior to March
8, 2008, we may, at our option, in lieu of delivering shares of common stock,
elect to pay the holder surrendering such Note an amount of cash equal to the
average of the common stock price for the five consecutive trading days
immediately following (a) the date of our notice of our election to deliver cash
as described below if we have not given a notice of redemption with respect to
such Note, or (b) the conversion date, in the case of a conversion following our
notice of redemption with respect to such Note specifying that we intend to
deliver cash upon conversion, in either case multiplied by the number of shares
of common stock issuable upon conversion of such Note on that date. We will
inform Noteholders through the trustee no later than two business days following
the conversion date of our election to deliver shares of common stock or to pay
cash in lieu of the delivery of shares, unless we have already informed holders
of our election in connection with our optional redemption of the Notes as
described under "-- Optional Redemption of the Notes" beginning on page 13 of
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this prospectus. If we elect to deliver all of such payment in shares of common
stock, the shares will be delivered through the trustee no later than the fifth
business day following the conversion date. If we elect to pay all or a portion
of such payment in cash, the payment, including any delivery of common stock,
will be made to holders surrendering Notes no later than the tenth business day
following the applicable conversion date. If an event of default, as described
under "-- Events of Default" beginning on page 20 of this prospectus (other than
a default in a cash payment upon conversion of the Notes), has occurred and is
continuing, we may not pay cash upon conversion of any Notes (other than cash in
lieu of fractional shares).
The "common stock price" of our common stock on any date means the closing
sale price per share (or if no closing sale price is reported, the average of
the bid and ask prices or, if there is more than one reported bid or ask price,
the average of the average bid and the average ask prices) on such date in
composite transactions reported on the principal United States securities
exchange on which the common stock is traded or, if the common stock is not
listed on a United States national or regional securities exchange, as reported
by the Nasdaq System.
Conversion Upon Notice of Redemption
A Noteholder may surrender for conversion any Note called for redemption at
any time prior to the close of business on the day that is two business days
prior to the redemption date, even if the Notes are not otherwise convertible at
such time.
Conversion Upon Specified Corporate Transactions
If we elect to:
- distribute to all holders of our common stock rights, warrants or options
entitling them to subscribe for or purchase, for a period expiring within
60 days of the date of distribution, shares of our common stock at less
than the then current market price; or
- distribute to all holders of shares of our common stock any assets, debt
securities or certain rights to purchase our securities, which
distribution has a per share value exceeding 15% of the closing price of
our common stock on the day preceding the declaration date for such
distribution,
we must notify the holders of Notes at least 20 days prior to the ex-dividend
date for such distribution. Once we have given such notice, holders may
surrender their Notes for conversion until the earlier of the close of business
on the business day prior to the ex-dividend date or our announcement that such
distribution will not take place. This provision shall not apply if the holder
of a Note otherwise participates in the distribution without conversion.
In addition, if we are a party to a consolidation, merger, share exchange,
sale of all or substantially all of our assets or other similar transaction, in
each case pursuant to which the shares of our common stock would be converted
into cash, securities or other property, a Noteholder may surrender its Notes
for conversion at any time from and after the date which is 15 days prior to the
anticipated effective date of such transaction until and including the date
which is 15 days after the actual effective date of such transaction. If we are
a party to a consolidation, merger, share exchange, sale of all or substantially
all of our assets or other similar transaction, in each case pursuant to which
the shares of our common stock are converted into cash, securities, or other
property, then at the effective time of the transaction, a Noteholder's right to
convert its Notes into shares of our common stock will be changed into a right
to convert such Notes into the kind and amount of cash, securities and other
property which such holder would have received if such holder had converted such
Notes immediately prior to the transaction. If the transaction also constitutes
a change in control, such holder can require us to repurchase all or a portion
of its Notes as described under "-- Right to Require Purchase of Notes upon a
Change in Control" beginning on page 15 of this prospectus.
If a holder of a Note has delivered notice of its election to have such
Note repurchased at the option of such holder or as a result of a change in
control, such Note may be converted only if the notice of election is withdrawn
as described beginning on pages 13 and 15 of this prospectus respectively, under
"-- Repurchase of Notes at the Option of the Holder" or "-- Right to Require
Purchase of Notes upon a Change in Control."
9
We will adjust the conversion price if (without duplication):
(1) we issue to all holders of shares of our common stock common stock
or other capital stock as a dividend or distribution on our common stock;
(2) we subdivide, combine or reclassify our common stock;
(3) we issue to all holders of our common stock rights, warrants or
options entitling them to subscribe for or purchase shares of our common
stock at less than the then current market price;
(4) we distribute to all holders of our common stock evidences of our
indebtedness, shares of capital stock (other than shares of our common
stock), securities, cash, property, rights, warrants or options, excluding:
- those rights, warrants or options referred to in clause (3) above;
- any dividend or distribution paid exclusively in cash not referred to
below; and
- any dividend or distribution referred to in clause (1) above;
(5) we make a cash distribution to all holders of shares of our common
stock that together with all other all-cash distributions and consideration
payable in respect of any tender or exchange offer by us or one of our
subsidiaries for shares made within the preceding 12 months exceeds 10% of
our aggregate market capitalization on the date of the declaration of the
distribution; or
(6) during any twelve-month period we or one of our subsidiaries
complete a repurchase by way of a tender or exchange offer of shares of our
common stock which involves an aggregate consideration that, together with:
- any cash and other consideration payable in respect of any tender or
exchange offer by us or one of our subsidiaries for shares of our common
stock concluded within the preceding 12 months; and
- the amount of any all-cash distributions to all holders of our common
stock made within the preceding 12 months;
exceeds 10% of our aggregate market capitalization on the expiration of the
tender or exchange offer.
For purposes of the foregoing, the term "market capitalization" as of any
date of calculation means the closing sale price of our common stock on the
trading day immediately prior to such date of calculation multiplied by the
aggregate number of shares of our common stock outstanding on the trading day
immediately prior to such date of calculation.
The conversion price will not be adjusted until adjustments amount to 1% or
more of the conversion price as last adjusted. We will carry forward any
adjustment we do not make and will include it in any future adjustment.
We will not issue fractional shares of common stock to a holder who
converts a Note. In lieu of issuing fractional shares, we will pay cash based
upon the common stock price on the date of conversion.
Except as described in this paragraph, no holder of Notes will be entitled,
upon conversion of the Notes, to any payment or adjustment on account of accrued
but unpaid interest, including contingent interest and liquidated damages, if
any, or on account of dividends on shares issued in connection with the
conversion. If any holder surrenders a Note for conversion between the close of
business on any record date for the payment of an installment of interest
(including contingent interest, if any) and the opening of business on the
related interest payment date, when the holder surrenders the note for
conversion, the holder must deliver payment to us of an amount equal to the
interest payable on the interest payment date (including contingent interest, if
any) on the principal amount to be converted. The foregoing sentence shall not
apply to Notes called for redemption on a redemption date within the period
between and including the record date and the interest payment date.
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If we make a distribution of property to our stockholders which would be
taxable to them as a dividend for federal income tax purposes and the conversion
price of the Notes is decreased, this decrease may be deemed to be the receipt
of taxable income by holders of the Notes.
We may from time to time reduce the conversion price if our Board of
Directors determines that this reduction would be in the best interests of LNR.
Any such determination by our Board of Directors will be conclusive. Any such
reduction in the conversion price must remain in effect for at least 20 trading
days. In addition, we may from time to time reduce the conversion price if our
Board of Directors deems it advisable to avoid or diminish any income tax to
holders of our common stock resulting from any stock or rights distribution on
our common stock.
SUBORDINATION
The payment of the Obligations (as defined below) on the Notes is
subordinated in right of payment to the prior payment in full in cash or cash
equivalents of all Obligations on Senior Indebtedness (as defined below),
whether outstanding on the Issue Date (as defined below) or thereafter incurred,
including without limitation our obligations under our Credit Agreement. Upon
any payment or distribution of our assets of any kind or character, whether in
cash, property or securities, to creditors upon any total or partial
liquidation, dissolution, winding-up, reorganization, assignment for the benefit
of creditors or marshaling of our assets or in a bankruptcy, reorganization,
insolvency, receivership or other similar proceeding, whether voluntary or
involuntary, all Obligations upon all Senior Indebtedness shall first be paid in
full in cash or cash equivalents, or such payment duly provided for to the
satisfaction of the holders of Senior Indebtedness, before any payment or
distribution is made on account of any Obligations on the Notes, or for the
acquisition of any of the Notes for cash or property or otherwise.
If any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise, of any principal of,
interest on, unreimbursed drawings for letters of credit issued in respect of,
or regularly occurring fees with respect to any Senior Indebtedness, no payment
of any kind or character shall be made by us or on our behalf or by any other
person on our or that person's behalf with respect to any Obligations on the
Notes or to acquire any of the Notes for cash or property or otherwise.
In addition, if
- any other event of default occurs and is continuing with respect to any
Designated Senior Indebtedness permitting the holders of such Designated
Senior Indebtedness then outstanding to accelerate the maturity thereof;
and
- the holders, or the trustee or agent on behalf of the holders, of the
Designated Senior Indebtedness as to which such default relates gives
written notice of the event of default to the Trustee (a "Default
Notice"),
then, unless and until all events of default with respect to that issue of
Designated Senior Indebtedness have been cured or waived or have ceased to exist
or the Trustee receives notice from the holders, or the trustee or agent on
behalf of the holders, of that issue of Designated Senior Indebtedness
terminating the Blockage Period (as defined below), during the 180 days after
the delivery of such Default Notice (the "Blockage Period"), we and any of our
subsidiaries or any obligor under the Notes will not:
- make any payment of any kind or character with respect to any Obligations
on the Notes; or
- acquire any of the Notes for cash or property or otherwise.
