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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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SCHEDULE 13E-3/A
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
(Amendment No. 1)
Milestone Properties, Inc.
(Name of the Issuer)
Milestone Properties, Inc.
Concord Assets Group, Inc.
Leonard S. Mandor
Robert A. Mandor
(Name of Person(s) Filing Statement)
$.78 Convertible Series A Preferred Stock
(Title of Class of Securities)
599358207
(CUSIP Number of Class of Securities)
Leonard S. Mandor With a copy to:
Chairman and Chief Executive Officer Joel A. Yunis, Esq.
Milestone Properties, Inc. Mark D. Fischer, Esq.
150 E. Palmetto Park Road, 4th Floor Rosenman & Colin LLP
Boca Raton, Florida 33432 575 Madison Avenue
(561-394-9533) New York, New York 10022
(Name, Address and Telephone Number of Person (212-940-8800)
Authorized to Receive Notices and Communications
on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate
box):
a. |_| The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
b. |_| The filing of a registration statement under the Securities
Act of 1933. c. |_| A tender offer.
d. |X| None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. |_|
Calculation of Filing Fee
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Transaction
Valuation* Amount of Filing Fee
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$8,982,621 $1,797+
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|_| Check box if any part of the fee is offset as provided by Rule 0-11(a)
(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
Amount previously paid:
Form or registration no.:
Filing party:
Date filed:
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* The transaction value is based on a maximum of 2,994,207 shares of the
Issuer's $.78 Convertible Series A Preferred Stock which the Issuer could
have acquired in the transaction at the time of the initial filing of
this Schedule 13E-3 (because of conversions, only 2,993,663 shares of
such preferred stock would be available for acquisition as of October 15,
1998) multiplied by the $3.00 per share that would be paid for the
release of claims and each such share as part of a proposed settlement of
a purported class action and derivative lawsuit brought by holders of the
$.78 Convertible Series A Preferred Stock against the Issuer, certain of
its former and present directors and executive officers, and its
principal stockholder. Even though a portion of the $3.00 per share
settlement payment is allocable to the release of claims (and not
entirely to the surrender of each share), the Issuer has, nonetheless,
calculated the transaction value based on the entire $3.00 per share
settlement payment. The settlement payment was negotiated as part of the
proposed settlement. Such proposed settlement must be approved by the
Court of Chancery of the State of Delaware before the Rule 13e-3
transaction can be effected.
+ The Issuer has previously paid the filing fee in connection with the
initial filing of this Schedule 13E-3.
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Explanatory Note
This Rule 13e-3 Transaction Statement on Schedule 13E-3 (this
"Schedule 13E-3") is being filed by Milestone Properties, Inc. ("MPI"), a
Delaware corporation, Concord Assets Group, Inc. ("Concord"), a New York
corporation, Leonard S. Mandor and Robert A. Mandor in connection with a
proposed settlement of a purported class action and derivative lawsuit.
Concord, Leonard S. Mandor and Robert A. Mandor are affiliates of MPI. Concord
beneficially owns approximately 71% (approximately 40% on a fully diluted
basis) of the outstanding shares of MPI's common stock, par value $.01 per
share (the "MPI Common Stock"). Leonard S. Mandor and Robert A. Mandor are the
only shareholders of Concord and serve as executive officers and directors of
MPI and Concord.
A copy of this Schedule 13E-3 is to be attached as an exhibit to the
Notice of Pendency of Class and Derivative Action, Proposed Settlement,
Settlement Hearing and Right to Appear (the "Settlement Notice"), a copy of
the form of which is annexed hereto as Exhibit 1, that is to be distributed to
all holders of record of shares of MPI Preferred Stock as of October 23, 1995
and their successors in interest and to all holders of shares of MPI Common
Stock as of the close of business on August 25, 1998 and their successors in
interest.
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Summary of the Rule 13e-3 Transaction
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Schedule 13E-3. Any reference in this
Schedule 13E-3 to MPI Preferred Stockholders who "opt out" of the Proposed
Settlement refers only to those MPI Preferred Stockholders who properly opt
out of the Proposed Settlement in the manner and within the time period
provided for in the Settlement Agreement (as discussed herein).
Background
This Schedule 13E-3 relates to the proposed settlement (the
"Proposed Settlement") of a purported class action and derivative lawsuit (the
"Pending Actions") which are discussed herein. If the Proposed Settlement were
approved, MPI would settle the Pending Actions by acquiring up to 2,993,663
shares of its $.78 Convertible Series A preferred stock, par value $.01 per
share (the "MPI Preferred Stock"), for $3.00 per share (including a portion
allocable to releases of claims) resulting in a Rule 13e-3 transaction. The
terms of the Proposed Settlement have been memorialized in the Stipulation and
Agreement of Settlement (the "Settlement Agreement") entered into on August 5,
1998 between counsel for John Winston, the named plaintiff in the Pending
Actions, and counsel for the named defendants (Leonard S. Mandor, Robert A.
Mandor, Joan LeVine, Harvey Jacobson, Gregory McMahon and Geoffrey S. Aaronson
(each of whom was a director of MPI at the time that the transactions that are
the subject of the Pending Actions were approved and effected), MPI and
Concord (collectively, the "Defendants")). A copy of the Settlement Agreement
is annexed hereto as Exhibit 2.
Terms of the Proposed Settlement
All holders of shares of MPI Preferred Stock as of October 23, 1995
and their successors in interest through the date that the final order of the
Court of Chancery of the State of Delaware (the "Court") approving the
Proposed Settlement becomes final and is no longer subject to appeal due to
the expiration of the 30 day appeal period without an appeal being filed, the
affirmation of the approval on appeal, or otherwise (the "Settlement Effective
Date"), except for the Defendants, members of their families, their affiliates
and their associates, are eligible to participate in the Proposed Settlement.
Pursuant to the Settlement Agreement, each MPI Preferred Stockholder that is
eligible to participate in the Proposed Settlement and who does not opt out of
the Proposed Settlement (collectively, the "Settlement Class") would be
required to surrender for acquisition by MPI all (and not less than all) of
the shares of MPI Preferred Stock owned by such holder together with a letter
of transmittal which provides for the release of all claims such holder may
have against the Defendants in connection with the transactions that are the
subject of the Pending Actions as of the Settlement Effective Date in exchange
for $3.00 in cash for each share of MPI Preferred Stock surrendered (see the
responses set forth in Items 3(a) and (b), paragraphs (i), (ii) and (iv) and
Item 4(a) of this Schedule 13E-3 for a discussion regarding the transactions
that are the subject of the Pending Actions). MPI Preferred Stockholders will
have 45 days from the date of the initial mailing of the Settlement Notice to
MPI Preferred Stockholders to opt out of the Proposed Settlement (see the
response set forth to Item 4(a) of this Schedule 13E-3 for a discussion
regarding how an MPI Preferred Stockholder who is eligible to participate in
the Proposed Settlement may properly opt out of the Proposed
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Settlement). All shares of MPI Preferred Stock acquired by MPI pursuant to the
Proposed Settlement would be cancelled.
