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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 13, 1999
BURNHAM PACIFIC PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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MARYLAND 1-9524 33-0204126
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
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610 WEST ASH STREET, SUITE 1600, SAN DIEGO, CALIFORNIA 92101
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(619) 652-4700
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
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(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT )
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ITEM 5. OTHER EVENTS.
On September 13, 1999, the Board of Directors of Burnham Pacific
Properties, Inc. (the "Company") sent a letter to the Company's shareholders. A
copy of this letter is attached as Exhibit 99.1 to this Current Report on Form
8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
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EXHIBIT NO. DESCRIPTION
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99.1 Letter, dated September 13, 1999, from the
Company's Board of Directors addressed to
the Company's shareholders.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the Company has duly caused this report to be filed on
its behalf by the undersigned, thereunto duly authorized.
BURNHAM PACIFIC PROPERTIES, INC.
Dated: September 13, 1999 By: /s/ Daniel B. Platt
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Name: Daniel B. Platt
Title: Chief Financial Officer
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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99.1 Letter, dated September 13, 1999, from the
Company's Board of Directors addressed to
the Company's shareholders.
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EXHIBIT 99.1
(BURNHAM PACIFIC LETTERHEAD)
September 13, 1999
Dear Fellow Burnham Pacific Shareholder:
Over the last few weeks, you have probably seen increased press coverage
surrounding Schottenstein Stores' unsolicited attempt to buy your company.
Because a number of the press reports have been inaccurate or misleading, your
Board of Directors and I want to take this opportunity to update you on events
and give you our current view of the situation.
THE SCHOTTENSTEIN LETTERS
Much has been made in the press of the letters Schottenstein has sent expressing
their interest in acquiring Burnham. It is important that you understand
precisely what was in those letters. It has also been suggested that we have not
been responsive. Nothing could be further from the truth.
When Schottenstein first wrote to us on June 7 proposing to buy Burnham for $13
per common share, we retained Goldman, Sachs & Co., a highly respected financial
adviser, to assist us in evaluating the letter and all of the potential
alternatives for optimizing the value of your shares.
Before our review was complete, Schottenstein sent a second letter on July 12
increasing their proposed price to $13.50 per share. The Board and
representatives of Goldman, Sachs & Co. met over several days in mid-July to
evaluate the new letter and to discuss other options. At that meeting, the
Board's eight directors, seven of whom are independent, decided to reject the
proposal for two key reasons:
1. We believe that the company you own is worth more. In addition,
Westbrook and Blackacre - Burnham's two largest holders of
preferred shares - invested in your company as recently as
December 1997 in securities convertible into common shares at
$15 3/8 per share, further validating that $13.50 is too low.
2. The second reason is that the proposal had too many conditions.
Schottenstein insisted, among other things, that both they and
their financing sources would need to undertake an extensive due
diligence process that would be disruptive to your company's
operations. In addition, Schottenstein's ability to complete
their offer is subject to their ability to arrange for their
financing. We believe these conditions would create unacceptable
risk to you and the Company.
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After we rejected the proposal, we instructed Goldman, Sachs & Co. to meet with
Schottenstein representatives to explain directly to them the reasons for our
response. Goldman has communicated to Schottenstein's representatives on several
occasions that the Board would be prepared to evaluate a revised proposal that
corrects the deficiencies in their current letter. In addition, Burnham's
management has spoken directly with Schottenstein and delivered the same
message. We have received additional letters which continue to restate their
previous proposal. More than a month has passed since the first of these
discussions and there has been no revised proposal from Schottenstein.
SHAREHOLDER RIGHTS AND EMPLOYEE RETENTION PLANS
Some investors and observers in the press have questioned our recent decision to
implement shareholder rights and employee retention plans in light of
Schottenstein's proposal, saying that these plans unfairly entrench or enrich
management. This is simply not true.
In fact, these plans are quite commonly used by a large number of companies
across a wide range of industries. Approximately 60% of the S&P 500 companies
have shareholder rights plans. Shareholder rights plans have a successful
history of protecting shareholders from unfair and coercive takeovers and
increasing the value ultimately received from a successful acquirer. In our
case, the shareholder rights plan has worked exactly as planned, and we believe
it factored into Schottenstein's decision to raise their proposed price to
$13.50 per share. The Board has the ability to dissolve the plan at any time if
an acceptable agreement fair to all shareholders is reached.
As to the employee retention and equity ownership plans, their purpose is to
provide a secure environment for our existing employees to continue to focus on
the business without distraction, while enabling us to better keep and attract
the talented staff we need to grow the business. These plans are standard
procedure for most companies in our situation. Without such plans, we risk
losing our best performers at this time of uncertainty, which would destroy
rather than create value for you. To help us design the plans, the Board hired
some of the best professional employee compensation consultants in the business,
including William M. Mercer Incorporated.
WESTBROOK AND BLACKACRE
You may have seen letters to Burnham from the Westbrook and Blackacre investment
companies quoted in newspaper articles suggesting that we engage Schottenstein's
proposal and arguing against our decision to adopt a shareholder rights plan.
You should know that Westbrook and Blackacre are our two major holders of
"preferred shares" and that their economic interests are very different from
yours. You should also know that, as preferred shareholders, in the event of a
sale of the company under the current proposal, they would receive a premium to
their original investment. It is therefore in their self-interest, not
necessarily yours, to be receptive to Schottenstein's proposal. While we
understand and respect their position, it is the Board's duty to be sure that
all of Burnham's shareholders are fairly treated.
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OUR PERFORMANCE
While the Company has recently not performed as well as we would like, you
should know that since 1996, when the new management team arrived, Burnham's
performance, as measured by total shareholder return, has exceeded the average
of all retail REITs in our sector. Over this time, the Company's assets have
grown more than 400% to $1.1 billion.
Unfortunately, the stock values of REITs in general are currently down. We are
confident that multiples will once again return to historical levels.
YOUR BOARD OF DIRECTORS
On behalf of your Board of Directors, I want to assure you that our
shareholders' best interests are always of primary concern. Our directors are
accomplished business professionals who are very engaged in the development of
the business plan for the Company.
It is worth remembering that Schottenstein's objective is to buy your company
for as little as they possibly can. They are working in their best interests,
not yours. We simply won't agree to anything that we don't believe is in your
best interests. We thank you for your continued support.
Very truly yours,
Malin Burnham
Chairman of the Board
Burnham Pacific Properties, Inc.
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