Notwithstanding anything herein to the contrary, in no event will a
Blockage Period extend beyond 180 days from the date the payment on the Notes
was due and only one such Blockage Period may be commenced with respect to all
issues of Designated Senior Indebtedness within any 360 consecutive days. No
event of default which existed or was continuing on the commencement date of any
Blockage Period shall be the basis for commencement of a second Blockage Period
by the holders, or the trustee or agent on behalf of the holders, of an issue of
Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive
11
days. Any subsequent action, or any breach of financial covenants for a period
commencing after the commencement date of a Blockage Period, that in either
case, would give rise to an event of default pursuant to any provisions under
which an event of default previously existed or was continuing shall constitute
a new event of default for this purpose.
As a result of this subordination, in the event of our insolvency, our
creditors who are not holders of Senior Indebtedness, including the holders of
the Notes, may recover less, ratably, than holders of Senior Indebtedness.
At November 30, 2002, after giving effect to the sale of $235 million
principal amount of Notes and application of the proceeds of that sale, we would
have had approximately $708.3 million of Senior Indebtedness.
We are principally a holding company whose primary assets consist of shares
of stock issued by our subsidiaries. Accordingly, we are dependent upon the cash
flows of, and receipt of dividends and advances from, or repayments of advances
by, our subsidiaries in order to meet our debt obligations, including our
obligations under the Notes. The Notes are not guaranteed by our subsidiaries
and, consequently, our subsidiaries are not obligated or required to pay any
amounts pursuant to the Notes or to make funds available therefor in the form of
dividends or advances. See "Risk Factors -- Our obligations under the Notes are
unsecured, are subordinate to all of our existing and future Senior
Indebtedness, and are structurally subordinate to subsidiary debt" on page 4 of
this prospectus.
"Designated Senior Indebtedness" means:
- any indebtedness under or in respect of our Credit Agreement (as defined
below); and
- any other indebtedness constituting Senior Indebtedness, the principal
amount of which is $25 million or more and that we have designated
"Designated Senior Indebtedness."
"Credit Agreement" means the Third Amended and Restated Revolving Credit
Agreement, dated as of November 27, 2002, among LNR and certain of its
subsidiaries, the lenders named therein and Bank of America, N.A., as
administrative agent, together with the related documents thereto, as such
agreement may be amended, supplemented or otherwise modified from time to time.
The Credit Agreement includes any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including increasing the
amount of available borrowings or adding our subsidiaries as additional
borrowers or guarantors thereunder) all or any portion of the indebtedness under
such agreement or any successor or replacement agreement whether by the same or
any other agent, lender or group of lenders.
"Issue Date" means the date of original issuance of the Notes.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any indebtedness.
"Senior Indebtedness" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any of
our indebtedness, whether outstanding on the Issue Date or thereafter created,
incurred or assumed, unless, in the case of any particular indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such indebtedness shall not be senior in
right of payment to the Notes. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on, and all other amounts owing in respect of:
(1) all of our monetary obligations (including guarantees thereof) of
every nature under our Credit Agreement, including, without limitation,
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities;
(2) all interest swap obligations (including guarantees thereof); and
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(3) all obligations (including guarantees) under currency agreements,
in each case whether outstanding on the date of the Indenture or thereafter
incurred.
Notwithstanding the foregoing, "Senior Indebtedness" will not include:
(1) any of our indebtedness to any of our subsidiaries or any of our
affiliates or any of such affiliate's subsidiaries;
(2) indebtedness to, or guaranteed on behalf of, our or any of our
subsidiaries' shareholders, directors, officers or employees (including,
without limitation, amounts owed for compensation);
(3) indebtedness to trade creditors and other amounts incurred in
connection with obtaining goods, materials or services;
(4) indebtedness represented by disqualified capital stock;
(5) any liability for federal, state, local or other taxes we owe;
(6) any indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code is without
recourse to us; and
(7) any indebtedness which is, by its express terms, subordinated in
right of payment to any of our other indebtedness.
OPTIONAL REDEMPTION OF THE NOTES
Beginning on March 8, 2008, we may redeem the Notes, in whole at any time,
or in part from time to time, for cash. If we redeem the Notes during the
twelve-month period commencing on March 8, 2008 or on March 1 of any of the
years thereafter, the redemption price will equal the percentage of the amount
of the redeemed Notes opposite that year below, plus accrued but unpaid interest
(including contingent interest, if any) up to but not including the date of
redemption:
YEAR PERCENTAGE
---- ----------
2008........................................................ 101.57%
2009........................................................ 100.79
2010 and thereafter......................................... 100.00
We will give not less than 30 days' nor more than 60 days' notice of
redemption by mail to holders of the Notes. If we opt to redeem less than all of
the Notes at any time, the trustee will select or cause to be selected the Notes
to be redeemed by any method that it deems fair and appropriate. In the event of
a partial redemption, the trustee may provide for selection for redemption of
portions of the principal amount of any Note of a denomination larger than
$1,000.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER
A holder has the right to require us to repurchase all or a portion of the
holder's Notes on March 1, 2010 and March 1, 2017. We will repurchase the Notes
for an amount equal to 100% of the principal amount of the Notes on the date of
purchase, plus accrued but unpaid interest (including contingent interest, if
any) to the date of repurchase. We may choose to pay the purchase price in cash,
with shares of our common stock, valued at 97.5% of the Market Price, or with a
combination of cash and our common stock (valued in that manner).
We will be required to give notice on a date not less than 30 business days
prior to each purchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:
- whether we will pay the purchase price of Notes in cash or common stock
or any combination thereof, specifying the percentages of each;
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- if we elect to pay in common stock, the method of calculating the Market
Price of the common stock; and
- the procedures that holders must follow to require us to purchase their
Notes.
The purchase notice given by each holder electing to require us to purchase
Notes shall state:
- the certificate numbers of the holder's Notes to be delivered for
purchase;
- the portion of the principal amount Notes to be purchased, which must be
$1,000 or an integral multiple of $1,000;
- that the Notes are to be purchased by us pursuant to the applicable
provisions of the Notes and the Indenture; and
- in the event we elect, pursuant to the notice that we are required to
give, to pay the purchase price in common stock, in whole or in part, but
the purchase price is ultimately to be paid to the holder entirely in
cash because any condition to payment of the purchase price or portion of
the purchase price in common stock is not satisfied prior to the close of
business on the purchase date, as described below, whether the holder
elects: (1) to withdraw the purchase notice as to some or all of the
Notes to which it relates, or (2) to receive cash in respect of the
entire purchase price for all Notes or portions of Notes subject to such
purchase notice.
If the holder fails to indicate the holder's choice with respect to the
election described in the final bullet point above, the holder shall be deemed
to have elected to receive cash in respect of the entire purchase price for all
Notes subject to the purchase notice in these circumstances. For a discussion of
the tax treatment of a holder exercising the right to require us to purchase
Notes, see "Certain United States Federal Income Tax Considerations -- Sale,
Exchange, Conversion or Redemption" beginning on page 26 of this prospectus.
Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
purchase date.
The notice of withdrawal shall state:
- the principal amount being withdrawn; and
- the principal amount of the Notes that remain subject to the purchase
notice, if any.
In connection with any purchase offer, we will:
- comply with the provisions of Rule 13e-4, Rule 14e-l and any other tender
offer rules under the Exchange Act which may then be applicable; and
- file a Schedule TO or any other required schedule under the Exchange Act.
Payment of the purchase price for a Note for which a purchase notice has
been delivered and not validly withdrawn is conditioned upon delivery of the
Note, together with necessary endorsements, to the paying agent at any time
after delivery of the purchase notice. Payment of the purchase price for the
Notes will be made promptly following the later of the purchase date or the time
of delivery of the Notes.
If we elect to pay the purchase price, in whole or in part, in shares of
common stock, the number of shares of common stock to be delivered by us shall
be equal to the portion of the purchase price to be paid in common stock divided
by 97.5% of the Market Price of a share of common stock.
We will pay cash based on the Market Price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See "Certain United States Federal Income Tax
Considerations -- Sale, Exchange, Conversion or Redemption" beginning on page 26
of this prospectus.
The "Market Price" means the average of the closing stock price of our
common stock for the 20 trading-day period ending on the third business day (if
the third business day prior to the applicable purchase date is a trading day
or, if not, then on the last trading day) prior to the applicable purchase date,
appropriately
14
adjusted to take into account the occurrence, during the period commencing on
the first of such trading days during such 20 trading day period and ending on
such purchase date, of certain events with respect to the common stock that
would result in an adjustment of the conversion rate.
Because the Market Price of the common stock is determined prior to the
applicable purchase date, holders of Notes bear the market risk with respect to
the value of the common stock to be received from the date such Market Price is
determined to such purchase date. We may pay the purchase price or any portion
of the purchase price in common stock only if the information necessary to
calculate the Market Price is published in a daily newspaper of national
circulation.