Consummation of the Proposed Settlement is subject to the approval of
the Court as to the fairness of the Proposed Settlement, as well as a number
of other conditions which may be waived at the option of the Defendants.
Notice of the hearing (the "Settlement Hearing") of the Court will be sent to
all holders of record of shares of MPI Preferred Stock as of October 23, 1995
and their successors in interest through the Settlement Effective Date and to
all holders of record of shares of MPI Common Stock as of August 25, 1998 (the
date that MPI has established as the record date for purposes of determining
who may opt out of the Proposed Settlement (the "Record Date")) and their
successors in interest through the Settlement Effective Date. The Settlement
Agreement provides that the Settlement Notice initially will be sent to all
holders of record of shares of MPI Preferred Stock as of October 23, 1995 and
their successors in interest through the close of business on the Record Date
and to all holders of record of shares of MPI Common Stock as of the close of
business on the Record Date at least 60 days prior to the Settlement Hearing.
Anyone who owned shares of MPI Preferred Stock as of October 23, 1995
and their successors in interest through the date that is one day prior to the
Settlement Hearing who do not opt out of the Proposed Settlement, and anyone
who owned shares of MPI Common Stock as of the close of business on August 25,
1998 and their successors in interest through the date that is one day prior
to the Settlement Hearing, may submit objections to the Proposed Settlement by
appearing in person or by his or her attorney at the Settlement Hearing and
presenting evidence or arguments that may be proper and relevant. However, no
person other than the named plaintiff to the Pending Actions and his counsel
and the Defendants and their counsel are entitled to be heard, and no papers,
briefs, pleadings or other documents submitted by any such persons will be
received and considered by the Court (except if the Court, in its discretion,
otherwise directs upon application of such person and for good cause shown),
unless no later than 10 days prior to the Settlement Hearing (i) a written
notice of the intention to appear, (ii) a detailed statement of such person's
objections to any matter before the Court, and (iii) the grounds therefor or
the reasons why such person desires to appear and to be heard, as well as all
documents and writings which such person desires the Court to consider, are
served by hand or first class mail, postage prepaid, with the Register in
Chancery and the respective counsel of the named plaintiff to the Pending
Actions and the Defendants, as provided for in the Order Scheduling Fairness
Hearing and Approving Notice, the form of which is annexed to the Settlement
Agreement as Exhibit A. Any person who fails to object in the foregoing manner
will be deemed to have waived such objections and will be forever barred from
raising such objections or otherwise contesting the Proposed Settlement at the
Settlement Hearing or in any other action or proceeding. Any person eligible
to submit objections at the Settlement Hearing but who does not, or believes
that he did not, receive a copy of the Settlement Notice with sufficient time
to object in the foregoing manner would need to apply to the Court for leave
and show good cause therefore in order to be heard.
MPI Preferred Stockholders who are eligible to participate in the
Proposed Settlement and who opt out of the Proposed Settlement cannot appear
at the Settlement Hearing and object to the Proposed Settlement. Such holders
cannot participate in the Settlement Hearing because by electing not to
participate in the Proposed Settlement, they would neither be bound by the
terms of the Settlement Agreement nor be eligible to receive the benefits of
the Proposed
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Settlement. Therefore, their rights as holders would not be effected in any
meaningful way by the outcome of the Settlement Hearing.
MPI Preferred Stockholders who are eligible to participate in the
Proposed Settlement and who do not opt out of the Proposed Settlement are
entitled to appear, or be otherwise represented, at the Settlement Hearing and
object to the terms of the Proposed Settlement. However, such holders would
not thereafter be eligible to opt out of the Proposed Settlement even if their
objections are not accepted by the Court and the Proposed Settlement is not
modified in such a way as to incorporate such objections.
MPI Preferred Stockholders who acquired (or acquire) their shares of
MPI Preferred Stock after August 25, 1998 are not entitled to opt out of the
Proposed Settlement and, if the Proposed Settlement is approved, would only be
entitled to receive the settlement consideration if they hold shares of MPI
Preferred Stock on the Settlement Effective Date. MPI Preferred Stockholders
who acquired (or acquire) their shares of MPI Preferred Stock after the Record
Date are not (and will not be) eligible to opt out of the Proposed Settlement
because by acquiring their shares of MPI Preferred Stock after the Proposed
Settlement was publicly announced, they effectively "opted into" (or will
effectively "opt into") the Proposed Settlement. Since, pursuant to the
Settlement Agreement, the Defendants have the right not to proceed with the
Proposed Settlement if holders of more than 10% of the outstanding shares of
MPI Preferred Stock opt out of the Proposed Settlement, it was deemed
practical and fair to all parties to the Settlement Agreement for
administrative purposes to set a date for determining with certainty the
actual number of opt out shares.
Effect of Settlement
As a result of, and upon, the consummation of the Proposed
Settlement, unless an MPI Preferred Stockholder who is eligible to participate
in the Proposed Settlement opts out of the Proposed Settlement in the manner
and within the time period provided for in the Settlement Agreement, all
claims of such holder against any and all of the Defendants relating to the
transactions that are the subject of the Pending Actions would be released and
all shares of MPI Preferred Stock held by such MPI Preferred Stockholder would
cease to be outstanding and would be cancelled and retired and would cease to
exist as of the Settlement Effective Date, and such holder would thereafter
cease to have any rights with respect to such shares, except the right to
receive, without interest, the settlement consideration, in each case, whether
or not such MPI Preferred Stockholder has delivered to MPI certificates
representing his or her shares of MPI Preferred Stock (or some other indicia
of ownership thereof acceptable to MPI) and/or a letter of transmittal
therefor. MPI Preferred Stockholders who do not opt out of the Proposed
Settlement must surrender the certificates representing their shares of MPI
Preferred Stock (or some other indicia of ownership thereof acceptable to MPI)
in order to receive the settlement consideration. MPI Preferred Stockholders
who are eligible to participate in the Proposed Settlement but who properly
opt out would retain their shares of MPI Preferred Stock and all of the rights
incidental thereto, including the liquidation and dividend preferences (see
Item 8(b) of this Schedule 13E-3), and would not receive any settlement
consideration and would not release their claims against the Defendants
relating to the transactions that are the subject of the Pending Actions.
