SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
AUGUST 29, 2004
Date of Report
LNR PROPERTY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 1-13223 65-0777234
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
1601 WASHINGTON AVENUE, SUITE 800, MIAMI BEACH, FLORIDA 33139
(Address of Principal Executive Offices) (Zip Code)
(305) 695-5500
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instructions A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On August 29, 2004, LNR Property Corporation (the "Company"), entered into
an Agreement and Plan of Merger (the "Merger Agreement") among the Company,
Riley Property Holdings LLC ("Parent") and Riley Acquisition Sub Corp.
("Acquisition Sub"). A copy of the Merger Agreement is attached as Exhibit 99.1.
Parent is a newly formed company that will be majority owned by affiliates of
Cerberus Capital Management, L.P. and its real estate affiliate Blackacre
Institutional Capital Management, LLC. The Company has no relationship with
either Cerberus or Blackacre. However, Stuart Miller, the Chairman of the Board
of the Company, who, together with a trust of which he is the trustee and a
beneficiary and partnerships owned by his family (together, the "Miller Family")
owns 409,750 shares of common stock and 9,071,164 shares of Class B common
stock, and therefore is entitled to cast 77.35% of the votes that can be cast by
the holders of the Company's outstanding stock, will be acquiring a 20.4%
interest in Parent for $150 million, payable in cash or with shares of
common stock (including shares obtained by conversion of Class B common
stock) valued at the per share amount of the merger consideration (i.e.,
$63.10 per share). Also, five senior officers of the Company, including
Jeffrey Krasnoff, the Company's President and Chief Executive Officer,
will be acquiring a 4.6% interest in Parent for $34 million.
Pursuant to the Merger Agreement, at the effective time of the Merger, (i)
Acquisition Sub will be merged with and into the Company (the "Merger"), with
the Company continuing as the surviving entity, (ii) each share of Common Stock
or Class B Common Stock of the Company that is outstanding immediately before
the effective time of the Merger (other than shares held in the treasury of the
Company or by any direct or indirect subsidiary of the Company, shares held by
Parent or Acquisition Sub and shares held by stockholders who perfect their
right to appraisal under Section 262 of the Delaware General Corporation Law)
will be converted into and become the right to receive $63.10 in cash, and (iii)
Parent or a subsidiary will become the sole stockholder of the Company. Stock
options and stock purchase agreements will become the right to receive the
difference between the merger consideration ($63.10 per share) and the exercise
price of the options or purchase price under the stock purchase agreements.
The Merger Agreement precludes the Company from soliciting other
proposals, but permits it to consider unsolicited proposals.
The Company can terminate the Merger Agreement at any time before the
stockholders vote with regard to the Merger in order to accept what the Board of
Directors determines, after consultation with investment bankers, to be a
superior proposal, if it determines, after consultation with counsel, that it is
reasonably likely that it is necessary to terminate the Merger Agreement and to
enter into an agreement regarding the superior proposal in order to fulfill the
fiduciary duties of the Board of Directors or the Special Committee. If the
Company terminates the Merger Agreement in order to accept a superior proposal,
it will have to pay Parent $75 million at the time it terminates the Merger
Agreement.
The Board of Directors or a Special Committee consisting entirely of
independent directors can withdraw or modify its recommendation that
stockholders vote to adopt the Merger Agreement if it is advised by counsel that
failure to do so would be reasonably likely to constitute a breach of the
directors' fiduciary obligations. If (a) the Board of Directors or the Special
Committee withdraws or modifies its recommendation, (b) the Board of Directors
or the Special Committee recommends another acquisition proposal, (c) the Board
of Directors does not comply with a request by Parent that it re-affirm its
recommendation and approval of the Merger Agreement after an alternate proposal
has been received, or (d) the Board of Directors fails to recommend against a
tender offer by someone other than Parent or an affiliate, Parent will have the
right either to terminate the Merger Agreement or to require that the proposal
to adopt the Merger Agreement be presented to the Company's stockholders. If
Parent exercises its right to terminate the Merger Agreement, or if the
Company's stockholders vote, but they fail to approve the proposal to adopt the
Merger Agreement, the Company will have to pay Parent $75 million.
