<PAGE>
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
DATE OF REPORT (Date of earliest event reported): MARCH 17, 1999
HORIZON GROUP PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 0-24123 38-3407933
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) (Identification No.)
77 WEST WACKER DRIVE, SUITE 3900
CHICAGO, ILLINOIS 60601
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (312) 917-1500
(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
On March 17, 1999, Horizon Group Properties, Inc. (the "Company")
announced that Prime Capital Holding, L.L.C. ("PCH"), a privately owned
company, has withdrawn its proposal for a business combination with Horizon
Group Properties, Inc. The withdrawal of the proposal was contained in a
letter from PCH to the Company dated March 17, 1999.
Separately, the Board of Directors of the Company announced that it has
reviewed its prior decision to submit to its shareholders for a vote an
amendment to the Company's Charter to not elect real estate investment trust
("REIT") status and has determined to elect REIT status as originally
contemplated.
The letter from PCH to the Company is attached hereto as Exhibit 99.6. The
press release with respect to the withdrawal of the proposal for the possible
business combination and the decision by the Board of Directors of the
Company to elect REIT status is attached hereto as Exhibit 99.7.
2
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
99.6 Letter dated March 17, 1999 from Prime Capital Holding, LLC to
the Company
99.7 Press Release issued by the Company on March 17, 1999 regarding
withdrawal of business combination proposal by Prime Capital
Holding, LLC and determination by the Company's Board of
Directors to elect REIT status
</TABLE>
3
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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.
HORIZON GROUP PROPERTIES, INC.
(Registrant)
Date: March 18, 1999
By: /s/ Gary J. Skoien
----------------------------
Name: Gary J. Skoien
Title: President and Chief Executive
Officer
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
99.6 Letter dated March 17, 1999 from Prime Capital Holding, LLC to
the Company
99.7 Press Release issued by the Company on March 17, 1999 regarding
withdrawal of business combination proposal by Prime Capital
Holding, LLC and determination by the Company's Board of
Directors to elect REIT status
</TABLE>
<PAGE>
Exhibit 99.6
March 17, 1999
Mr. Gary J. Skoien
Chief Executive Officer
Horizon Group Properties, Inc.
77 West Wacker Drive, Suite 4200
Chicago, IL 60601
Re: Merger Proposal for Horizon Group Properties, LP ("Horizon")
Dear Mr. Skoien:
It is with regret that I inform you of PCH's decision to withdraw its
proposal dated January 5th, 1999 to merge PCH with Horizon. Our decision is
prompted by proposed changes in the tax laws which if enacted, as expected,
would negate nearly all the economic advantages of executing our merged
business plan.
As you recall, the driving factor in our merger proposal was the tax
synergies that would be realized in combining PCH's earnings, which are
predominantly "bad" REIT gain on sale income, with Horizons depreciable real
estate within a newly-created preferred stock subsidiary that would operate
under the public REIT platform. Subsequent to my offer letter, President
Clinton proposed, and Congress is now expected to adopt, sweeping changes to
the tax laws that would severely restrict the use of preferred stock
subsidiaries for the purposes intended. The timing is indeed unfortunate,
because I truly believed the transaction was a "win win" for both our
companies.
Gary, I've truly enjoyed working with you on this transaction. You have a
fine staff and an exciting business opportunity at Horizon.
Sincerely,
/s/ James W Roiter
President and Chief Executive Officer
cc: Michael W. Reschke
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Exhibit 99.7
FOR IMMEDIATE RELEASE CONTACT: Susan Crusoe
Senior Vice President,
Marketing
(312) 917-8877
PRIME CAPITAL HOLDING, L.L.C. WITHDRAWS
BUSINESS COMBINATION PROPOSAL
(Chicago, Illinois - March 17, 1999) -- Horizon Group Properties, Inc. (HGP)
(NASDAQ: HGPI), an owner, operator and developer of factory outlet and power
centers, today announced that Prime Capital Holding, L.L.C. ("PCH"), a
privately owned company, has withdrawn its proposal for a business
combination with Horizon Group Properties, Inc. As stated in a letter dated
March 17, 1999 from PCH to HGP, PCH's decision to withdraw its proposal was
"prompted by proposed changes in the tax laws which if enacted, as expected,
would negate nearly all the economic advantages of executing the merged
business plan." PCH's letter withdrawing its previous proposal further states
that the "driving factor" in PCH's merger proposal was "the tax synergies
that would be realized in combining PCH's earnings, which are
predominately "bad" REIT gain on sale income, with HGP's depreciable real
estate within a newly-created preferred stock subsidiary that would operate
under the public REIT platform."
Horizon Group Properties, Inc. had received a proposal dated January 5, 1999
from PCH regarding a possible business combination in which PCH would
contribute all of its assets, liabilities and cash in exchange for newly
issued shares of HGP common stock or common units of Horizon Group
Properties, Limited Partnership. PCH noted in its March 17, 1999 letter that
the proposed changes to the tax laws would severely restrict the use of
preferred stock subsidiaries and eliminate the tax advantages of combining
HGP's current business operations with real estate finance.
"Although we were excited about the possibility of joining the two companies,
we remain pleased with the strategic direction of our core business
operations as demonstrated by our fourth quarter results," said HGP's
Chairman, President and CEO, Gary J. Skoien. "Fourth quarter same-store sales
for our outlet center portfolio substantially outperformed the outlet
industry. In addition, occupancy for the fourth quarter and the year also
increased." Mr. Skoien added, "We will continue to focus on maximizing the
value of our shopping center portfolio."
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The majority owner of PCH is The Prime Group, Inc., a privately owned
diversified real estate company led by Michael W. Reschke. Mr. Reschke is a
Director and a significant shareholder of HGP. Gary J. Skoien, Chairman of
the Board, President and Chief Executive Officer of HGP, is also an officer
of The Prime Group, Inc. with responsibility for business interests that are
not related to PCH.
Separately, the Board of Directors of Horizon Group Properties, Inc. has
reviewed its prior decision to submit to its shareholders for a vote, an
amendment to HGP's Charter to not elect REIT status for the Company and has
determined to elect REIT status as originally contemplated.
Based in Chicago, Illinois, Horizon Group Properties, Inc. has 13 operating
factory outlet centers and one power center in 11 states totaling more than
2.9 million square feet.
Safe Harbor Statement: The statements contained herein, which are not
historical facts, are forward-looking statements based upon economic
forecasts, budgets, and other factors which, by their nature, involve known
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of Horizon Group Properties, Inc. to be
materially different from any future results implied by such statements. In
particular, among the factors that could cause actual results to differ
materially are the following: business conditions and the general economy,
competitive factors, interest rates and other risks inherent in the real
estate business. For further information on factors which could impact the
Company and the statements contained herein, reference is made to the
Company's filings with the Securities and Exchange Commission.