If the Proposed Settlement is consummated, MPI believes that
immediately subsequent to acquiring shares of the MPI Preferred Stock in the
Rule 13e-3 transaction, it would have
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sufficient cash to continue operating in the ordinary course of business for the
next 12 months. The foregoing is a forward-looking statement and there can be no
assurances that this would be the case. Factors which could cause such a
statement to become untrue include the fact that (i) MPI's plans, strategies,
objectives, expectations and intentions are subject to change at any time at the
discretion of MPI; (ii) general economic and business conditions, which, among
other things, affect the demand for retail space or retail goods, availability,
and creditworthiness of prospective tenants, lease rents and the terms and
availability of financing, are subject to change; (iii) adverse changes in the
real estate markets including, among other things, competition with other
companies, may occur; and (iv) adverse changes in the properties owned by MPI
could require the expenditure of funds to fix or maintain such properties. Also,
MPI has proposed to acquire additional properties. In order to consummate such
acquisitions, MPI would need to raise additional funds (see of Item 5(d) of this
Schedule 13E-3).
If the Proposed Settlement were to be effected (which would not be
expected to occur prior to the end of 1998) and none or only a small number of
the eligible MPI Preferred Stockholders opted out of the Proposed Settlement,
then, absent changes in MPI's business activities and/or a sale of its
wraparound mortgage positions, it is currently anticipated that for 1999 and
thereafter it is likely that MPI would be classified for federal income tax
purposes as a personal holding company. In such event, it could be necessary
for 1999 and thereafter for MPI to cause "consent" or "deficiency" dividends
to be deemed paid to its stockholders to avoid personal holding company tax.
If this were done, MPI's stockholders would be required to pay tax on such
deemed dividends for which they would receive no cash to pay the tax thereon.
MPI would seek to minimize its stockholders' exposure to income tax as a
result of consent or deficiency dividends.
If the Proposed Settlement is consummated, Concord and its affiliates
would continue to own beneficially approximately 71% of the outstanding shares
of MPI Common Stock and, if none of the MPI Preferred Stockholders eligible to
participate in the Proposed Settlement opt out of the Proposed Settlement,
Concord and its affiliates would own beneficially a majority of the
outstanding shares of MPI Preferred Stock. Therefore, Concord and its
affiliates would control the vote on all matters submitted to holders of
either class of MPI's stock, including the election of directors and
extraordinary corporate transactions, such as mergers. This would not have any
immediate effect on the unaffiliated MPI Common Stockholders, since Concord
and its affiliates already control MPI and the unaffiliated MPI Common
Stockholders' shares are already subject to the MPI Preferred Stock
liquidation and dividend preferences (see Item 8(b) of this Schedule 13E-3).
However, if holders of a sufficient number of shares of MPI Preferred Stock
participate in the Proposed Settlement, the possibility that Concord and its
affiliates would lose absolute control (although Concord probably would not
lose effective control) of MPI would be eliminated (Concord and its affiliates
currently would own beneficially approximately 40% of the outstanding shares
of MPI Common Stock on a fully diluted basis, as each share of MPI Preferred
Stock is currently convertible, for no consideration, into 1.1 shares of MPI
Common Stock). Generally, holders of shares of MPI Preferred Stock do not have
voting rights except in connection with the election of one director to MPI's
Board of Directors (or two directors if, as is currently the case, MPI does
not pay dividends on the MPI Preferred Stock for a period of time) and, under
Delaware law and the Certificate of Designations of the MPI Preferred Stock,
in connection with certain extraordinary corporate actions that could affect
the rights of holders of shares of MPI Preferred Stock (i.e., by amending the
terms and provisions of the MPI Preferred Stock in a manner which would
adversely affect the rights or preferences of the MPI Preferred
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Stock (e.g., by creating a class of stock (or security convertible into a class
of stock) that ranks pari passu or is superior to the MPI Preferred Stock, or by
increasing the authorized number of shares of MPI Preferred Stock)).
In general, for U.S. federal income tax purposes, the Proposed
Settlement should result in a holder of MPI Preferred Stock who does not opt
out realizing gain (or loss) equal to the amount by which the settlement
proceeds paid to such holder exceeds (or is less than) such holder's tax basis
in his or her MPI Preferred Stock.
Fairness of Settlement
Each of the Filers believes that the Rule 13e-3 transaction would be
fair to the unaffiliated stockholders of MPI. The foregoing belief is based
principally upon the fact that the Proposed Settlement cannot be consummated
unless the Court concludes after a hearing (in which all interested parties
are invited to participate) that the Proposed Settlement is fair to MPI, the
Settlement Class and the MPI Common Stockholders, both substantively and
procedurally. The belief is also based upon the cash to be received by the
holders of the MPI Preferred Stock as compared to such stock's market price
immediately prior to the public announcement of the Proposed Settlement (and
prior to the public announcement of an earlier settlement proposal), the MPI
Preferred Stock's current market price ($2.00 per share on October 15, 1998),
and the illiquidity of the market for the MPI Preferred Stock.
The Rule 13e-3 transaction would provide significant value to the
holders of the MPI Preferred Stock. Immediately prior to the public
announcement of the Proposed Settlement, the MPI Preferred Stock traded
sporadically, in low volume, and had a market value of approximately $.875 per
share. The net book value of the MPI Preferred Stock was $8.06 per share as of
June 30, 1998. However, unlike the proposed payment of the settlement
consideration, there is no current likelihood of MPI Preferred Stockholders
realizing the net book value of the MPI Preferred Stock, because such holders
cannot force MPI's liquidation and there is no current intention to liquidate
by MPI. In addition, even if MPI were to be liquidated, any cash received from
the disposition of its assets would be offset by expenses, which could be
significant, including, but not limited to, wind-down expenses, lease
termination fees, taxes and termination and severance payments. After payment
of cash expenses and the satisfaction of all debts having priority over the
MPI Preferred Stockholders' liquidation preference, MPI estimates that the net
proceeds of a liquidation available to MPI Preferred Stockholders, on a per
share basis, would be significantly lower than the net book value of such
shares, which is less than the full $10 per share liquidation preference. In
addition, MPI is not obligated to declare or pay (and has not paid for more
than two years) any dividends on such stock. The MPI Preferred Stockholders
have no means to compel dividends to be declared or paid. MPI is also under no
obligation to redeem the MPI Preferred Stock. However, MPI's Board of
Directors has the power to declare dividends and to recommend to the MPI
Common Stockholders that MPI be liquidated and would continue to have such
power if the Proposed Settlement is consummated, and there can be no assurance
that MPI would not thereafter declare dividends on the MPI Preferred Stock or
seek to effect a liquidation.
The required Court approval of the Proposed Settlement is also
significant to the belief of each of the Filers that the Rule 13e-3
transaction is fair because in approving the Proposed Settlement, the Court
would be necessarily passing upon the fairness, reasonableness and adequacy of
the consideration to be received by the MPI Preferred Stockholders.
