SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 8)*
GRUBB & ELLIS COMPANY
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
40009-52-0
(CUSIP Number)
Martin H. Neidell
Stroock & Stroock & Lavan
7 HANOVER SQUARE, NEW YORK, NEW YORK 10004
212-806-5836
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
DECEMBER 11, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ------------------------------- ------------------------------
CUSIP No. 40009-52-0 Page 2 of __ Pages
- ------------------------------- ------------------------------
- --------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Investors, L.P.
- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) X
- --------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
-------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 10,443,339
OWNED BY
-------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
-------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,443,339
- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,443,339
- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
*
- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
57.1%
- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ------------------------------- ------------------------------
CUSIP No. 40009-52-0 Page 3 of __ Pages
- --------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E. M. Warburg, Pincus & Co., Inc.
- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) X
- --------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
-------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 10,443,339
OWNED BY
-------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
-------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,443,339
- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,443,339
- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
*
- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
57.1%
- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
SCHEDULE 13D
- ------------------------------- ------------------------------
CUSIP No. 40009-52-0 Page 4 of __ Pages
- ------------------------------- ------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E. M. Warburg, Pincus & Company
- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) X
- --------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- -------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
-------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 10,443,339
OWNED BY
-------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
-------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,443,339
- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,443,339
- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
*
- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
57.1%
- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
SCHEDULE 13D
- ------------------------------- ------------------------------
CUSIP No. 40009-52-0 Page 5 of __ Pages
- --------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus & Co.
- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) X
- --------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
-------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 10,443,339
OWNED BY
-------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
-------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 10,443,339
- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,443,339
- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
*
- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
57.1%
- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
This Amendment No. 8 to Schedule 13D is being filed on behalf of
Warburg, Pincus Investors, L.P. ("WPI") and certain of its affiliated entities
(the "Reporting Entities") relating to the common stock, par value $.01 per
share (the "Common Stock"), of Grubb & Ellis Company, a Delaware corporation
(the "Company"). Terms defined in the original Schedule 13D, as amended, shall
have the same meaning when used herein. This amendment is being filed pursuant
to Rule 13d-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
On October 22, 1996, WPI acquired from The Prudential Insurance Company of
America ("Prudential"), pursuant to a Sale and Assignment Agreement the
following securities (the "Securities") of the Company owned by Prudential: (a)
$5,000,000 Principal Amount Amended and Restated Revolving Credit Note due
November 1, 1999; (b) $6,500,000 Amended and Restated 9.90% Senior Note due
November 1, 1998; (c) $3,500,000 Principal Amount Amended and Restated 9.90%
Senior Note due November 1, 1998((a), (b) and (c) above are sometimes
collectively referred to as the "Senior Notes"); (d) $10,900,834.33 Principal
Amount Amended and Restated 10.65% Subordinated Payment-In-Kind Note due
November 1, 2001; (e) $1,520,058.79 Principal Amount 11.65% Subordinated
Payment-In-Kind Note due November 1, 2001; (f) $723,517.03 Principal Amount
11.65% Subordinated Payment-In-Kind Note due November 1, 2001; ((d), (e) and (f)
above are sometimes referred to as the "PIK Notes");(g) 130,233 Shares of Junior
Convertible Preferred Stock; (h) Warrant No. 16 to subscribe for 200,000 shares
of Common Stock ("Warrant No. 16") and (i) New Warrant No. 17 to subscribe for
150,000 shares of Common Stock ("Warrant No. 17"). The securities set forth in
(d) through (g) above are sometimes referred to as the "Purchased Securities".
