SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): April 15, 1999
Charter Municipal Mortgage Acceptance Company
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or other Jurisdiction of Incorporation)
1-13237 13-3949418
(Commission File Number) (IRS Employer Identification Number)
625 Madison Avenue, New York, NY 10022
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 421-5333
Not Applicable
------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
As part of the settlement of class action litigation known as Prudential
Securities Inc. Limited Partnership Litigation, MDL No. 1005 relating to Charter
Municipal Mortgage Acceptance Company's ("CharterMac") predecessor partnerships
(the "Partnerships"), counsel for the partners of the Partnerships ("Class
Counsel") had the right to petition the United States District Court for the
Southern District of New York (the "Court") for additional attorney's fees in
the form of CharterMac's shares of beneficial interest ("Counsel's Fee Shares")
in an amount to be determined in the Court's sole discretion and based upon a
percentage of the increase in value of CharterMac ("Added Value"), one year
after CharterMac's formation.
On February 18, 1999, the Court issued an Order and Stipulation of
Settlement (the "Order") which stated that Class Counsel is entitled to receive
608,955 Counsel Fee Shares, representing Added Value of $7,788,536.
In lieu of the issuance of shares, on April 15, 1999, Related Charter,
LP (the "Manager"), on behalf of CharterMac, reached an agreement with Class
Counsel for a cash settlement of $6,089,955 (the "Agreement"), to be paid on or
before April 30, 1999. Pursuant to the Agreement, the cash settlement will be in
full satisfaction of Class Counsel's entitlement under the Order, and Class
Counsel will have no right now or in the future to receive any shares of
CharterMac, or any other consideration of any kind, from Charter.
CharterMac had previously reported in its Form 10-K for the fiscal year
ended December 31, 1998, diluted earnings per share and cash available for
distribution per share assuming that Counsel Fee Shares had been issued. The
agreement will therefore have a positive impact on CharterMac's financial
results on a diluted per share basis.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a). Financial Statements
Not Applicable
(b). Pro Forma Financial Information
Not Applicable
(c). Exhibits
3.1 Agreement dated as of April 15, 1999 between Charter Municipal
Mortgage Acceptance Company and Melvyn I. Weiss, Esq. and Lawrence A.
Sucharow, Esq., as Class Counsel Co-Chairman.
99.1 Press Release dated April 15, 1999: Charter Municipal Mortgage
Acceptance Company to Increase MBIA Credit Facility to $200 Million;
Announces $6.4 Million Tax-Exempt Bond Acquisition; To Retire at a
Discount an Obligation to Issue Stock to Counsel.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Charter Municipal Mortgage Acceptance Company
(Registrant)
BY: /s/ Stuart J. Boesky
--------------------
Stuart J. Boesky
President
April 29,1998
EXHIBIT 3.1
AGREEMENT dated as of April 15, 1999 between Charter Municipal Acceptance
Company ("Charter"), on the one hand, and Melvyn I. Weiss, Esq. and Lawrence a.
Sucharow, Esq., as Class Counsel Co-Chairmen as defined in the Stipulation
(which is defined below) ("Class Counsel Co-Chairmen"), on the other.
WHEREAS, in Order No. 157 -- entitled "Order re: Fees and Expenses
(Sponsor Settlements)" - issued in the action entitled In re: Prudential
Securities Incorporation Limited Partnerships Litigation, MDL Docket No. 1005,
M-21-67 (MP) (the "Action"), the United States District Court for the Southern
District of New York, inter alia, awarded Class Counsel (as that term is defined
in the Stipulation of Settlement with Related Defendants dated December 24,
1996) (the "Stipulation") filed in the Action, 608,955 shares of Charter,
payable in eight installments in accordance with paragraph 78 of the Stipulation
(the "Order"), and
WHEREAS, in lieu of Charter's issuance of the 608,955 shares to Class
Counsel over time, the parties have agreed that it is in their mutual interest
for Class Counsel to instead receive a fixed dollar amount in full satisfaction
of the Charter shares to which they are and would otherwise be entitled to
receive under the terms of the Order and the Stipulation.
NOW, THEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. In lieu of Charter's issuance of any shares to class Counsel now or in
the future, Charter will instead, on or before April 30, 1999, pay to Class
Counsel by good check or wire transfer pursuant to instructions to be given to
Charter by Class Counsel, the sum of tem dollars ($10) per share for each of the
608,955 shares of Charter which Class Counsel would otherwise be entitled to
receive under the Order and the Stipulation, for a total payment to Class
Counsel of six million eighty-nine thousand five hundred and fifty dollars
($6,089,550).