Our right to purchase Notes, in whole or in part, with common stock is
subject to our satisfying various conditions, including:
- the registration of the common stock under the Securities Act and the
Exchange Act, if required; and
- any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.
If such conditions are not satisfied with respect to a holder prior to the
close of business on the purchase date, we will pay the purchase price of the
Notes of such holder entirely in cash. See "Certain United States Federal Income
Tax Considerations -- Sale, Exchange, Conversion or Redemption" beginning on
page 26 of this prospectus. We may not change the form or components or
percentages of components of consideration to be paid for the Notes once we have
given the notice that we are required to give to holders of Notes, except as
described in the first sentence of this paragraph.
If the paying agent holds cash or securities sufficient to pay the purchase
price of the Note on the business day following the purchase date in accordance
with the terms of the Indenture, then, immediately after the purchase date, the
Note will cease to be outstanding, whether or not the Note is delivered to the
paying agent. Thereafter, all other rights of the holder shall terminate, other
than the right to receive the purchase price upon delivery of the Note.
Our ability to purchase Notes may be limited by the terms of our then
existing indebtedness or financing agreements.
No Notes may be purchased at the option of holders if there has occurred
and is continuing an event of default with respect to the Notes, other than a
default in the payment of the purchase price with respect to such Notes.
MANDATORY REDEMPTION
Except as described in this prospectus beginning on pages 15 and 13,
respectively, under the captions "-- Right to Require Purchase of Notes upon a
Change in Control" and "-- Repurchase of Notes at the Option of the Holder," we
are not required to make mandatory redemption of, or sinking fund payments with
respect to, the Notes.
RIGHT TO REQUIRE PURCHASE OF NOTES UPON A CHANGE IN CONTROL
If a change in control (as defined below) occurs before March 1, 2010, each
holder of Notes may require that we repurchase the holder's Notes on the date
fixed by us that is not less than 30 days nor more than 45 days after we give
notice of the change in control. We will repurchase the Notes at a purchase
price equal to 100% of the principal amount of the Notes, plus accrued but
unpaid interest, including contingent interest, if any, to the date of
repurchase.
We may, at our option, pay the change in control repurchase price in cash
or, as long as our common stock is then listed on a national securities exchange
or traded on the Nasdaq National Market, shares of our common stock or a
combination of cash and common stock. The value of a share of our common stock
for such purposes shall be 97.5% of the Market Price.
15
"Change in control" means the occurrence of one or more of the following
events:
- any person (including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended), other than us, any of our subsidiaries, any of our or our
subsidiaries' employee benefit plans or a permitted holder (as defined
below) is or becomes the beneficial owner, directly or indirectly,
through a purchase or other acquisition transaction or series of
transactions (other than a merger or consolidation involving us), of
shares of our capital stock entitling such person to exercise in excess
of 50% of the total voting power of all shares of our capital stock
entitled to vote generally in the election of directors;
- we consolidate with, or merge into, any other person, any person
consolidates with, or merges into us, or we sell or transfer our assets,
as an entirety or substantially as an entirety, to another person, other
than
(a) any such merger pursuant to which the holders of our voting
stock, immediately prior to such transaction have, directly or
indirectly, shares of capital stock of the continuing or surviving
corporation immediately after such transaction which entitle such
holders to exercise in excess of 50% of the total voting power of all
shares of capital stock of the continuing or surviving corporation or
its parent entitled to vote generally in the election of directors; and
(b) any merger which is effected solely to change our jurisdiction
of incorporation and results in a reclassification, conversion or
exchange of outstanding shares of voting stock solely into shares of
stock carrying substantially the same relative rights as the voting
stock; or
- a change in our Board of Directors in which the individuals who
constituted our Board of Directors at the beginning of the two-year
period immediately preceding such change (together with any other
director whose election to our Board of Directors or whose nomination for
election by our stockholders was approved by a vote of at least a
majority of the directors then in office either who were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of
the directors then in office.
A change in control will not be deemed to have occurred, however, if
either:
(1) the common stock price for (a) any 10 trading days within the 20
consecutive trading days ending immediately before the change in control,
and (b) at least five trading days within the 10 consecutive trading days
ending immediately before the change in control shall equal or exceed 105%
of the conversion price, or
(2) both
(a) at least 90% of the consideration (excluding cash payments for
fractional shares) in the transaction or transactions constituting the
change in control consists of shares of common stock with full voting
rights traded on a national securities exchange or quoted on the Nasdaq
National Market (or which will be so traded or quoted when issued or
exchanged in connection with such change in control) (such securities
being referred to as "publicly traded securities") and as a result of
such transaction or transactions the Notes become convertible solely
into such publicly traded securities and
(b) the consideration in the transaction or transactions
constituting the change in control consists of cash, publicly traded
securities or a combination of cash and publicly traded securities and
the amount of such consideration to which a holder of a share of common
stock shall be entitled in such transaction or transactions have an
aggregate fair market value (which, in the case of publicly traded
securities, shall be equal to the average closing price of such publicly
traded securities during the five consecutive trading days commencing
with the trading day following consummation of the transaction or
transactions constituting the change in control) of at least 105% of the
conversion price then in effect.
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The term "permitted holders" means any current holder of our Class B common
stock and any permitted transferee of our Class B common stock under the terms
of our Certificate of Incorporation as it exists on the date of this prospectus.
The definition of "change in control" includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substantially
all" of our assets. Although there is a developing body of case law interpreting
the phrase "substantially all," there is no precise established definition of
the phrase under applicable law. Accordingly, the ability of a holder of Notes
to require us to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of our assets to another person
or group may be uncertain.
On or before the 30th day after the change in control, we must mail to the
trustee and all holders of the Notes a notice of the occurrence of the change in
control offer, stating:
- whether we will pay the repurchase price in cash or common stock or any
combination thereof, specifying the percentages of each;
- if we elect to pay in common stock, the method of calculating the Market
Price of the common stock; and
- the procedures which a holder of Notes must follow to exercise the
repurchase right.
To exercise the repurchase right, holders of Notes must deliver, on or
before the repurchase date specified in our notice of a change in control, the
Notes to be repurchased, duly endorsed for transfer, together with a written
repurchase notice and the form entitled "Option to Elect Repurchase Upon a
Change in Control" on the reverse side of the Note duly completed, to the paying
agent. The repurchase notice given by each holder electing to require us to
repurchase Notes shall state:
- the certificate numbers of the holder's Notes to be delivered for
repurchase;
- the portion of the principal amount of Notes to be repurchased, which
must be $1,000 or an integral multiple of $1,000;
- that the Notes are to be repurchased by us pursuant to the applicable
provisions of the Notes and the Indenture; and
- in the event we elect, pursuant to the notice that we are required to
give, to pay the repurchase price in common stock, in whole or in part,
but the repurchase price is ultimately to be paid to the holder entirely
in cash because any condition to payment of the repurchase price or
portion of the repurchase price in common stock is not satisfied prior to
the close of business on the purchase date, as described below, whether
the holder elects: (1) to withdraw the repurchase notice as to some or
all of the Notes to which it relates or (2) to receive cash in respect of
the entire repurchase price for all Notes or portions of Notes subject to
such repurchase notice.
If the holder fails to indicate the holder's choice with respect to the
election described in the final bullet point above, the holder shall be deemed
to have elected to receive cash in respect of the entire repurchase price for
all Notes subject to the repurchase notice in these circumstances. For a
discussion of the tax treatment of a holder receiving cash instead of common
stock, see "Certain United States Federal Income Tax Considerations -- Sale,
Exchange, Conversion or Redemption" beginning on page 26 of this prospectus.
Any repurchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
repurchase date. The notice of withdrawal shall state:
- the principal amount being withdrawn;
- the certificate numbers of the Notes being withdrawn; and
- the principal amount of the Notes that remain subject to the repurchase
notice, if any.
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If we elect to pay the repurchase price, in whole or in part, in shares of
common stock, the number of shares of common stock to be delivered by us shall
be equal to the portion of the repurchase price to be paid in common stock
divided by 97.5% of the Market Price of a share of common stock.
We will pay cash based on the Market Price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the repurchase price. See "Certain United States Federal Income
Tax Considerations -- Sale, Exchange, Conversion or Redemption" beginning on
page 26 of this prospectus.
Because the Market Price of the common stock is determined prior to the
applicable repurchase date, holders of Notes bear the market risk with respect
to the value of the common stock to be received from the date such Market Price
is determined to such repurchase date. We may pay the repurchase price or any
portion of the repurchase price in common stock only if the information
necessary to calculate the Market Price is published in a daily newspaper of
national circulation.
Our right to repurchase Notes, in whole or in part, with common stock is
subject to our satisfying various conditions, including:
- the registration of the common stock under the Securities Act and the
Exchange Act, if required; and
- any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.
If such conditions are not satisfied with respect to a holder prior to the
close of business on the repurchase date, we will pay the repurchase price of
the Notes of such holder entirely in cash. See "Certain United States Federal
Income Tax Considerations -- Sale, Exchange, Conversion or Redemption" beginning
on page 26 of this prospectus. We may not change the form or components or
percentages of components of consideration to be paid for the Notes once we have
given the notice that we are required to give to holders of Notes, except as
described in the first sentence of this paragraph.
We will comply with the provisions of Rule l3e-4 and any other tender offer
rules under the Exchange Act which may then be applicable in connection with the
repurchase of the Notes in the event of a change in control.