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Each of the Filers also believes that the Rule 13e-3 transaction is
fair because the unaffiliated holders of the MPI Common Stock would benefit
from the Proposed Settlement. The claims in the purported class action include
a claim that the conversion ratio for the MPI Preferred Stock should be
significantly higher than the current ratio of 1.1 shares of MPI Common Stock
for each share of MPI Preferred Stock. If the plaintiff were to be successful
on such claim, the ownership interests of the MPI Common Stockholders could be
significantly diluted. In addition, the MPI Common Stockholders would benefit
from the elimination of the plaintiff's other claims which could result in
significant cost and expense to MPI associated with continued litigation.
Concord and its affiliates, to the Filers' knowledge, own in the
aggregate 5,672 shares of MPI Preferred Stock and certain of the Defendants
and other persons who are associated with Concord and MPI own in the aggregate
an additional 372 shares of MPI Preferred Stock. Since Concord and its
affiliates (as well as the other Defendants, members of their families, their
affiliates and their associates who are not affiliated with Concord) are
prohibited from participating in the Proposed Settlement under the terms of
the Settlement Agreement, unless holders of at least 5,300 shares of the MPI
Preferred Stock opt out of the Rule 13e-3 transaction (or holders of at least
6,044 shares of the MPI Preferred Stock if the other Defendants and their
associates who are prohibited from participating in the Proposed Settlement
and who own 372 shares of the MPI Preferred Stock act in concert with
Concord), Concord and its affiliates (together with such other Defendants and
their associates acting in concert with Concord and its affiliates, if
applicable) would own beneficially a majority, and therefore control any vote
by the holders, of the MPI Preferred Stock. Nonetheless, even if Concord and
its affiliates gain control of the vote of the MPI Preferred Stock, there
would be no legal effect on the rights of unaffiliated MPI Common Stockholders
because the preferential terms of the MPI Preferred Stock vis-a-vis the MPI
Common Stock will be unchanged and Concord and its affiliates already control
MPI via their approximate 71% beneficial ownership of the MPI Common Stock.
However, subject to the fulfillment of the fiduciary obligations owed by MPI's
Board of Directors to the unaffiliated holders of shares of MPI's Common Stock,
Concord and its affiliates would be in a position to approve corporate actions
that benefit the holders of shares of MPI Preferred Stock but adversely affect
the holders of shares of MPI Common Stock.
Item 1. Issuer and Class of Securities Subject to the Transaction.
(a) Milestone Properties, Inc., a Delaware corporation, is the issuer
of the MPI Preferred Stock, the class of equity security that is the subject
of the Rule 13e-3 transaction. MPI's principal executive office is located at
150 E. Palmetto Park Road, 4th Floor, Boca Raton, Florida 33432.
(b) MPI's $.78 Convertible Series A preferred stock, par value $.01
per share, is the subject of the Rule 13e-3 transaction. As of October 15,
1998, there were 2,999,707 shares of MPI Preferred Stock outstanding which
were held by 1,597 holders of record.
(c) The MPI Preferred Stock was traded on The New York Stock Exchange
(the "NYSE") from January 29, 1991 through July 3, 1998. The NYSE suspended
trading in shares of the MPI Preferred Stock (and the MPI Common Stock) prior
to the market opening on July 6, 1998 because the NYSE determined that MPI had
fallen below certain of its continued listing criteria relating to net income
and market value of publicly held shares. The NYSE subsequently applied to the
SEC to delist the MPI Preferred Stock (and the MPI Common Stock) and on
September 10, 1998, the SEC issued an order granting the NYSE's application to
delist the MPI Preferred Stock (and the MPI Common Stock). Effective as of the
opening of the trading session on September 11, 1998, the MPI Preferred Stock
(and the MPI Common Stock) was delisted
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from the NYSE. MPI has learned that on or about July 6, 1998, a market began to
be made for shares of the MPI Preferred Stock (and the MPI Common Stock) on the
Over-The-Counter Bulletin Board (the "OTC Bulletin Board"). The following table
sets forth the high and low sales prices of the MPI Preferred Stock, as reported
on the NYSE, for each quarterly period for the past two calendar years and the
current year and for the period from July 1, 1998 through July 3, 1998. In
addition, the table sets forth the high and low bid quotations for the MPI
Preferred Stock, as reported on the OTC Bulletin Board, for the period from July
6, 1998 through October 15, 1998.
Sales Price
-----------
High Low
---- ---
Fiscal Year Ended December 31, 1996
First Quarter 3-1/4 2
Second Quarter 2-5/8 1-1/8
Third Quarter 1-1/4 26/32
Fourth Quarter 1-1/8 5/8
Fiscal Year Ended December 31, 1997
First Quarter 7/8 5/8
Second Quarter 11/16 1/2
Third Quarter 1-5/16 7/16
Fourth Quarter 1-5/16 1-3/16
Fiscal Year Ending December 31, 1998
First Quarter 1-3/4 1-1/4
Second Quarter 1-3/8 1-5/16
Third Quarter
NYSE (through July 3, 1998) 1-1/2 1-7/16
OTC Bulletin Board (July 6,
1998 through October 15, 1998) 2-3/8 7/8
On October 15, 1998, the last reported bid quotation for the MPI
Preferred Stock on the OTC Bulletin Board was $2.00 per share.
(d) No dividends have been paid on the MPI Preferred Stock for more
than the past two years and MPI is not obligated to declare dividends on the
MPI Preferred Stock. However, the MPI Preferred Stock has a preferential right
to receive a quarterly, noncumulative dividend of $.195 per share before
dividends can be paid on the MPI Common Stock.
(e) No public offering of the MPI Preferred Stock has been made in
the last three years.
(f) None of the Filers has purchased any shares of MPI Preferred
Stock during the two most recently completed fiscal years of MPI or during
MPI's current fiscal year.
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Item 2. Identity and Background.
This Schedule 13E-3 is being filed by MPI, the issuer of the class of
equity securities (the MPI Preferred Stock) which is the subject of the Rule
13e-3 transaction, and Concord, Leonard S. Mandor and Robert A. Mandor, each
of whom is an affiliate of MPI (collectively, the "Filers"). The Rule 13e-3
transaction which is the subject of this Schedule 13E-3, is part of a larger
transaction involving the Proposed Settlement. The Filers are defendants in
such litigation. See Item 4(a) of this Schedule 13E-3 for additional
information regarding the Proposed Settlement.
Concord, a New York corporation, owns beneficially approximately 71%
of the outstanding shares of MPI Common Stock (approximately 40% on a fully
diluted basis after giving effect to the conversion into MPI Common Stock of
all of the outstanding shares of MPI Preferred Stock -- each share of MPI
Preferred Stock is currently convertible, for no consideration, into 1.1
shares of MPI Common Stock -- and the exercise of all outstanding options to
purchase shares of MPI Common Stock) and may therefore be deemed to control
MPI. Concord's principal activity is the acquisition, ownership and operation,
through its wholly owned subsidiaries and other affiliates, of investment
retail properties, primarily community and neighborhood shopping centers,
small regional malls and single-tenant commercial properties. Concord has its
principal executive offices at 150 E. Palmetto Park Road, 4th Floor, Boca
Raton, Florida 33432.
