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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
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FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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FIRST UNION REAL ESTATE INVESTMENTS
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AT THE COMPANY IN CLEVELAND IN CHICAGO IN NEW YORK
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Thomas T. Kmiecik Stanley L. Ulchaker Peter Wentz Arthur Gormley
Senior Vice President Edward Howard & Co. The Dilenschneider Group The Dilenschneider Group
(216) 781-4030 (216) 781-2400 (312) 553-0700 (212) 922-0900
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FOR IMMEDIATE RELEASE
FIRST UNION CHARGES GOTHAM GROUP AND OTHER HEDGE FUNDS
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ARE WORKING AS A GROUP TO TAKE CONTROL OF FIRST
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UNION IN VIOLATION OF FEDERAL SECURITIES LAWS
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CLEVELAND, OHIO, MAY 6, 1998 -- FIRST UNION REAL ESTATE INVESTMENTS (NYSE: FUR)
has filed a brief in federal district court offering detailed evidence
supporting its claims that Gotham Partners, Apollo Real Estate Advisors,
Franklin Mutual Advisors and other New York hedge funds have been working
together in violation of Securities and Exchange Commission (SEC) regulations
since late 1996 to acquire control of the real estate investment trust (REIT).
First Union's brief charges that this is at least the third time members of the
group have worked together without proper disclosure in an attempt to take over
a public company. In each case, group members have taken significant positions
in a company they describe as "undervalued" and then instituted an aggressive
publicity campaign to harass and denigrate management while maintaining in
filings with the SEC that their purchases were solely for "investment purposes."
Even as they attacked management, the brief alleges, the group members increased
their positions in an orchestrated joint buying program, all without revealing
they are working together to gain control of a subject company.
Federal securities laws require any person or group acquiring more than 5% of
the outstanding shares of a publicly traded company to file disclosure
statements with the SEC describing the purpose of the investment and any formal
or informal agreements with other shareholders. First Union's brief charges that
Gotham's incomplete and misleading filings have materially defrauded the market
and have allowed Gotham and its allies to acquire at least 30% of First Union's
shares without disclosing their intent to force a change in control of the
Trust. In addition, First Union's own Declaration of Trust and its By-Laws
prohibit any shareholder from owning more than 9.8% of the outstanding shares,
in order to protect the Trust's preferred tax status as a REIT.
The most distressing aspect of this scheme is the total disregard that these
hedge funds have displayed for First Union shareholders, said a company
spokesman. While these hedge funds have been working as an undisclosed group,
shareholders have sold their shares without having been told they were entitled
to a premium for selling control and without affording First Union's trustees
the opportunity to negotiate on behalf of all shareholders.
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Gotham Partners has filed a motion to keep First Union from obtaining more
information in discovery to support its claims. First Union has opposed the
motion and asked the federal district court to schedule a hearing on First
Union's motion for an injunction to prevent Gotham Partners from continuing its
proxy contest against management. The court has taken both motions under
advisement.
First Union Real Estate Investments is a unique stapled-stock real estate
investment trust (REIT) headquartered in Cleveland, Ohio, and traded on the New
York Stock Exchange.
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