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Either the Company or Parent can terminate the Merger Agreement if the
Merger is not completed by May 31, 2005, except that a party cannot terminate
the Merger Agreement because the Merger is not completed by that date if the
reason the Merger is not completed by that date is failure of that party to
fulfill its obligations under the Merger Agreement. If either party terminates
the Merger Agreement because the Merger is not completed by May 31, 2005, and
within 12 months after the Merger Agreement terminates, the Company enters into
an agreement or understanding (including a letter of intent) relating to a sale
of more than 15% of the Company's assets or shares (other than a sale of assets
in the ordinary course of business) or there is another type of acquisition
of the Company, the Company will have to pay Parent $75 million.
The Merger Agreement contains representations and warranties by the
Company and by Parent and Acquisition Sub. The representations and warranties
will terminate when the Merger takes place. The Merger Agreement also contains
customary closing conditions, including a condition that at the date of the
Merger the Company's representations and warranties be correct, except to an
extent that would not reasonably be expected to have, in aggregate, a Material
Adverse Effect. For the purposes of the Merger Agreement, a Material Adverse
Effect is limited to an effect that is reasonably likely to exceed $150 million.
Cerberus Capital Management has agreed to provide Parent with, or arrange
for Parent or a subsidiary to borrow, the funds it needs to carry out the
Merger, and has also agreed to provide Parent with funds it needs to pay damages
if it breaches the Merger Agreement. However, Parent's exposure for breaching
the Merger Agreement will be limited to $125 million.
The Merger Agreement must be adopted by the affirmative vote of a majority
in voting power of the outstanding shares of the Company's Common Stock and its
Class B Common Stock, voting together as though they were a single class.
On August 29, 2004, the Board of Directors of the Company approved the
Merger Agreement and declared it to be advisable. It also unanimously voted to
recommend that the Company's stockholders vote in favor of adopting the Merger
Agreement and, by doing so, approving the Merger. The Board action followed a
unanimous recommendation by a Special Committee that the Board of Directors
approve the Merger.
On August 29, 2004, the Miller Family signed a voting agreement pursuant
to which they agreed to vote the shares they own in favor of the proposal to
adopt the Merger Agreement and against any competing proposals. However, if the
Company's Board of Directors or the Special Committee withdraws its
recommendation that the Company's stockholders vote to adopt the Merger
Agreement, the voting agreement will terminate, other than with regard to any
member of the Miller Family who notifies Parent within 5 days after the Board of
Directors or the Special Committee withdraws its recommendation that the Miller
Family member wants the voting agreement to remain in effect as to it.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit No. Description of Document
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99.1 Agreement and Plan of Merger among the Company, Riley Property
Holdings LLC and Riley Acquisition Sub Corp. dated
August 29, 2004.
99.2 Voting Agreement among Riley Property Holdings, LLC, Stuart
Miller, The LM Stuart Miller Irrevocable Trust U/A 10/6/94,
MFA Limited Partnership, The Miller Charitable Fund, L.P. and
the Company dated August 29, 2004.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: September 1, 2004
LNR PROPERTY CORPORATION
By: /S/ Jeffrey P. Krasnoff
-----------------------------
Name: Jeffrey P. Krasnoff
Title: President and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit No. Description of Document
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99.1 Agreement and Plan of Merger among the Company, Riley
Property Holdings LLC and Riley Acquisition Sub Corp. dated
August 29, 2004.
99.2 Voting Agreement among Riley Property Holdings, LLC, Stuart
Miller, The LM Stuart Miller Irrevocable Trust U/A 10/6/94,
MFA Limited Partnership, The Miller Charitable Fund, L.P. and
the Company dated August 29, 2004.
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