In connection with any change in control, we will within 30 days following
any change in control:
(1) obtain the consents under our Credit Agreement and all other
Senior Indebtedness required to permit the repurchase of the Notes pursuant
to a change in control offer; or
(2) repay in full all indebtedness and terminate all commitments,
under our Credit Agreement and all other Senior Indebtedness the term of
which would prohibit the purchase of the Notes under a change in control
offer.
If we are obligated to make a change in control offer, there can be no
assurance that we will be able to obtain all required consents under Senior
Indebtedness or have available funds sufficient to repay Senior Indebtedness and
to pay the change in control purchase price for all the Notes tendered in the
Notes under a change in control offer, we would need to seek third party
financing to the extent we do not have available funds to meet our purchase
obligations. However, there can be no assurance that we would be able to obtain
any such financing.
The effect of these provisions granting the holders the right to require us
to repurchase the Notes upon the occurrence of a change in control may make it
more difficult for any person or group to acquire control of us or to effect a
business combination with us. Our ability to pay cash to holders of Notes
following the occurrence of a change in control may be limited by our then
existing financial resources. We cannot assure you that sufficient funds will be
available when necessary to make any required repurchases. See "Risk
Factors -- If we experience a change in control, we may be unable to purchase
the Notes you hold as required under the Indenture" beginning on page 4 of this
prospectus.
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Our obligation to make a change in control offer will be satisfied if a
third party makes the change in control offer in the manner and at the times and
otherwise in compliance in all material respects with the requirements
applicable to a change in control offer made by us and purchases all Notes
properly tendered and not withdrawn under the change in control offer.
The term "beneficial owner" will be determined in accordance with Rules
13d-3 and 13d-5 promulgated by the SEC under the Exchange Act or any successor
provision, except that a person shall be deemed to have "beneficial ownership"
of all shares of our common stock that the person has the right to acquire,
whether exercisable immediately or only after the passage of time.
PROHIBITION ON INCURRENCE OF SENIOR SUBORDINATED DEBT
We will not incur or permit to exist indebtedness that by its terms (or by
the terms of any agreement governing such indebtedness) is senior in right of
payment to the Notes and expressly subordinate in right of payment to any of our
other indebtedness.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may, without the consent of the holders of any of the Notes, consolidate
with, or merge into any other person or convey, transfer or lease our properties
and assets substantially as an entirety to, any other person, if:
- we are the resulting or surviving corporation or the successor,
transferee or lessee, if other than us, is a corporation organized under
the laws of any U.S. jurisdiction and expressly assumes our obligations
under the Indenture and the Notes by means of a supplemental Indenture
entered into with the trustee; and
- after giving effect to the transaction, no event of default and no event
which, with notice or lapse of time, or both, would constitute an event
of default, shall have occurred and be continuing.
Under any consolidation, merger or any conveyance, transfer or lease of our
properties and assets as described in the preceding paragraph, the successor
company will be our successor and shall succeed to, and be substituted for, and
may exercise every right and power of, LNR under the Indenture. If the
predecessor is still in existence after the transaction, it will be released
from its obligations and covenants under the Indenture and the Notes, except in
connection with a lease of all or substantially all of our properties and
assets.
MODIFICATION AND WAIVER
We and the trustee may enter into one or more supplemental Indentures that
add, change or eliminate provisions of the Indenture or modify the rights of the
holders of the Notes with the consent of the holders of at least a majority in
principal amount of the Notes then outstanding. However, without the consent of
each holder of an outstanding Note, no supplemental Indenture may, among other
things:
- change the stated maturity of the principal of, or payment date of any
installment of interest (including contingent interest, if any) on, any
Note;
- reduce the principal amount or redemption price of, or the rate of
interest (including contingent interest, if any) on, any Note;
- change the currency in which the principal of any Note or interest is
payable or adversely affect the price or ratio at which common stock may
be substituted for currency in connection with any payments made;.
- impair the right to institute suit for the enforcement of any payment on
or with respect to any Note when due;
- adversely affect the right provided in the Indenture to convert any Note;
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- modify the provisions of the Indenture relating to our requirement to
repurchase Notes upon a change in control or on specified dates in a
manner adverse to the holders of the Notes;
- reduce the percentage in principal amount of the outstanding Notes
necessary to modify or amend the Indenture or to consent to any waiver
provided for in the Indenture; or
- waive a default in the payment of any amount or shares of common stock
due in connection with any Note.
The holders of a majority in principal amount of the outstanding Notes may,
on behalf of the holders of all Notes:
- waive compliance by us with restrictive provisions of the Indenture other
than as provided in the preceding paragraph; and
- waive any past default under the Indenture and its consequences, except a
default in the payment of the principal of or any interest (including
contingent interest, if any) on any Note or in respect of a provision
which under the Indenture cannot be modified or amended without the
consent of the holder of each outstanding Note affected.
Without the consent of any holders of Notes, we and the trustee may enter
into one or more supplemental Indentures for any of the following purposes:
- to cure any ambiguity, omission, defect or inconsistency in the
Indenture;
- to evidence a successor to us and the assumption by the successor of our
obligations under the Indenture and the Notes;
- to make any change that does not adversely affect the rights of any
holder of the Notes;
- to comply with any requirement in connection with the qualification of
the Indenture under the Trust Indenture Act; or
- to complete or make provision for certain other matters contemplated by
the Indenture.
EVENTS OF DEFAULT
Each of the following are events of default under the Indenture:
(1) if we fail to pay interest (including contingent interest) on any
Notes when it becomes due and payable and the default continues for a
period of 30 days, whether or not such failure shall be due to the
subordination provisions of the Indenture or agreements with respect to any
other indebtedness or any other reason;
(2) if we fall to pay the principal on any Notes, when it becomes due
and payable, at maturity, upon acceleration, upon redemption or otherwise
(including the failure to make a change in control offer or make a payment
to purchase Notes tendered pursuant to a change in control offer), whether
or not such failure shall be due to the subordination provisions of the
Indenture or agreements with respect to any other Indebtedness or any other
reason;
(3) if we fail to observe or perform any other covenant or agreement
contained in the Indenture which continues for a period of 30 days after we
received written notice specifying the default (and demanding that such
default be remedied) from the Trustee or the holders of at least 25% of the
outstanding principal amount of the Notes (except in the case of our
default with respect to the "Merger, Consolidation and Sale of Assets"
covenant, which will constitute an event of default with such notice
requirement but without such passage of time requirement);
(4) if we fail to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any of our or our subsidiaries' recourse indebtedness, or the
acceleration of the final stated maturity of any such recourse indebtedness
if the aggregate principal amount of such indebtedness, together with the
principal amount of any other such recourse indebtedness
20
in default for failure to pay principal at final maturity or which has been
accelerated, aggregates $5.0 million or more at any time;
(5) one or more judgments in an aggregate amount in excess of $5.0
million shall have been rendered against us or any of our subsidiaries and
remain undischarged, unpaid or unstayed for a period of 60 days after such
judgment or judgments become final and nonappealable; and
(6) certain events of bankruptcy affecting us or any of our
subsidiaries.
The events of default described in clauses (4), (5) and (6) above with
respect to a subsidiary shall not apply if that person was not a subsidiary at
the time such event or condition occurred unless, in the case of clause (4) or
(5) above, we or another of our subsidiaries assumes or otherwise becomes liable
for the liability referred to therein or the liabilities generally of such
person.
If an event of default (other than an event of default specified in clause
(6) above) shall occur and be continuing, the Trustee or the holders of at least
25% in principal amount of outstanding Notes may declare the principal of and
accrued interest on all the Notes to be due and payable by written notice to us
and, if it is given by holders, the Trustee specifying the respective event of
default and that it is a "notice of acceleration" (the "Acceleration Notice").
Upon delivery of an Acceleration Notice, the principal of and accrued interest
on all the Notes:
- shall become immediately due and payable; or
- if there are any amounts outstanding under our Credit Agreement, shall
become immediately due and payable upon the first to occur of an
acceleration under our credit agreement or five business days after
receipt by us and the representative under our Credit Agreement of such
Acceleration Notice but only if such event of default is then continuing.
If an event of default specified in clause (6) above occurs and is
continuing with respect to us, then all unpaid principal of, and premium, if
any, and accrued but unpaid interest on all of the outstanding Notes shall
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holder.
At any time after a declaration of acceleration with respect to the Notes,
the holders of a majority in aggregate principal amount of the Notes may rescind
and cancel such declaration and its consequences:
- if the rescission would not conflict with any judgment or decree;
- if all existing events of default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
such acceleration;
- if interest on overdue installments of interest (to the extent the
payment of such interest is lawful) and on overdue principal, which has
become due otherwise than by such declaration of acceleration, has been
paid;
- if we have paid the Trustee its reasonable compensation and reimbursed
the Trustee for its expense, disbursements and advances; and
- in the event of the cure or waiver of an event of default of the type
described in clause (4) of the description above of events of default,
the Trustee has received an officers' certificate and an opinion of
counsel that such event of default has been cured or waived.
No such rescission shall affect any subsequent default or impair any rights
arising from a subsequent default.
The holders of a majority in aggregate principal amount of the Notes may
waive any existing default or event of default under the Indenture, and its
consequences, except a default in the payment of the principal of or interest on
any Notes.
The holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture and under the Trust Indenture Act. Subject to the
provisions of the Indenture relating to the duties of the
21
Trustee, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request, order or direction of any of the
holders, unless such holders have offered to the Trustee reasonable indemnity.
Subject to all provisions of the Indenture and applicable law, the holders of a
majority in aggregate principal amount of the then outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.
We are required to provide an officers' certificate to the Trustee promptly
upon our obtaining knowledge of any default or event of default that has
occurred and, if applicable, describe such default or event of default and the
status thereof. In addition, we must provide an annual certification as to the
existence of defaults and events of default.
CONCERNING THE TRUSTEE
U.S. Bank Trust National Association, the trustee under the Indenture, also
is the trustee under the indentures relating to our 9 3/8% Senior Subordinated
Notes due 2008 and our 10 1/2% Senior Subordinated Notes due 2009. An affiliate
of the trustee has extended a construction loan to us and is one of the lenders
under our Credit Agreement. We also may maintain custodial and deposit accounts
and conduct other banking transactions with the trustee or its affiliates in the
ordinary course of business. The trustee and its affiliates may from time to
time in the future provide banking and other services to us in the ordinary
course of their business.
BOOK-ENTRY SYSTEM
The Notes are issued in the form of global securities held in book-entry
form. DTC or its nominee is the sole registered holder of the Notes for all
purposes under the Indenture. Owners of beneficial interests in the Notes
represented by the global securities hold their interests pursuant to the
procedures and practices of DTC. As a result, beneficial interests in any such
securities are shown on, and transfers are effected only through, records
maintained by DTC and its direct and indirect participants. Any such interests
may not be exchanged for certificated securities, except in limited
circumstances. Owners of beneficial interests must exercise any rights in
respect of their interests, including any right to convert or require repurchase
of their interests in the Notes, in accordance with the procedures and practices
of DTC. Beneficial owners are not holders and are not entitled to any rights
under the global securities or the Indenture. We and the trustee, and any of our
respective agents, may treat DTC as the sole holder and registered owner of the
global securities.
EXCHANGE OF GLOBAL SECURITIES
The Notes, represented by one or more global securities, will be
exchangeable for certificated securities with the same terms only if:
- DTC is unwilling or unable to continue as depositary or if DTC ceases to
be a clearing agency registered under the Exchange Act and we do not
appoint a successor depositary within 90 days;
- we decide to discontinue use of the system of book-entry transfer through
DTC or any successor depositary, or
- a default under the Indenture occurs and is continuing.
DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency" for
registered participants, and it facilitates the settlement of transactions among
its participants in those securities through electronic computerized book-entry
changes in participants' accounts, eliminating the need for physical movement of
securities certificates. DTC's participants include securities brokers and
dealers, including the agent, banks, trust companies, clearing corporation and
other organizations, some of whom and/or their representatives owns DTC. Access
to DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
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REGISTRATION RIGHTS
We entered into a registration rights agreement with the initial purchasers
of the Notes for the benefit of the holders of the Notes and the shares of our
common stock issuable on conversion of the Notes in which we agreed to file the
registration statement of which this prospectus is a part. Under this agreement,
we also agreed at our cost to:
- use all reasonable efforts to cause the registration statement of which
this prospectus is a part to be declared effective under the Securities
Act no later than 180 days after the first date of original issuance of
the Notes; and
- use all reasonable efforts to keep the registration statement effective
after its effective date until the earlier of:
- the sale pursuant to the registration statement of all of the Notes and
any shares of our common stock issued upon conversion of the Notes; and
- the expiration of the holding period applicable to the Notes and the
shares of our common stock issuable upon conversion of the Notes held by
non-affiliates of LNR under Rule 144(k) under the Securities Act, or any
successor provision, subject to certain exceptions.
We have the right to suspend use of the registration statement during
specified periods of time relating to pending corporate developments and public
filings with the SEC and similar events. If we fail to keep the registration
statement effective or usable in accordance with and during the periods
specified in the registration rights agreement, then, in each case, we will pay
liquidated damages to all holders of Notes and all holders of our common stock
issued on conversion of Notes equal to (i) in respect of each $1,000 principal
amount of Notes, the sum per annum equal to 0.50% of that principal amount, and
(ii) in respect of any shares of common stock issued upon conversion of Notes,
the sum per annum equal to 0.50% of the principal amount of Notes that would
then be convertible into that number of shares. While the failure to file or
become effective or any unavailability continues, we will pay liquidated damages
in cash on March 1 and September 1 of each year to the person who is the holder
of record of the Notes or common stock issuable in respect of the Notes on the
immediately preceding February 15 or August 15. After a registration default is
cured, we will pay any previously unpaid liquidated damages in cash on the
subsequent interest payment date to the record holder on the date of the cure.
A holder who elects to sell any securities pursuant to the registration
statement:
- must be named as selling security holder;
- will be required to deliver a prospectus to purchasers;
- will be subject to the civil liability provisions under the Securities
Act in connection with any sales; and
- will be bound by the applicable provisions of the registration rights
agreement, including indemnification obligations.
Promptly upon request from any holder of Notes or common stock issued on
conversion of Notes (which are the registrable securities), we will provide a
form of notice and questionnaire, which must be completed and delivered by that
holder to us at least five business days before any intended distribution of
registrable securities under the registration statement. If we receive from a
holder of registrable securities a completed questionnaire, together with such
other information as we may reasonably request, we will file an amendment to the
registration statement, or a supplement to this prospectus, to permit the holder
to deliver a prospectus to purchasers of registrable securities. Any holder that
does not complete and deliver a questionnaire or provide such other information
will not be named as a selling security holder in this prospectus and therefore
will not be permitted to sell any registrable securities under the registration
statement of which it is a part.
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GOVERNING LAW
The Indenture and the Notes are governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflict
of laws.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following describes the material United States federal income tax
consequences to holders of the acquisition, disposition and ownership of the
Notes. This discussion, and an opinion that has been given with regard to it,
are based upon certificates and representations as to the possible payments of
contingent interest, as well as estimates and projections of certain other
future events, and upon United States Federal income tax laws, regulations,
rulings and decisions now in effect, all of which are subject to change
(including retroactive changes) or possible differing interpretations. The
discussion below deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, tax-exempt entities, persons holding Notes in a
tax-deferred or tax-advantaged account, or persons holding Notes as a hedge
against currency risks, as a position in a "straddle" or as part of a "hedging"
or "conversion" transaction for tax purposes. It is also limited to holders of
Notes who buy or sell the Notes offered by this prospectus. Persons considering
the purchase of Notes should consult their own tax advisors concerning the
application of the United States federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of Notes arising under the laws of any other taxing jurisdiction.
We do not address all of the tax consequences that may be relevant to a
holder of Notes. In particular, we do not address:
- the United States federal income tax consequences to shareholders in, or
partners or beneficiaries of, an entity that is a holder of Notes;
- the United States federal estate, gift or alternative minimum tax
consequences of the purchase, ownership or disposition of Notes;
- persons who hold the Notes whose functional currency is not the United
States dollar;
- any state, local or foreign tax consequences of the purchase, ownership
or disposition of Notes; or
- any federal, state, local or foreign tax consequences of owning or
disposing of common stock acquired by converting Notes.
For purposes of this discussion, a U.S. Holder is a beneficial owner of
Notes who or which is:
- a citizen or individual resident of the United States for United States
federal income tax purposes;
- a corporation, including any entity treated as a corporation for United
States federal income tax purposes, created or organized in or under the
laws of the United States, any state thereof or the District of Columbia;
- an estate if its income is subject to United States federal income
taxation regardless of its source; or
- a trust if (1) a United States court can exercise primary supervision
over its administration and (2) one or more United States persons have
the authority to control all of its substantial decisions.
Notwithstanding the preceding sentence, certain trusts in existence on
August 20, 1996, and treated as a United States person prior to such date, may
also be treated as U.S. Holders. A Non-U.S. Holder is a beneficial owner of the
Notes other than a U.S. Holder.
No statutory or judicial authority directly addresses the treatment of the
Notes or instruments similar to the Notes for United States federal income tax
purposes. No rulings have been sought or are expected to be sought from the
Internal Revenue Service (which we refer to as the IRS) with respect to any of
the United
24
States federal income tax consequences discussed below, and no assurance can be
given that the IRS will not take contrary positions. As a result, no assurance
can be given that the IRS will agree with the tax characterizations and the tax
consequences described below.
WE URGE PROSPECTIVE INVESTORS TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF NOTES OR COMMON STOCK THEY ACQUIRE BY CONVERTING NOTES, IN LIGHT
OF THEIR OWN PARTICULAR CIRCUMSTANCES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
CLASSIFICATION OF THE NOTES
The Notes are treated as indebtedness for United States federal income tax
purposes. Pursuant to the terms of the Indenture, we and each holder of the
Notes are deemed to agree, for United States federal income tax purposes, to
treat the Notes as debt instruments that are subject to the regulations
governing contingent payment debt instruments (which we refer to as the CPDI
regulations) with a "comparable yield" calculated in the manner described below.
However, because the tax treatment of the Notes under the CPDI regulations is
uncertain, no assurance can be given that the IRS will not assert that the Notes
should be treated differently. Different treatment could affect the amount,
timing and character of income, gain or loss in respect of the Notes.