Leonard S. Mandor and Robert A. Mandor are the only shareholders, the
only directors and the Chief Executive Officer and Chief Financial Officer,
respectively, of Concord and may be considered controlling persons of MPI.
Leonard S. Mandor and Robert A. Mandor are also directors and executive
officers of MPI.
(a), (b), (c), (d) and (g) Information required to be disclosed
regarding the Filers and, with respect to MPI and Concord, their respective
directors and officers, in response to parts (a), (b), (c), (d) and (g) of
Item 2 to Schedule 13E-3 is set forth below:
Leonard S. Mandor has served as Chairman of the Board and Chief
Executive Officer of MPI since it began operations in December 1990. MPI is
engaged in the business of acquiring, owning, managing and developing real
estate, primarily consisting of shopping centers. Mr. Mandor is also the
Chairman of the Board and Chief Executive Officer of Concord. Mr. Mandor has
been associated with Concord since its inception in 1981.
Robert A. Mandor has served as President, Chief Financial Officer and
a director of MPI since it began operations in December 1990. Mr. Mandor is
also the President, Chief Financial Officer and a director of Concord. Mr.
Mandor has been associated with Concord since its inception in 1981.
Joseph P. Otto was appointed a director of MPI by the Board in
November 1996 and has served as a Vice President of MPI since it began its
operations in December 1990. Mr. Otto is also a Vice President of Concord. Mr.
Otto has been associated with Concord since 1984.
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Harvey Shore has served as Secretary and a Senior Vice President of
MPI since it began operations in December 1990. Mr. Shore is also a Senior
Vice President and Secretary of Concord. Mr. Shore has been associated with
Concord since 1983.
Patrick S. Kirse was appointed Vice President of Accounting of MPI in
September 1997 and as Controller in October 1997. He had served as a
non-executive Vice-President from February 1996 to September 1997 after
joining MPI in March 1995. From January 1992 until March 1995, Mr. Kirse, a
Certified Public Accountant, was an accountant with Deloitte & Touche LLP.
Geoffrey S. Aaronson has been a director of MPI since December 1990.
Mr. Aaronson is a shareholder of the law firm of Schantz, Schatzman, Aaronson
& Perlman, P.A. in Miami, Florida, and has been with such firm since 1983. Mr.
Aaronson's business address is 200 South Biscayne Boulevard, Suite 3650,
Miami, Florida 33131.
Harvey Jacobson has been a director of MPI since December 1990. Mr.
Jacobson has been the Chief Executive Officer of Glencraft Lingerie
Corporation since 1985. Mr. Jacobson's business address is 38 East 32nd
Street, New York, New York 10016.
Gregory McMahon was elected as a director of MPI by the holders of
the Preferred Stock in 1991. Mr. McMahon is a Certified Public Accountant and
has been a partner in the accounting firm of John McMahon & Sons for more than
17 years. Mr. McMahon's business address is 60 East 42nd Street, Suite 2118,
New York, New York 10165.
Except as otherwise set forth above, the business address of all
persons identified in the response to this Item 2 is 150 E. Palmetto Park
Road, 4th Floor, Boca Raton, Florida 33432.
All of the persons identified in the response to this Item 2 are
citizens of the United States of America.
(e) None of the Filers and no executive officer or director of either
MPI or Concord has, during the past five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(f) None of MPI, Leonard S. Mandor and Robert A. Mandor and no
executive officer or director of either MPI or Concord has, during the past
five years, been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and, as a result, was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violations of such laws. However, in February 1995, the SEC filed a civil
complaint against Concord in connection with the proxy solicitation conducted
in connection with the merger into MPI of two limited partnerships which were
predecessors to MPI. The complaint alleged that Concord had violated the
antifraud provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), through the forgery of investor signatures on proxy cards and
that Concord had failed timely to provide certain investors with partnership
lists, as required under the proxy rules. In April 1995, Concord consented,
without admitting or denying the SEC's allegations, to a judgment enjoining it
from committing future violations of the proxy rules under the Exchange Act
and related rules under the Securities Act of 1933, as amended, and providing
for the payment of a monetary penalty.
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Item 3. Past Contacts, Transactions or Negotiations.
(a) and (b) Other than with respect to the Rule 13e-3 transaction and
certain negotiations which terminated in September 1998 in connection with a
proposed transaction between certain affiliates of MPI and MPI, on one hand,
and an unrelated third party on the other hand, for the sale of two retail
properties owned by MPI and 23 retail properties owned by such affiliates, 22
of which are subject to wraparound mortgages held by MPI which would have to
have been released if such proposed transaction had been consummated, none of
the persons identified in Item 2 of this Schedule 13E-3 have engaged in any of
the types of transactions or had any of the contacts or negotiations of the
type referred to in the text to parts (a) and (b) of Item 3 to Schedule 13E-3,
during the two-year period referred to therein or in the amounts contemplated
thereby. With respect to the Rule 13e-3 transaction, reference is made to the
Settlement Notice and, in particular, the discussion therein under the heading
"Background and Description of the Actions" for a description of the contacts
and negotiations leading up to the Rule 13e-3 transaction, which is
incorporated herein by reference. Additional information regarding the
terminated potential sale to an unrelated third party of two retail properties
owned by MPI and 23 retail properties owned by certain of its affiliates is
set forth in the response in this Schedule 13E-3 to Item 8(f) of Schedule
13E-3. The negotiations regarding such sale arose from a solicitation
conducted on behalf of MPI and certain of its affiliates by Societe Generale
Securities Corporation. See the response in this Schedule 13E-3 to Items 5(b)
and 5(e) of Schedule 13E-3 for information regarding the plans and proposals
of MPI and such affiliates regarding the sale of properties.