As the result of the transaction described in Item 6, WPI is the
beneficial owner of 10,443,339 shares of Common Stock through its direct
ownership of (i) 9,105,981 shares of Common Stock, including 4,828,548 shares
received by WPI on conversion of 128,266 shares of Senior Preferred Stock, and
(ii) warrants to purchase an aggregate of 1,337,358 shares of Common Stock. The
shares of Common Stock and warrants, upon exercise, represent approximately
57.1% of the shares of Common Stock calculated in accordance with Rule
13d-3(d)(1)(i). WPC, EMW and E.M. Warburg may be deemed to own beneficially the
shares of Common Stock beneficially owned by WPI.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
On December 11, 1996, the Company, WPI and Joe F. Hanauer ("Hanauer")
entered into a tri-party agreement (the "Tri-Party Agreement") pursuant to which
(a) WPI sold the Purchased Securities to the Company for an aggregate purchase
price equal to $10 million, plus accrued interest of $69,315.07; (b) the PIK
Notes were cancelled; (c) Warrant No. 16 and Warrant No. 17 were amended to
extend the term thereof to January 29, 2002; (d) WPI transferred to Hanauer a
portion of Warrant No. 16 representing the right to purchase 14,286 shares of
the Company's Common Stock and a portion of Warrant No. 17 representing the
right to purchase 10,714 shares of the Company's Common Stock; (e) WPI converted
its shares of Senior Convertible Preferred Stock of the Company into 4,828,548
shares of Common Stock; (f) WPI gave notice to Prudential to convert its Junior
Convertible Preferred Stock into Common Stock; (g) the Purchased Securities were
cancelled; (h) WPI and others entered into a Registration Rights Agreement; (i)
WPI granted to the Company a new option; and (j) the Stockholders Agreement was
terminated.
Pursuant to the Tri-Party Agreement, the Company and WPI entered into the
Option Agreement dated as of December 11, 1996 (the "Option Agreement"), which
allows the Company to purchase the Senior Notes at a purchase price of $13
million plus any accrued and unpaid interest due to WPI at an annual rate of 10%
through the last day of January 1997 and 12% thereafter, payable on the last day
of each month during the Second Option Term (as defined below), in arrears.
"Second Option Term" means from December 11, 1996 through April 16, 1997, unless
the Company is in active discussions with a lender or investor expressing
interest in funding the purchase price, in which case the term would be extended
to July 15, 1997. Accrual and payment of interest on the Senior Notes will be
waived during the Second Option Term. If the Second Option is not exercised,
interest on the Senior Notes will begin to accrue pursuant to the terms of the
Senior Notes on the expiration of the Second Option Term. After the expiration
of the Second Option Term, the Company will have the right to repay the Senior
Notes for $13 million only if such repayment is in cash.
In connection with the Tri-Party Agreement, WPI executed a letter dated
December 9, 1996 addressed to Mr. Hanauer (the "Warburg/Hanauer Letter")
confirming their understanding that, in connection with the closing of the
Tri-Party agreement, WPI will cause the directors of the Company nominated by
WPI to nominate Mr. Hanauer for election to the Board of Directors of the
Company at the 1997 and 1998 annual meetings of the stockholders. In addition,
WPI agreed to vote all of its shares of Common Stock in favor of Mr. Hanauer's
election to the Board of Directors of the Company.
Pursuant to the Tri-Party Agreement, Mr. Hanauer, the Company, WPI and
others entered into a Registration Rights Agreement which grants WPI and others
various demand and piggyback registration rights.
The Tri-Party Agreement, Option Agreement, Warburg/Hanauer Letter and the
Registration Rights Agreement are attached hereto as exhibits and the statements
contained herein with respect to such agreements are qualified in their entirety
by reference to the complete text of such agreements.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Tri-Party Agreement dated as of December 11, 1996 by
and among Grubb & Ellis Company, a Delaware corporation,
Warburg, Pincus Investors, L.P., a Delaware limited
partnership, and Joe F. Hanauer.*
Exhibit 2 Letter Agreement by and among Warburg, Pincus
Investors, L.P., a Delaware limited partnership, and Joe F.
Hanauer.*
Exhibit 3 Registration Rights Agreement dated as of December 11,
1996 by and among Grubb & Ellis Company, a Delaware
corporation, Warburg, Pincus Investors, L.P., a Delaware
limited partnership, Joe F. Hanauer, Mike Kojaian, Kenneth
J. Kojaian and C. Michael Kojaian.*
Exhibit 4 Option Agreement dated as of December 11, 1996 between
Warburg, Pincus Investors, L.P. and Grubb & Ellis Company.
- ------------
* Filed as an exhibit to the Schedule 13D filed by Joe F. Hanauer with the
Securities and Exchange Commission on December 18,1996 and incorporated herein
by reference.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
WARBURG, PINCUS INVESTORS, L.P.
By: WARBURG, PINCUS & CO.,
General Partner
By:/s/Reuben S. Leibowitz
Reuben S. Leibowitz, Partner
E. M. WARBURG, PINCUS & CO., INC.
By:/s/Reuben S. Leibowitz
Reuben S. Leibowitz, Managing
Director
E. M. WARBURG, PINCUS & COMPANY
By:/s/Reuben S. Leibowitz
Reuben S. Leibowitz, Partner
WARBURG, PINCUS & CO.