ACCRUAL OF INTEREST ON THE NOTES
Pursuant to the CPDI regulations, a U.S. Holder of Notes will be required
to accrue interest income on the Notes in the amounts described below,
regardless of whether the U.S. Holder uses the cash or accrual method of tax
accounting. Accordingly, U.S. Holders will be required to include interest in
taxable income in each year in excess of the accruals on the Notes for non-tax
purposes and in excess of any interest payments actually received in that year.
The CPDI regulations provide that a U.S. Holder must accrue an amount of
ordinary interest income, as original issue discount for United States federal
income tax purposes, for each accrual period prior to and including the maturity
date of the Notes that equals:
(1) the product of (i) the adjusted issue price (as defined below) of
the Notes as of the beginning of the accrual period; and (ii) the
comparable yield to maturity (as defined below) of the Notes, adjusted for
the length of the accrual period;
(2) divided by the number of days in the accrual period; and
(3) multiplied by the number of days during the accrual period that
the U.S. Holder held the Notes.
A Note's issue price is the first price at which a substantial amount of
the Notes is sold to the public, excluding sales to bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers. The adjusted issue price of a Note is its issue
price increased by any interest income previously accrued, determined without
regard to any adjustments to interest accruals described below, and decreased by
the amount of any noncontingent payments and the projected amount of any
contingent payments whose scheduled payment date has passed.
Under the CPDI regulations, we are required to establish the "comparable
yield" for the Notes. The comparable yield for the Notes is the annual yield we
would pay, as of the initial issue date, on a fixed-rate nonconvertible debt
security with no contingent payments, but with terms and conditions otherwise
comparable to those of the Notes. We intend to take the position that the
comparable yield for the Notes is 9.5%, compounded semiannually.
The CPDI regulations require that we provide to U.S. Holders, solely for
United States federal income tax purposes, a schedule of the projected amounts
of payments (which we refer to as projected payments) on the Notes. This
schedule must produce the comparable yield. The projected payment schedule
includes
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estimates for certain contingent interest payments and an estimate for a payment
at maturity taking into account the conversion feature.
The comparable yield and the projected payment schedule are set forth in
the Indenture. U.S. Holders may also obtain the projected payment schedule by
submitting a written request for it to: LNR Property Corporation, 1601
Washington Avenue, Suite 800, Miami Beach, Florida 33139, Attn: General Counsel.
For United States federal income tax purposes, a U.S. Holder must use the
comparable yield and the projected payment schedule in determining its interest
accruals, and the adjustments to them described below in respect of the Notes,
unless the U.S. Holder timely discloses and justifies the use of other estimates
to the IRS. This requirement for holders to use the comparable yield and
projected payment schedule determined by us is imposed by the CPDI regulations
and is in addition to each holder's deemed agreement in the Indenture to treat
the Notes consistently with our treatment.
THE COMPARABLE YIELD AND THE PROJECTED PAYMENT SCHEDULE ARE NOT DETERMINED
FOR ANY PURPOSE OTHER THAN FOR THE DETERMINATION OF A U.S. HOLDER'S INTEREST
ACCRUALS AND ADJUSTMENTS TO THOSE ACCRUALS IN RESPECT OF THE NOTES FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES. THEY DO NOT CONSTITUTE A PROJECTION OR
REPRESENTATION REGARDING THE ACTUAL AMOUNTS PAYABLE ON THE NOTES.
Amounts treated as interest under the CPDI regulations are treated as
original issue discount for all purposes of the Code.
ADJUSTMENTS TO INTEREST ACCRUALS ON THE NOTES
If, during any taxable year, a U.S. Holder receives actual payments with
respect to the Notes for that taxable year that in the aggregate exceed the
total amount of projected payments for that taxable year, the U.S. Holder will
incur a "net positive adjustment" under the CPDI regulations equal to the amount
of such excess. The U.S. Holder will treat a "net positive adjustment" as
additional interest income. For this purpose, the payments in a taxable year
include the fair market value of property (including any of our common stock
received on conversion of the Notes) received in that year.
If a U.S. Holder receives in a taxable year actual payments with respect to
the Notes for that taxable year that in the aggregate are less than the amount
of projected payments for that taxable year, the U.S. Holder will incur a "net
negative adjustment" under the CPDI regulations equal to the amount of such
deficit. This adjustment will (a) reduce the U.S. Holder's interest income on
the Notes for that taxable year, and (b) to the extent of any excess after the
application of (a), give rise to an ordinary loss to the extent of the U.S.
Holder's interest income on the Notes during prior taxable years, reduced to the
extent such interest was offset by prior net negative adjustments.
If the adjusted issue price of a U.S. Holder's Note is greater than the
price paid by the U.S. Holder for the Note, the U.S. Holder must make positive
adjustments increasing the amount of interest that the U.S. Holder would
otherwise accrue and include in income each year, and increase the amount of
ordinary income (or decreasing the amount of ordinary loss) recognized upon
redemption or maturity by the amounts allocated among the daily portions of
interest and projected payments, respectively; if the adjusted issue price of
the Note is less than the price the U.S. Holder paid for the Note, the U.S.
Holder must make negative adjustments, decreasing the amount of interest that
the U.S. Holder must include in income each year, and the amount of ordinary
income (or increasing the amount of ordinary loss) recognized upon redemption or
maturity by the amounts allocated among the daily portions of interest and
projected payments, respectively. Adjustments allocated to the interest amount
are not made until the date the daily portion of interest accrues.
SALE, EXCHANGE, CONVERSION OR REDEMPTION
Generally, the sale or exchange of a Note or the redemption of a Note for
cash will result in taxable gain or loss to a U.S. Holder. As described above,
our calculation of the comparable yield and the projected payment schedule for
the Notes includes the receipt of stock upon conversion as a contingent payment
with respect to the Notes. Accordingly, we intend to treat the receipt of our
common stock by a U.S. Holder upon the conversion of a Note or upon the
redemption of a Note where we elect to pay in common stock as a
26
payment under the CPDI regulations. As described above, holders are generally
bound by our determination of the comparable yield and the projected payment
schedule.
The amount of gain or loss on a taxable sale, exchange, conversion or
redemption will be equal to the difference between (a) the amount of cash plus
the fair market value of any other property received by the U.S. Holder,
including the fair market value of any of our common stock received, and (b) the
U.S. Holder's adjusted tax basis in the Note.
A U.S. Holder's adjusted tax basis in a Note will generally be equal to the
U.S. Holder's original purchase price for the Note, increased by any interest
income previously accrued by the U.S. Holder (determined without regard to any
adjustments to interest accruals described above), and decreased by the amount
of any noncontingent payment and the projected amount of any contingent payment
whose scheduled payment date has passed, and increased or decreased by the
amount of any positive or negative adjustment, respectively, that the U.S.
Holder is required to make if it purchases the Note at a price other than the
adjusted issue price.
Gain recognized upon a sale, exchange, conversion or redemption of a Note
will generally be treated as ordinary interest income; any loss will be ordinary
loss to the extent of interest on the Note previously included in income, and
thereafter capital loss (which will be long term if the note is held for more
than one year). The deductibility of net capital losses by individuals and
corporations is subject to limitations.
A U.S. Holder's tax basis in our common stock received upon a conversion of
a Note or upon a U.S. Holder's exercise of a put right that we elect to pay in
common stock will equal the then current fair market value of that common stock.
The U.S. Holder's holding period for the common stock received will commence on
the day immediately following the date of conversion or redemption.
CONSTRUCTIVE DIVIDENDS
If at any time we were to make a distribution of property to our
stockholders that would be taxable to the stockholders as a dividend for United
States federal income tax purposes and, in accordance with the anti-dilution
provisions of the Notes, the conversion rate of the Notes was increased, that
increase might be deemed to be the payment of a taxable dividend to holders of
the Notes.
TREATMENT OF NON-US. HOLDERS
Payments of contingent interest made to Non-U.S. Holders will not be exempt
from United States federal income or withholding tax and, therefore, Non-U.S.
Holders will be subject to withholding on payments of contingent interest at a
rate of 30%, subject to reduction by an applicable treaty or upon the receipt of
a Form W-8ECI from a Non-U.S. Holder claiming that the payments are effectively
connected with the conduct of a United States trade or business. A Non-U.S.
Holder that is subject to the withholding tax should consult its own tax
advisors as to whether it can obtain a refund of a portion of the withholding
tax, either on the grounds that some portion of the contingent interest
represents a return of principal under the CPDI regulations, or on some other
grounds.
All other payments on the Notes made to a Non-U.S. Holder, including a
payment in common stock upon a conversion, and any gain realized on a sale or
exchange of the Notes (other than gain attributable to accrued contingent
interest payments), will be exempt from United States income or withholding tax,
provided that:
with respect to interest (including original issue discount)
(1) the Non-U.S. Holder does not own, actually or constructively, 10
percent or more of the total combined voting power of all classes of our
stock entitled to vote, and is not a controlled foreign corporation
related, directly or indirectly, to us through stock ownership;
(2) the statement requirement set forth in section 871(b) or section
881(c) of the Code has been fulfilled with respect to the beneficial owner,
as discussed below;
27
(3) the payments and gain are not effectively connected with the
conduct by such Non-U.S. Holder of a trade or business in the United
States.
The statement requirement referred to in subparagraph (2) will be fulfilled
if the beneficial owner of a Note certifies on IRS Form W-8BEN, under penalties
of perjury, that it is not a United States person and provides its name and
address or otherwise satisfies applicable documentation requirements.