Certain of the persons identified in Item 2 of this Schedule 13E-3
have, however, engaged in transactions (all of which have been previously
disclosed in MPI's reports under the Exchange Act) that may be of the type
required to be disclosed under Item 3 of Schedule 13E-3, except that none of
them meet the criteria for disclosure because (i) the amounts involved are
below the thresholds established for disclosure under such Item or (ii) they
occurred more than two years ago. Such transactions are described below.
i. In October 1995, MPI acquired an aggregate of 35 interests in real
estate properties consisting of 32 wraparound mortgage interests and three fee
properties from Castle Plaza, Inc., a Delaware corporation, Mountain View
Mall, Inc., a Delaware corporation, Concord Income Realty Partners VI, L.P., a
Delaware limited partnership, and Concord Income Realty Partners IX, L.P., a
Delaware limited partnership, all of which were then and are now affiliates of
Concord (the "Concord Sellers") for approximately $700,000 in cash and
2,545,000 shares of MPI Common Stock (the "Acquisition"). As a result of the
Acquisition, (i) Concord's beneficial ownership was increased to approximately
69% of the outstanding shares of MPI Common Stock (approximately 37% on a
fully diluted basis after giving effect to the conversion into MPI Common
Stock of all outstanding shares of MPI Preferred Stock and the exercise of all
outstanding options to purchase shares of MPI Common Stock), (ii) Concord's
ownership position gave it the ability to elect all of MPI's directors, other
than the directors that are elected by the holders of the MPI Preferred Stock,
and (iii) Concord's ownership position gave it the ability, subject to certain
limitations, to approve all matters submitted to a vote of the MPI Common
Stockholders, including all fundamental corporate transactions.
ii. Pursuant to certain agreements executed in connection with the
Acquisition (the "Acquisition Agreements"), and as security for any claims
against any Concord Seller for a breach of any covenant, representation or
warranty under any Acquisition Agreement, MPI and
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Concord entered into an agreement on October 23, 1995 in which Concord agreed to
guaranty and indemnify MPI (the "Concord Guaranty") for one year for up to
$1,000,000 in the aggregate, for a breach by any Concord Seller of any covenant,
representation or warranty under any Acquisition Agreement. The Concord Guaranty
permitted the payment by Concord of any of its liabilities or obligations
thereunder in cash and/or shares of MPI Common Stock. To secure its obligations
under the Concord Guaranty, Concord executed and delivered to MPI a pledge
agreement (the "Concord Pledge Agreement") creating a security interest in favor
of MPI with respect to (i) 137,930 shares of MPI Common Stock beneficially owned
by Concord, and (ii) 137,930 shares of common stock of Union Property Investors,
Inc. ("UPI"), a former wholly owned subsidiary of MPI which was spun-off in
November 1995 to the holders of record of MPI's Common Stock as of October 31,
1995, which shares were beneficially owned by Concord. Each of the Concord
Guaranty and the Concord Pledge Agreement expired on October 23, 1996. No claims
were made thereunder.
iii. On August 4, 1995 and October 30, 1995, MPI transferred (the
"Transfer") five and 11 retail properties, respectively, to UPI. In November
1995, MPI assigned to UPI a $3,000,000 line of credit that MPI had obtained
from First Union National Bank of Florida in February 1995 which was
collateralized by one of the properties transferred to UPI in the Transfer.
iv. UPI was recapitalized and spun-off in November 1995, when MPI
distributed (the "Distribution") all of the outstanding shares of UPI common
stock to the holders of record of the MPI Common Stock as of October 31, 1995
on a share-for-share basis and for no consideration. In the Distribution,
Concord and its affiliates acquired approximately 75% of UPI's common stock.
Leonard S. Mandor and Robert A. Mandor served as directors and executive
officers of UPI.
v. As a result of and immediately following UPI's recapitalization,
MPI owned all 650,000 outstanding shares of UPI's preferred stock, par value
$.01 per share, with a 9% cumulative dividend (subject to adjustment to 8% in
certain events) and a $10 per share liquidation preference and redemption
value (the "UPI Preferred Stock"). Between March 22, 1996 and February 25,
1997, UPI redeemed an aggregate of 293,600 shares of the UPI Preferred Stock
owned by MPI at a price of $10 per share for a total redemption price of
$2,936,000 plus the accrued and unpaid dividends on such redeemed shares. As a
result of such redemptions, the dividend rate on the UPI Preferred Stock was
reduced to 8% per annum as of January 1, 1996.
vi. On February 27, 1997, UPI was merged (the "UPI Merger") into a
wholly owned subsidiary of Kranzco Realty Trust, a Maryland real estate
investment trust ("Kranzco"). In connection with the UPI Merger, the 356,400
shares of the UPI Preferred Stock which MPI owned as of the date of the UPI
Merger were converted into shares of Kranzco's Series C Cumulative Redeemable
Preferred Shares on a share-for-share basis.
vii. On March 26, 1993, the United States District Court for the
Southern District of New York approved a settlement (the "CMI Settlement") of
a consolidated class action which had been filed against MPI, Concord, Leonard
S. Mandor, Robert A. Mandor, certain of MPI's other present and former
affiliates, and Shareholder Communications Corporation, the proxy solicitation
firm engaged by MPI in connection with the merger of two limited partnerships
which were predecessors to MPI, The Concord Milestone Income Fund, L.P. and
Concord Milestone Income Fund II, L.P., into MPI on December 18, 1990. Under
the terms of the CMI
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Settlement, MPI among other things, was required to pay $1,360,000 in legal fees
and expenses to plaintiffs' counsel over a period of three years. As of December
31, 1996, MPI paid the final $215,000 of legal fees and expenses remaining under
the CMI Settlement.
viii. A lawsuit (the "Rabin Litigation") purporting to be a class
action against, among others, Concord, Leonard S. Mandor, Robert A. Mandor and
certain partnerships and affiliates of Concord, was filed in September 1989
alleging various federal and common law claims relating to the sales of
interests in such partnerships. In November 1991, the Rabin Litigation was
settled pursuant to the terms of a court-approved settlement agreement (the
"Rabin Settlement Agreement"). The plaintiffs in the Rabin Litigation
subsequently filed a Notice of Motion with the court seeking to enforce the
Rabin Settlement Agreement and for declaratory and other relief. The
plaintiffs asserted, inter alia, that the defendants breached the Rabin
Settlement Agreement by improperly allocating transaction expenses against the
payment to be made to the selling partnerships in certain circumstances
pursuant to the Rabin Settlement Agreement and breached their fiduciary duties
to the plaintiffs. Although MPI was not a party to such action, had the
plaintiffs been successful in their claim for certain transaction expenses,
the value of certain wraparound mortgages held by MPI could have been
adversely affected. Concord and one of its subsidiaries have agreed to
indemnify MPI for any losses, up to $200,000 in the aggregate, resulting from
any such transaction fees, costs or expenses incurred by MPI as a result of
such event. Concord and its subsidiary can satisfy their indemnification
obligation to MPI by delivery of shares of MPI Common Stock.
In connection with the motion to enforce the Rabin Settlement
Agreement filed by the plaintiffs in such action, the plaintiffs alleged, in
part, that the sale of properties by the general partner (the "General
Partner") of any partnership selling properties was premature, without valid
business justification with respect to such partnership and a breach of the
General Partner's fiduciary duty. If such aspect of the litigation had been
determined adversely to the General Partner (or if the General Partner agreed
to a settlement restricting its ability to sell properties prior to maturity),
the ability of the General Partner to sell partnership properties, including
the partnerships' commercial real properties (the "Underlying Properties")
which secure certain wraparound notes and wraparound mortgages held by MPI
(together, the "Partnership Wrap Debt"), prior to the maturity of the related
Partnership Wrap Debt, whether by acceleration or at stated maturity, would
have been limited and could have materially and adversely affected MPI's
ability to realize upon the value of the Partnership Wrap Debt.
