NEWTON, Mass.--(BUSINESS WIRE)--CommonWealth REIT (NYSE:CWH) today issued a statement regarding comments made by Sam Zell on CNBC’s “Squawk Box” program on February 28, 2014.
Sam Zell, age 72, recently accepted over $17 million of in-the-money options to serve as a trustee nominee on behalf of Related Fund Management, LLC and Corvex Management LP (together, “Related/Corvex”). In the CNBC interview he was asked if he is on too many other boards to devote the time required to serve as Chairman of the CWH Board if Related/Corvex are successful in their effort to remove the entire CWH Board, without cause, and elect their hand-picked slate at a subsequent shareholders’ meeting. Zell said:
“I am not sure that I am on seven boards. I believe I am only on one…two…three…maybe three public companies.” – Sam Zell, CNBC, Squawk Box, February 28, 2014
CWH notes that Zell currently serves as Chairman of four publicly traded companies: (1) Equity Residential (NYSE:EQR); (2) Equity LifeStyle Properties, Inc. (NYSE: ELS); (3) Anixter International, Inc. (NYSE:AXE); and (4) Covanta Holding Corporation (NYSE:CVA). He is also the Chairman of at least two private companies, including Equity International Inc. and Equity Group Investments, LLC and was the Chairman of The Tribune Company until it emerged from Chapter 11 bankruptcy. CWH further notes that Zell is an active owner of a number of international real estate businesses, and is involved in litigation related to his sponsorship of the leveraged buyout and subsequent bankruptcy of The Tribune Company.
Adam Portnoy, Managing Trustee and President of CWH, made the following statement:
“Sam Zell’s inability to recollect the number of public company boards on which he serves should be deeply troubling to investors in those companies. Further, this lapse in Zell’s memory and his existing commitments to other business activities, some of which appear to compete with CWH, underscores our belief that he is ‘over-boarded’ and overcommitted and would be unable to devote the necessary time, if elected, to serve as Chairman of the CWH Board.
“Notably, when invited by CWH to discuss the Company’s strategy and the Board’s commitment to enhancing governance, Zell refused and indicated he was too ‘busy’ to meet. We believe it is clear that Zell has been induced to serve as front man for Related/Corvex with a lucrative agreement, including $17 million of in-the-money options.”
CWH believes that certain other comments made by Zell during the CNBC interview also do not stand up to careful scrutiny. For example, when Zell was asked to explain why he sold all of the 192,158 CWH common shares he owned just two business days before the public announcement of his agreement to join the hostile takeover campaign, Zell said:
“We thought maybe we could build a position. We quickly found out that the liquidity of the stock in terms of its availability to build a position didn't seem likely at all. And consequently, rather than hold a minor share and have the filing requirements that go with that, we just eliminated the position. It was such a very minor position.” – Sam Zell, CNBC, Squawk Box, February 28, 2014
The facts are as follows: (i) the trading volume in CWH common shares for the last three months was approximately 1 million shares per day; (ii) if elected as a CWH trustee, Zell would not avoid any filing requirements by selling his shares in CWH; (iii) Zell sold his shares in CWH, which were purchased about two weeks earlier, for approximately $4.9 million and he realized a profit of almost $400,000; and (iv) Zell purchased his shares in CWH at $23.53 per share and he sold his shares at $25.50 per share, and Zell’s agreement with Related/Corvex provide him the opportunity to purchase over 4 million common shares of CWH at prices of $21.00 and $24.00 per share.
Adam Portnoy further commented:
“We believe that Zell’s motivations for his trading activity in CWH common shares in the days prior to joining the Related/Corvex campaign to take control of CWH have not been adequately addressed.”
CWH will file today with the Securities and Exchange Commission (SEC) a transcript of the February 28, 2014 Sam Zell interview pertaining to CWH.
CommonWealth REIT is a real estate investment trust that primarily owns office properties located throughout the United States. CWH is headquartered in Newton, MA.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE INCLUDES FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON CWH'S PRESENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS REASONS, INCLUDING SOME REASONS BEYOND CWH’S CONTROL.
ADDITIONAL INFORMATION REGARDING THE CONSENT SOLICITATION
CWH, its Trustees and certain of its executive officers, and Reit Management & Research LLC and certain of its directors, officers and employees may be deemed to be participants in the solicitation of consent revocations from shareholders in connection with the solicitation being conducted by Related/Corvex. On January 29, 2014, CWH filed a definitive consent revocation statement with the SEC in response to the Related/Corvex solicitation and has mailed the definitive consent revocation statement and form of WHITE consent revocation card to each shareholder entitled to deliver a written revocation in connection with the consent solicitation. SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE CONSENT REVOCATION STATEMENT FILED WITH THE SEC, AND ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY OTHER RELEVANT DOCUMENTS THAT CWH MAY FILE WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Additional information regarding the identity of the potential participants and their direct or indirect interests, by share holdings or otherwise, is set forth in the definitive consent revocation statement filed by CWH with the SEC in connection with the solicitation of revocations of consents.
Shareholders may obtain free of charge copies of the definitive consent revocation statement and any other documents filed by CWH with the SEC in connection with the Related/Corvex solicitation at the SEC’s website (http://sec.gov), at CWH’s website (http://cwhreit.com) or by requesting these materials from Timothy Bonang, by phone at (617) 796-8222, or by mail at Two Newton Place, 255 Washington Street, Newton, MA 02458 or by requesting materials from the firm assisting CWH in the solicitation of consent revocations, Morrow & Co., LLC, toll free at (800) 276-3011 (banks and brokers call collect at (203) 658-9400).
A Maryland Real Estate Investment Trust with transferable shares of
beneficial interest listed on the New York Stock Exchange.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.