In addition, with respect to any gain to a Non-U.S. Holder from a sale,
exchange, conversion, or redemption of Notes, that gain (other than gain
attributable to accrued contingent interest payments) will be exempt from United
States income or withholding tax, provided that:
(1) our common stock continues to be regularly traded on the New York
Stock Exchange or another established securities market within or outside
the United States, and, during the five-year period ending on the date of
any payment on or sale or exchange of a Note, as applicable, such Non-U.S.
Holder does not beneficially own more than 5% of our common stock.
(2) such Non-U.S. Holder is not an individual who has been present in
the United States for 183 days or more during the taxable year of the
disposition.
A constructive distribution on a Note may be subject to United States
withholding tax at a rate of 30%, subject to reduction by an applicable treaty.
We (or the applicable withholding agent) may withhold on other payments made on
a Non-U.S. Holder's Notes between the date of the constructive distribution and
the due date for our filing of IRS Form 1042-S (including extensions) for the
tax year in which the constructive distribution is made if we (or the applicable
withholding agent) have knowledge of the facts that give rise to the
withholding.
If a Non-U.S. Holder of Notes is engaged in a trade or business in the
United States, and if interest on the Notes is effectively connected with the
conduct of that trade or business, the Non-U.S. Holder, although exempt from the
withholding tax discussed in the preceding paragraphs, will generally be subject
to regular U.S. federal income tax on interest and on any gain realized on the
sale or exchange of the Notes in the same manner as if it were a U.S. Holder. In
lieu of the certificate described above, such a Non-U.S. Holder will be required
to provide to the withholding agent a properly executed IRS Form W-8ECI in order
to claim an exemption from withholding tax. In addition, if such a Non-U.S.
Holder is a foreign corporation, such holder may be subject to a branch profits
tax equal to 30% (or a lower rate provided by an applicable treaty) of its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments.
TAX SHELTER REGULATIONS
Recently finalized Treasury regulations intended to address so-called tax
shelters and other potentially tax-motivated transactions require participants
in a "reportable transaction" to disclose certain information about the
transaction on IRS Form 8886 and retain information relating to the transaction.
Organizers and sellers of reportable transactions are required to maintain lists
identifying the transaction investors and furnish to the IRS upon demand such
investor information as well as detailed information regarding the transactions.
A transaction may be a "reportable transaction" based upon any of several
indicia, including the existence of confidentiality agreements, certain
indemnity arrangements, potential for recognizing investment or other losses,
and significant book-tax differences, one or more of which may be present with
respect to or in connection with our offering of the Notes. Prospective
investors should consult their own tax advisors as to any possible disclosure
obligation with respect to their investment in the Notes and should be aware
that we and other participants in the offering intend to comply with the
disclosure and maintenance requirements under the Treasury regulations, to the
extent the Treasury regulations are determined to be applicable.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Payments of principal, premium (if any) and interest (including original
issue discount) on, and the proceeds of dispositions of, Notes may be subject to
information reporting and United States federal backup withholding tax at the
applicable rate (currently 30%) if the holder of Notes fails to supply an
accurate taxpayer identification number or otherwise fails to comply with
applicable United States information
28
reporting or certification requirements. All amounts so withheld will be allowed
as a refund with respect to, or credit against, such holder's United States
federal income tax liability.
SELLING SECURITYHOLDERS
The Notes were originally issued by us and resold by the initial purchasers
of the Notes in transactions exempt from the registration requirements of the
Securities Act, to persons reasonably believed by the initial purchasers to be
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act) in compliance with Rule 144A. These qualified institutional buyers,
together with persons who acquired or acquire Notes from them or from subsequent
owners in transactions that were or are not registered under the Securities Act,
are the "selling securityholders" under this prospectus. They may from time to
time use this prospectus to offer and sell Notes or shares of our common stock
that are issued upon conversion of Notes.
The following table sets forth with respect to each of the listed selling
securityholders the principal amount of Notes and the number of shares of our
common stock that the selling securityholder owned at a recent date (including
shares of common stock that the selling securityholder would own if it converted
all its Notes). We obtained that information from the selling securityholders,
and have not attempted to verify it. None of the selling securityholders has, or
has had within the past three years, any position, office or other material
relationship with us or, insofar as we are aware, any of our predecessors or
affiliates. Because a selling securityholder may sell with this prospectus any
portion of its Notes or shares acquired on conversion of Notes, we cannot
estimate the principal amount of Notes or shares of our common stock any selling
securityholder will beneficially own after it completes particular sales. In
addition, selling securityholders may, since the dates as of which they provided
information to us, have sold or otherwise disposed of some of the Notes or
common stock listed below.
We will supplement this prospectus from time to time to add holders of
Notes to, or delete holders of Notes from, the list of Selling Securityholders
or to reflect changes in the principal amount of Notes particular Selling
Securityholders may offer by this prospectus.
PRINCIPAL AMOUNT OF NOTES
BENEFICIALLY OWNED AND NUMBER OF SHARES OF
THAT MAY BE OFFERED BY COMMON STOCK
SELLING SECURITYHOLDER THIS PROSPECTUS BENEFICIALLY OWNED(1)
---------------------- ------------------------- ---------------------
Innovest Finanzdienstle.............................. $ 1,500,000 33,127
S.A.C. Capital Associates, LLC....................... $ 2,000,000 44,169
BNP Paribas Equity Strategies, SNC................... $ 11,571,000 255,543
CooperNeff Convertible Strategies (Cayman)
Master Fund, LP.................................... $ 7,917,000 174,845
Context Convertible Arbitrage Offshore Ltd. ......... $ 415,000 9,165
Context Convertible Arbitrage Fund, LP............... $ 665,000 14,686
Arkansas PERS........................................ $ 385,000 8,502
ICI American Holdings Trust.......................... $ 125,000 2,760
Zeneca Holdings Trust................................ $ 135,000 2,981
Delaware PERS........................................ $ 540,000 11,925
Syngenta AG.......................................... $ 90,000 1,987
Prudential Insurance Co of America................... $ 35,000 772
Boilermakers Blacksmith Pension Trust................ $ 500,000 11,042
State of Oregon/Equity............................... $ 1,700,000 37,544
Duke Endowment....................................... $ 95,000 2,098
Louisiana CCRF....................................... $ 70,000 1,545
Delta Airlines Master Trust.......................... $ 225,000 4,969
Froley Revy Investment Convertible Security Fund..... $ 55,000 1,214
29
PRINCIPAL AMOUNT OF NOTES
BENEFICIALLY OWNED AND NUMBER OF SHARES OF
THAT MAY BE OFFERED BY COMMON STOCK
SELLING SECURITYHOLDER THIS PROSPECTUS BENEFICIALLY OWNED(1)
---------------------- ------------------------- ---------------------
Sturgeon Limited..................................... $ 1,512,000 33,392
JP Morgan Securities Inc. ........................... $ 12,750,000 281,581
Akela Capital Master Fund, Ltd. ..................... $ 5,000,000 110,424
Laurel Ridge Capital LP.............................. $ 1,000,000 22,084
Alpine Associates.................................... $ 9,700,000 214,222
Alpine Partners, L.P. ............................... $ 1,300,000 28,710
Tribeca Investments L.T.D. .......................... $ 2,000,000 44,169
Grace Convertible Arbitrage Fund, Ltd. .............. $ 4,000,000 88,339
LLT Limited.......................................... $ 156,000 3,445
Wachovia Securities Inc. ............................ $ 8,500,000 187,720
Common Fund Event Driven Co, Ltd. c/o Levco.......... $ 65,000 1,435
Levco Alternative Fund Ltd. ......................... $ 2,197,000 48,520
Citi JL Ltd. ........................................ $ 87,000 1,921
Lyxor/JLC Fund Ltd. ................................. $ 167,000 3,688
Purchase Associates, L.P. ........................... $ 484,000 10,689
Highbridge International LLC......................... $ 33,000,000 728,798
Forest Fulcrum Fund LLP.............................. $ 404,000 8,922
BGI Global Investors c/o Forest Investment
Management LLC..................................... $ 168,000 3,710
Forest Multi-Strategy Master Fund SFC, on behalf of
Series F, Multi-Strategy Segregated Portfolio...... $ 204,000 4,505
Zurich Master Hedge Fund c/o Forest Investment
Management LLC..................................... $ 260,000 5,742
Forest Global Convertible Fund Series A-5............ $ 1,896,000 41,872
Lyxor Master Fund c/o Forest Investment
Management LLC..................................... $ 632,000 13,957
Relay 11 Holdings c/o Forest Investment Management
LLC................................................ $ 80,000 1,766
RBC Alternative Assets LP c/o Forest Investment
Management LLC..................................... $ 160,000 3,533
RBC Alternative Assets LP............................ $ 500,000 11,042
Sphinx Convertible Arbitrage c/o Forest Investment
Management LLC..................................... $ 40,000 883
------------ ---------
$114,285,000 2,523,943
---------------
(1) Including the shares the selling securityholder would acquire if the selling
securityholder converted all its Notes.
PLAN OF DISTRIBUTION
The Notes and the shares of our common stock issued upon conversion of
Notes covered by this prospectus will be offered and sold solely by or on behalf
of the selling securityholders. We have agreed to bear the costs of registering
sales of those Notes and shares under the Securities Act. However, the selling
securityholders must bear any brokerage commissions or similar selling expenses
relating to the sale of Notes or shares of common stock issued upon conversion
of Notes.