The parties settled the action to enforce the Rabin Settlement
Agreement pursuant to a Stipulation and Order approved by the court on October
27, 1997, under which the plaintiffs withdrew their breach of fiduciary duty
claims and withdrew with prejudice, in exchange for a payment by the
defendants, including Concord, of $600,000, their claim that the defendants
improperly allocated transaction costs in connection with the sale of certain
properties, thereby breaching the Rabin Settlement Agreement. In addition, the
Stipulation and Order provides for a formula relating to the allocation of
transaction expenses in connection with the future sale of properties owned by
the partnerships, including the Underlying Properties.
ix. In December 1990, MPI entered into an executive management
agreement, as amended (the "Executive Management Agreement"), with Concord,
pursuant to which MPI provides management services and assists Concord in the
management of properties (the "Concord Properties") owned by Concord and its
affiliates, including limited partnerships controlled by Concord or affiliates
of Concord. Pursuant to the Executive Management
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Agreement, which is renewable annually, MPI makes available to Concord certain
personnel of MPI to provide management services (the "Management Services") to
Concord in connection with which Concord is required to reimburse MPI based upon
the hourly wage rate of such personnel, and MPI provides Concord with office
space and general office services. The Management Services include overseeing
all financing, acquisitions, dispositions and operational functions of the
Concord Properties. The operational functions of the Management Services include
procuring and maintaining insurance, leasing, supervising and administering
expansion and maintenance projects, and performing all other necessary services
for maintaining the Concord Properties. Under the Executive Management
Agreement, affiliates of Concord engaged in real estate brokerage activities may
receive brokerage or leasing commissions in connection with the purchase, sale
or leasing of properties by MPI. In March 1995, the Executive Management
Agreement was amended to reduce by 50% the quarterly fee paid by Concord to MPI
for Management Services to its present fee of $12,500 and to reduce by 50% the
amount reimbursed by Concord for office space and general office services. This
reduction was occasioned by a significant decrease in properties owned by
Concord and, accordingly, a corresponding decrease in the Management Services.
Pursuant to the Executive Management Agreement, Concord owes MPI $163,188 for
expenses incurred by MPI in 1997 and Concord reimbursed MPI for expenses
totaling $155,857 incurred by MPI in 1996. In addition, Concord owes MPI $69,910
for various services provided by MPI to Concord in 1997 pursuant to the
Executive Management Agreement and Concord paid MPI $68,681 for similar services
provided to Concord in 1996.
x. Milestone Properties Management, Inc. ("MPMI"), one of MPI's
wholly owned subsidiaries, is a party to a property management agreement (the
"Property Management Agreement") with Concord under which MPMI manages certain
properties owned by Concord and its affiliates, including limited partnerships
controlled by Concord or affiliates of Concord. MPMI received $95,020 and
$9,747 in termination fees and incurred $64,762 and $7,608 of accelerated
amortization in connection with the termination of management agreements for
the years ended December 31, 1997 and 1996, respectively, resulting from the
sale or foreclosure of properties owned by limited partnerships syndicated by
Concord. As of June 30, 1998, MPMI performed property management and leasing
services for seven of Concord's shopping centers pursuant to the Property
Management Agreement.
xi. In connection with the UPI Merger, on February 26, 1997, UPI
terminated a property management agreement it had entered into with MPMI in
November 1995 (the "UPI Property Management Agreement") and a management
services agreement it had entered into with MPI in November 1995 (the "UPI
Management Services Agreement"). The aggregate fees paid by UPI to MPMI and
MPI for services provided to UPI under the UPI Property Management Agreement
and the UPI Management Services Agreement were $21,669 and $86,919,
respectively, in 1997 and $975,807 and $260,024, respectively, in 1996.
xii. On May 24, 1996, a wraparound note held by MPI on a property
located in Roanoke, Virginia was paid as a result of the sale of such property
by its owner, an MPI affiliate, to an unrelated party. The sale price was
approximately $2,150,000, resulting in net cash proceeds of $515,965 and a
book gain of $393,768 to MPI. In conjunction with the sale of such property,
Centaur Leasing Company, Inc., a wholly owned subsidiary of MPI ("Centaur")
and the lessee under the master lease on such property, cancelled such master
lease.
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xiii. On November 1, 1996, a wraparound note held by MPI on a
property located in Southington, Connecticut was paid as a result of the sale
of such property by its owner, an MPI affiliate, to an unrelated party. The
sale price was approximately $2,745,000, resulting in net cash proceeds of
$245,280 and a book loss of $127,020 to MPI. In conjunction with the sale of
such property, Centaur, as the lessee on the master lease on such property,
cancelled such master lease.
xiv. On June 12, 1997, a wraparound note and a non-recourse
underlying mortgage held by MPI on a property located in Prattville, Alabama
were satisfied as a result of the foreclosure sale of such property by the
lender of the underlying mortgage, resulting in a book gain of approximately
$120,000 to MPI. In conjunction with the foreclosure sale of such property,
Centaur, as the lessee on the master lease on such property, canceled such
master lease.
xv. On October 30, 1997, a wraparound note held by MPI on a property
located in Marion, Ohio was paid as a result of the sale of such property by
its owner, an MPI affiliate, to an unrelated party. The sale price of the
property was approximately $2,750,000, resulting in net cash proceeds of
$986,108 and a book gain of approximately $200,000 to MPI. In conjunction with
the sale of such property, Centaur, as the lessee on the master lease on such
property, canceled such master lease.
xvi. On February 9, 1998, a wraparound note held by MPI on a property
located in Chili, New York was assigned to an unrelated party. At the time,
such wraparound note had a carrying value of $1,477,010 and was assigned for
$75,000 in cash and the relief of a non-recourse underlying mortgage
obligation of MPI that had a principal balance outstanding of $1,477,010,
resulting in a book gain to MPI of approximately $75,000.
xvii. On July 7, 1998, MPI completed the sale of the Mountain View
Mall located in Bend, Oregon, to an unrelated party, for approximately
$17,750,000. After paying expenses and satisfying the balance of the
underlying first mortgage debt on the Bend property, which was approximately
$17,065,000, MPI realized net cash proceeds from the sale of approximately
$319,200 and a book gain of approximately $848,000.
xviii. On September 21, 1998, a wraparound note held by MPI on a
property located in Vestivia Hills, Alabama was paid as a result of the sale
of such property by its owner, an MPI affiliate, to an unrelated party. The
sale price of the property was approximately $1,640,000, resulting in net cash
proceeds of $875,334 and a book gain of approximately $338,000 to MPI. In
conjunction with the sale of such property, Centaur, as the lessee on the
master lease on such property, cancelled such master lease.
