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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): DECEMBER 29, 2000
NEW VALLEY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-2493 13-5482050
(Commission File Number) (I.R.S. Employer Identification No.)
100 S.E. SECOND STREET, MIAMI, FLORIDA 33131
(Address of principal executive offices) (Zip Code)
(305) 579-8000
(Registrant's telephone number, including area code)
(NOT APPLICABLE)
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 29, 2000, WRD Holding Corporation, a newly-organized
subsidiary of New Valley Corporation, purchased 29/30ths of the Class A
interests of Apollo Real Estate Fund III, L.P. in Western Realty Development
LLC. New Valley owns the remaining interests in Western Realty Development which
is engaged in the real estate business in Moscow, Russia.
WRD Holding paid the purchase price of $4 million with a promissory
note due November 30, 2005. The note, which is secured by a pledge of the
purchased Class A interests, bears interest at a rate of 7% per annum,
compounded annually; interest is payable to the extent of available cash flow
from distributions from Western Realty Development. In addition, upon the
maturity date of the note or, if earlier, upon the closing of various liquidity
events, including sales of interests in or assets of, or a business combination
or financing involving, Western Realty Development, additional interest will be
payable under the note. The additional interest would be in an amount equal to
30% of the excess, if any, of the proceeds from a liquidity event occurring
prior to the maturity of the note or the appraised fair market value of Western
Realty Development, at maturity, over $13.75 million.
As a result of the purchase of the Class A interests, New Valley and
its subsidiaries will be entitled to 99% of distributions from Western Realty
Development and Apollo will be entitled to 1% of distributions. Accordingly, New
Valley will no longer account for its interests in Western Realty Development
using the equity method of accounting. Effective December 29, 2000, Western
Realty Development became a consolidated subsidiary of New Valley.
The purchase of the Class A interests was effected pursuant to an
Interest Purchase Agreement dated as of December 29, 2000 between WRD Holding
and Apollo. The transaction was negotiated on an arm's-length basis between New
Valley and Apollo. Apollo had no material relationship with New Valley or any of
its affiliates, or any director or officer of New Valley, or any affiliate or
associate of any such director or officer, except as noted below. In June 1998,
New Valley and Apollo organized Western Realty Repin LLC, which is described in
New Valley's Form 10-Q for the quarter ended September 30, 2000. As of January
12, 2001, two shopping centers owned by New Valley were secured by mortgages
from an affiliate of Apollo. As of January 12, 2001, pension plans sponsored by
BGLS Inc., a wholly-owned subsidiary of Vector Group Ltd., had invested in an
investment partnership managed by an affiliate of Apollo. As of January 12,
2001, affiliates of Apollo beneficially owned approximately 9.9% of the common
stock of Vector. Vector and BGLS directly and indirectly hold 56.1% of the
common shares of New Valley.
The foregoing summary of the purchase of the Class A interests is
qualified in its entirety by reference to the text of the Interest Purchase
Agreement and related agreements, which are attached hereto as exhibits and are
incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a)(b) The consolidated financial statements of Western Realty
Development for the year ended December 31, 1999 and for the period February 20,
1998 (date of inception) to December 31, 1998 were filed as Exhibit 99 to New
Valley's Annual Report on Form 10-K for the year ended December 31, 1999 and are
incorporated herein by reference. All other financial statements and pro forma
financial information required by this Item 7 will be filed no later than 60
days after the date that this initial report on Form 8-K was required to be
filed.
(c) The following Exhibits are provided in accordance with the
provisions of Item 601 of Regulation S-K and are filed herewith unless otherwise
noted.
EXHIBIT INDEX
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10.1 Interest Purchase Agreement dated as of December 29, 2000 between WRD Holding and
Apollo.
10.2 Promissory Note of WRD Holding dated December 29, 2000 in favor of Apollo.
10.3 Pledge Agreement dated as of December 29, 2000 between Apollo and WRD Holding.
</TABLE>
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SIGNATURE
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.
NEW VALLEY CORPORATION
By: /s/ J. Bryant Kirkland III
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J. Bryant Kirkland III
Vice President and Chief Financial Officer
Date: January 16, 2001
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