30
The selling securityholders may sell Notes or shares of common stock in one
or more transactions at a fixed price or prices (which may be changed), at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at prices determined on a negotiated or competitive bid basis.
Selling securityholders may effect these transactions by selling Notes or common
stock directly to purchasers or to or through broker-dealers, which may act as
agents or principals. Those broker-dealers may receive compensation in the form
of discounts, concessions, or commissions from the selling securityholders
(which compensation as to a particular broker-dealer might be in excess of
customary commissions).
The selling securityholders and any broker-dealers that act in connection
with the sale of the Notes or shares of common stock issuable upon conversion of
the Notes may be deemed to be "underwriters" as that term is defined in the
Securities Act, and any commissions received by broker-dealers and any profit on
the sale of the Notes or shares of common stock issued upon conversion of Notes
sold by broker-dealers while acting as principals may be deemed to be
underwriting discounts or commissions for purposes of the Securities Act.
Because selling securityholders may be deemed to be "underwriters" for
purposes of the Securities Act, the selling securityholders will be subject to
the prospectus delivery requirements of the Securities Act, which may include
delivery through the facilities of the New York Stock Exchange pursuant to Rule
153 under the Securities Act. We have informed the selling securityholders that
the anti-manipulation provisions of Regulation M under the Securities Exchange
Act may apply to their sales.
The selling securityholders may from time to time deliver Notes or shares
of common stock to cover short sales or upon the exercise, settlement or closing
of call equivalent positions or put equivalent positions.
LEGAL MATTERS
Clifford Chance US LLP, 200 Park Avenue, New York, New York 10166, has
passed upon the validity of the securities offered by this prospectus.
EXPERTS
Our consolidated financial statements as of November 30, 2002 and 2001, and
for each of the three years in the period ended November 30, 2002, and the
related financial statement schedules, that are incorporated by reference into
this prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing in our Annual Report on Form 10-K
for the year ended November 30, 2002, and have been so incorporated by reference
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
The combined financial statements of Lennar Land Partners and Lennar Land
Partners II as of November 30, 2002 and 2001, and for each of the three years in
the period ended November 30, 2002, that are incorporated by reference into this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing in our Annual Report on Form 10-K for the year
ended November 30, 2002, and have been so incorporated by reference in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
The financial statements of Madison Square Company LLC as of December 31,
2002 and 2001, and for each of the three years in the period ended December 31,
2002, that are incorporated by reference into this prospectus have been audited
by Ernst & Young LLP, independent auditors, as stated in their report appearing
in our Annual Report on Form 10-K for the year ended November 30, 2002, and have
been so incorporated by reference in reliance on the report of such firm given
upon their authority as experts in accounting and auditing.
31
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We are incorporating by reference in this prospectus the following
documents which we have previously filed with the Securities and Exchange
Commission under the File Number 1-13223:
(1) Our Annual Report on Form 10-K for the fiscal year ended November
30, 2002 filed February 27, 2003;
(2)Our definitive proxy statement filed March 12, 2003; and
(3) The description of our common stock contained in our registration
statement under Section 12 of the Securities Exchange Act of 1934, as
amended, including any amendment or report filed for the purpose of
updating that description.
Whenever after the date of this prospectus we file reports or documents
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended, those reports and documents will be deemed to be part of this
prospectus from the time they are filed. If anything in a report or document we
file after the date of this prospectus changes anything in it, this prospectus
will be deemed to be changed by that subsequently filed report or document
beginning on the date the report or document is filed.
WE WILL PROVIDE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS IS
DELIVERED, INCLUDING BENEFICIAL OWNERS OF NOTES, A COPY OF ANY OR ALL OF THE
DOCUMENTS OR INFORMATION THAT HAVE BEEN INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, BUT NOT DELIVERED WITH THIS PROSPECTUS. WE WILL PROVIDE THIS AT NO
COST TO THE REQUESTOR UPON WRITTEN OR ORAL REQUEST ADDRESSED TO LNR PROPERTY
CORPORATION, 1601 WASHINGTON AVENUE, MIAMI BEACH, FLORIDA 33139, ATTENTION:
DIRECTOR OF INVESTOR RELATIONS (TELEPHONE: 305-695-5500).
INFORMATION WE FILE
We file annual, quarterly and current reports, proxy statements and other
materials with the SEC. The public may read and copy any materials we file with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements and other information regarding issuers (including us) that file
electronically with the SEC. The address of that site is http://www.sec.gov.
Reports, proxy statements and other information we file also can be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses to be paid by the
Company in connection with the sale of Notes and shares of common stock issuable
upon conversion of the Notes being registered. All amounts for items other than
the SEC registration fee and NYSE listing fee are estimated.
ITEM AMOUNT
---- --------
Securities and Exchange Commission Registration Fee......... $ 20,295
Printing.................................................... 10,000
Accounting Fees............................................. 45,000
Legal Fees and Expenses..................................... 30,000
Miscellaneous Fees and Expenses............................. 14,705
--------
TOTAL.................................................. $120,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the General Corporation Law of Delaware, our
Certificate of Incorporation provides that an officer, director, employee or
agent of our company is entitled to be indemnified for expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her by reason of any action, suit or proceeding brought against him or her by
virtue of his or her acting as such officer, director, employee or agent,
provided he or she acted in good faith or in a manner he or she reasonably
believed to be in or not opposed to the best interests of our company and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful, except that in any action or suit by or in the
right of our company that person shall be indemnified only for his or her
reasonable expenses and, if that person is adjudged to be liable for negligence
or misconduct, he or she will not be indemnified unless and only to the extent
that a court of appropriate jurisdiction determine that indemnification is fair
and reasonable.
ITEM 16. EXHIBITS
(a) Exhibits
4.1 -- Indenture dated March 5, 2003, by and among LNR and US Bank Trust
National Association
4.2 -- Registration Rights Agreement dated March 5, 2003, by and among
LNR, Deutsche Bank Securities, Inc. and Banc of America Securities
LLC
5.1 -- Opinion of Clifford Chance US LLP
23.1 -- Consent of Clifford Chance US LLP (Included in Exhibit 5.1)
23.2 -- Consent of Deloitte & Touche LLP
23.3 -- Consent of Deloitte & Touche LLP
23.4 -- Consent of Ernst & Young LLP
24 -- Power of Attorney -- on signature page
25 -- Statement of Eligibility of Trustee
(b) Financial Statements
Inapplicable.
33
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report,
to security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(6) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of
the Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of LNR pursuant
to the foregoing provisions, or otherwise, LNR has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by LNR of expenses incurred or paid by a director, officer or
controlling person of LNR in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, LNR will, unless in the opinion
of
34
counsel for LNR the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Miami Beach, state of Florida, on April 11, 2003.
LNR PROPERTY CORPORATION
By: /s/ JEFFREY P. KRASNOFF
------------------------------------
Name: Jeffrey P. Krasnoff
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Jeffrey P. Krasnoff, Shelly Rubin, Zena
Dickstein and Steven N. Bjerke his or her true and lawful attorney-in-fact and
agent, with full powers of substitution, to sign for him or her and in his or
her name any or all amendments (including post-effective amendments) to the
registration statement to which this power of attorney is attached and to file
those amendments and all exhibits to them and other documents to be filed in
connection with them with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JEFFREY P. KRASNOFF President, Chief Executive Officer April 11, 2003
----------------------------------------- and Director
Jeffrey P. Krasnoff (Principal Executive Officer)
/s/ SHELLY L. RUBIN Vice President and Chief April 11, 2003
----------------------------------------- Financial Officer
Shelly L. Rubin (Principal Financial Officer)
/s/ STEVEN N. BJERKE Controller April 11, 2003
----------------------------------------- (Principal Accounting Officer)
Steven N. Bjerke
/s/ STUART A. MILLER Director April 11, 2003
-----------------------------------------
Stuart A. Miller
/s/ BRIAN L. BILZIN Director April 11, 2003
-----------------------------------------
Brian L. Bilzin
/s/ CHARLES E. COBB, JR. Director April 11, 2003
-----------------------------------------
Charles E. Cobb, Jr.
/s/ EDWARD T. FOOTE II Director April 11, 2003
-----------------------------------------
Edward T. Foote II
36
SIGNATURE TITLE DATE
--------- ----- ----
/s/ STEPHEN E. FRANK Director April 11, 2003
-----------------------------------------
Stephen E. Frank
/s/ CONNIE MACK Director April 11, 2003
-----------------------------------------
Connie Mack
/s/ STEVEN J. SAIONTZ Director April 11, 2003
-----------------------------------------
Steven J. Saiontz
37
EXHIBIT INDEX
4.1 -- Indenture dated March 5, 2003, by and among LNR and US Bank
Trust National Association
4.2 -- Registration Rights Agreement dated March 5, 2003, by and
among LNR, Deutsche Bank Securities, Inc. and Banc of
America Securities LLC
5.1 -- Opinion of Clifford Chance US LLP
23.1 -- Consent of Clifford Chance US LLP (Included in Exhibit 5.1)
23.2 -- Consent of Deloitte & Touche LLP
23.3 -- Consent of Deloitte & Touche LLP
23.4 -- Consent of Ernst & Young LLP
24 -- Power of Attorney -- on signature page
25 -- Statement of Eligibility of Trustee