By:/s/Reuben S. Leibowitz
Reuben S. Leibowitz, Partner
Dated: December 18, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
1 Tri-Party Agreement dated as of
December 11, 1996 by and among
Grubb & Ellis Company, a Delaware
corporation, Warburg, Pincus
Investors, L.P., a Delaware limited
partnership, and Joe F. Hanauer.
2 Letter Agreement by and among
Warburg, Pincus Investors, L.P.,
a Delaware limited partnership,
and Joe F. Hanauer.
3 Registration Rights Agreement
dated as of December 11, 1996 by
and among Grubb & Ellis Company,
a Delaware corporation, Warburg,
Pincus Investors, L.P., a Delaware
limited partnership, Joe F. Hanauer,
Mike Kojaian, Kenneth J. Kojaian and
C. Michael Kojaian.
4 Option Agreement dated as of
December 11, 1996 between Warburg,
Pincus Investors, L.P. and Grubb &
Ellis Company.
Exhibit 4
E.M. WARBURG, PINCUS & CO., INC.
466 LEXINGTON AVENUE, NEW YORK, N.Y. 10017-3147
December 11, 1996
Grubb & Ellis Company
10275 West Higgins Road, Suite 300
Rosemont, IL 60018
Attention: Mr. Neil Young
Gentlemen:
Warburg, Pincus Investors, L.P. ("WPI") hereby grants to Grubb & Ellis Company
(the "Company") an option, for the Option Term set forth below, to purchase $15
million in Revolving Credit Notes and Senior Notes of the Company held by WPI
(the "Debt Securities") as an entirety as set forth below.
1. EXERCISE PRICE: $13 million plus any accrued and unpaid
interest due to WPI as per paragraph 2, below. No interest or
dividends will accrue or be due or payable on the Debt
Securities during the Option Term, described below,
notwithstanding any stated interest rate or other terms of such
Securities.
2. INTEREST: The Company will pay WPI interest at an annual rate
of 10% through the last day of January, 1997 and 12% thereafter,
payable on the last day of each month during the Option Term, in
arrears, based on the exercise price.
3. TERM: From the date hereof through April 16, 1997, unless the company is in
active discussions with a lender(s) or investor(s) who has expressed interest
in funding the Exercise Price, in which case the term would extend through
July 15, 1997 (the "Option Term").
4. CLOSING: The closing will occur two business days after receipt by WPI of
written notice of the Company's intent to exercise the option, with the
purchase price payable in immediately available funds against delivery of the
Debt Securities which shall be marked "Canceled". WPI will transfer title to
the Debt Securities in the same manner and with the same representations and
warranties as it transferred title to the Purchased Securities as set forth
in the Tri-Party Agreement between WPI, the Company and Joe F. Hanauer dated
December 11, 1996. WPI and the Company agree to sign such documents as are
necessary to effect the cancellation of the Debt Securities and the
assignment and transfer of the Debt Securities from WPI to the Company as
provided herein.
The accrual and payment of any and all interest under the terms of the Debt
Securities will be waived during the Option Terms. If this option is not
exercised, interest on the Debt Securities will begin to accrue pursuant to the
terms of the Securities effective the first day after the expiration of the
Option Term, and the interest provided for pursuant to paragraph 2 herein shall
cease.
During the Option Term the Debt Securities shall be legended to state that the
Debt Securities are subject to this option agreement. Any assignment of the Debt
Securities by WPI during the Option Term shall be subject to this option
agreement.
After the expiration of the Option Term, the Company will continue to have the
right to repay the Debt Securities in total for $13 million in cash, i.e., a $2
million discount from face value; such discount would apply to the November 1999
principal payment, if any of the Debt Securities remaining outstanding at such
date. However, no discount applies to other than cash repayments.
Notwithstanding anything herein to the contrary, after the expiration of the
Option Term, the ability of the Company to prepay the debt in whole or in part,
pursuant to the terms of the Debt Securities, and all other terms of the Debt
Securities, shall remain in full force and effect.
Very truly yours,
WARBURG, PINCUS INVESTORS, L.P.
By: Warburg, Pincus & Co.
By: /S/ JOHN D. SANTOLERI
John D. Santoleri, Partner
ACCEPTED AND AGREED
GRUBB & ELLIS COMPANY
By: /S/_________________________
Name: ____________________________
Title: _____________________________