2. Class Counsel Co-Chairmen acknowledge that the foregoing payment shall
be in full satisfaction of Class Counsel's entitlement under, the Order and the
Stipulation to receive Charter shares now or in the future and that upon the
payment of said amount, they will have no right now or in the future to receive
any shares of Charter or any other consideration of any kind from Charter.
3. Class Counsel Co-Chairmen hereby warrant and represent that they are
authorized on behalf of Class Counsel to enter into this Agreement on Class
Counsel's behalf.
4. Charter hereby represents and warrants that its Board of Trustees,
including its independent trustees, have unanimously approved this Agreement as
being in Charter's best interests.
Millberg Weiss Bershad Hynes & Lerach LLP
By: /s/ George A. Bauer III
-----------------------
George A. Bauer III
Goodkind Labaton Rudoff & Sucharow LLP
By: /s/ Lawrence A. Sucharow
Lawrence A. Sucharow
Charter Municipal Mortgage Acceptance Company
By: /s/ Stuart J. Boesky
--------------------
Stuart Boesky, President
Exhibit 99.1
CONTACT: Brenda Abuaf
Director of Shareholder Services
Charter Municipal Mortgage
Acceptance Company ("CharterMac")
(800) 831-4826
PRESS: Elisabeth Philippe
Morgen-Walke Associates
(212) 850-5705
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
TO INCREASE MBIA CREDIT FACILITY TO $200 MILLION;
ANNOUNCES $6.4 MILLION TAX-EXEMPT BOND ACQUISITION;
TO RETIRE AT A DISCOUNT AN OBLIGATION TO ISSUE STOCK TO COUNSEL
NEW YORK, NY - April 15, 1999 - Charter Municipal Mortgage Acceptance Company,
"CharterMac", (AMEX: CHC) today announced that MBIA Insurance Corporation
("MBIA") has agreed to increase CharterMac's borrowing ability under the private
label Tender Option Program ("TOP") to $200 million.
During 1998, CharterMac utilized the TOP as its primary source of capital to
acquire First Mortgage Bonds ("FMBs"). Currently, MBIA is obligated to guarantee
up to $150 million of the Company's TOP. MBIA has agreed to increase its
obligation to guarantee the TOP to $200 million. It is expected that a formal
agreement to increase and extend the facility will be executed within 30 days.
The proceeds derived from the issuance of additional TOP's will primarily be
used to acquire additional bonds.
New Bond Acquisition
On March 26, 1999, CharterMac acquired a $6.4 million Multifamily Housing
Revenue Bond from the Mercer County Improvements Authority. The bond is secured
by a first mortgage on Hamilton Gardens Apartments, a 174-unit multifamily
affordable housing apartment complex located in Hamilton, NJ. Rehabilitation is
expected to begin immediately and should be completed in approximately 10
months.
Agreement to Retire Obligation at a Discount
In addition, as part of the settlement of certain litigation relating to
CharterMac's predecessor partnerships (the "Partnerships"), counsel for the
partners of the Partnerships ("Class Counsel") had the right to petition the
United States District Court for the Southern District of New York (the "Court")
for additional attorneys' fees ("Counsel's Fee Shares") one year after
CharterMac's formation. In a decision made by the Court on February 18, 1999,
Class Counsel is entitled to receive 608,955 shares of beneficial interest in
the Company. Based upon the closing stock price on April 12, 1999 such shares
would have a market value of $7,535,818.
<PAGE>
In lieu of CharterMac's issuance of such shares, the Company was able to
negotiate an agreement to pay Class Counsel cash instead, in the amount of
$6,089,550. Such amount will be paid on or before April 30, 1999. The Company
has been reporting diluted earnings per share and cash available for
distribution per share assuming such shares were issued. Therefore, this
agreement should have a positive impact on the Company's financial results on a
per diluted share basis.
"We are delighted to be able to announce this news," said Stuart J. Boesky,
President and Chief Operating Officer of CharterMac. "Our ability to retire this
obligation at a price which equates to $10 per share makes this an accretive
transaction for the Company."
CharterMac originates and acquires tax-exempt bonds, the proceeds of which are
used by borrowers to finance and refinance the development and ownership of
multifamily housing nationwide. The Company's portfolio is currently comprised
of 50 tax-exempt multifamily bonds in 15 states.
Certain items in this press release may constitute forward-looking statements
within the meaning of the Private Litigation Reform Act of 1995 and as such may
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performances or achievements of CharterMac to be materially
different from any future results, performances or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements
speak only as of the date of this press release. CharterMac expressly disclaims
any obligation or undertaking to release publicly any updates or revisions to
any forward-looking statements contained herein to reflect any change in
CharterMac's expectations with regard thereto or change in events, conditions or
circumstances on which any such statement is based.
###