xix. On October 1, 1998, a wraparound note held by MPI on a property
located in South Williamson, Kentucky was paid as a result of the sale of such
property by its owner, an MPI affiliate, to an unrelated party. The sale price
of the property was $14,873,655, resulting in net cash proceeds of $100,000
and a book gain of approximately $4,400,000 to MPI. In conjunction with the
sale of such property, Centaur, as the lessee on the master lease on such
property, cancelled such master lease.
xx. From August 1994 to November 1997, one of the focuses of MPI was
on investment opportunities and, in particular, the purchasing of issues of
mortgage loan securitizations which were backed by mortgage loans on
commercial and multi-family dwellings
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("CMBSs"). To facilitate the purchase of CMBSs, short term borrowing
arrangements ("Loans Payable") were entered into with the brokers from which
such securitizations were purchased. MPI engaged in a variety of interest rate
management techniques in order to attempt to manage the effective maturity
and/or interest rate risks associated with the CMBSs. Such techniques included
selling short U.S. Treasury Notes which were collateralized by reverse
repurchase agreements.
MPI had $32,314,853 and $37,594,939 of CMBS as of December 31, 1996
and 1995, respectively, and $23,829,335 and $27,450,954 of associated Loans
Payable as of December 31, 1996 and 1995, respectively. Additionally, MPI had
$33,952,346 and $32,823,439 of U.S. Treasury Notes sold short as of December
31, 1996 and 1995, respectively, and $34,718,749 and $33,119,375 of associated
reverse repurchase agreements as of December 31, 1996 and 1995.
On January 23, 1997, MPI sold its ownership of the CMBS consisting of
a Nomura Series 1994-MD1 B3A (the "MD1 Certificate") to an unrelated party and
repaid the associated Loan Payable. At the time of the sale of the MD1
Certificate, MPI had outstanding U.S. Treasury Note short positions totaling
$10,000,000 associated with the MD1 Certificate. In connection with the sale
of the MD1 Certificate, MPI closed $9,500,000 of U.S. Treasury Note short
positions. As a result of the sale, MPI realized a book loss of approximately
$1,100,000.
On November 10, 1997, MPI sold its remaining ownership of the CMBSs
consisting of a Nomura Series 1996-MDV B2 certificate (the "MDV Certificate"),
a DLJ 1994-MF11 B2 certificate (the "B2 Certificate"), and a DLJ 1994-MF11 B3
certificate (the "B3 Certificate") (the MDV Certificate, the B2 Certificate
and the B3 Certificate may be referred to collectively herein as the
"Certificates") to unrelated parties and repaid the associated Loans Payable.
At the time of the sale of the Certificates, MPI had outstanding U.S. Treasury
Note short positions totaling $25,500,000 associated with the Certificates. In
connection with the sale of the Certificates, MPI closed all such remaining
U.S. Treasury Note short positions. As a result of the sale, MPI realized a
book gain of approximately $3,500,000.
Item 4. Terms of the Transaction.
(a) Information regarding the material terms of the Rule 13e-3
transaction is set forth in the Settlement Notice under the caption "The
Settlement", which is incorporated herein by reference. In general, such
transaction arises out of a proposed settlement of a purported class action
and derivative lawsuit. In the Pending Actions, John Winston, the named
plaintiff and an MPI Preferred Stockholder purporting to bring the action on
behalf of himself and the other MPI Preferred Stockholders and derivatively on
behalf of MPI, alleges that in connection with (i) the Acquisition (see the
response set forth in Items 3(a) and (b), paragraph (i), of this Schedule
13E-3), (ii) the Transfer (see the response set forth in Items 3(a) and (b),
paragraph (iii), of this Schedule 13E-3) and (iii) the Distribution (see the
response set forth in Items 3(a) and (b), paragraph (iv), of this Schedule
13E-3) (the Acquisition, the Transfer and the Distribution are collectively
referred to herein as the "Transactions"), MPI and its directors engaged in
self-dealing and breached their fiduciary duties of good faith and fair
dealing to the MPI Preferred Stockholders. The plaintiff claimed, among other
things, that, as a result of the Transactions, MPI would not have sufficient
funds to pay dividends on the MPI Preferred Stock and that the properties
acquired in the Acquisition were grossly inferior to the UPI Properties.
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The Proposed Settlement would be effected pursuant to the Settlement
Agreement that was entered into on August 5, 1998 between counsel for John
Winston, the named plaintiff in the Pending Actions, and counsel for the named
defendants therein (Leonard S. Mandor, Robert A. Mandor, Joan LeVine, Harvey
Jacobson, Gregory McMahon and Geoffrey S. Aaronson (each of whom was a
director of MPI at the time that the Transactions were approved and effected),
MPI and Concord). Pursuant to the Settlement Agreement, each MPI Preferred
Stockholder that is eligible to participate in the Proposed Settlement and who
does not opt out of the Proposed Settlement would be required to exchange all
of such holders shares of MPI Preferred Stock with MPI for $3.00 in cash for
each share of MPI Preferred Stock surrendered to MPI by such holder and the
release by such holder of all claims against the Defendants relating to the
Transactions.
To properly opt out of the Proposed Settlement, an MPI Preferred
Stockholder who is eligible to participate in the Proposed Settlement must
mail a letter to the Register in Chancery and to each counsel of record for
the parties to the Pending Actions prior to the day that is 45 days from the
date that the Settlement Notice is first mailed to MPI Preferred Stockholders
setting forth (i) his or her name, address, social security number or employer
identification number, as applicable, and telephone number, (ii) the number of
shares of MPI Preferred Stock owned and, if available, the certificate
number(s) of the stock certificate(s) representing such shares of MPI
Preferred Stock, (iii) if the shares of MPI Preferred Stock are not or were
not held of record or registered in such holder's name on the books and
records of MPI, the letter must indicate the name or brokerage firm and
account in which such shares of MPI Preferred Stock were registered and
include evidence of such holder's ownership thereof, and (iv) that he or she
elects to opt out of the Proposed Settlement. Any MPI Preferred Stockholder
who is eligible to participate in the Proposed Settlement but does not return
an opt-out election meeting the above requirements on or prior to the time set
forth above will be deemed a member of the Settlement Class and will be bound
by, and subject to, the terms and conditions of the Settlement Agreement and
all court orders affecting the Settlement Class. All shares of MPI Preferred
Stock acquired by MPI pursuant to the Proposed Settlement would be cancelled.
Consummation of the Proposed Settlement is subject to the approval of the
Court as to the fairness of the Proposed Settlement as well as a number of
other conditions which may be waived at the option of the Defendants,
including the condition that holders eligible to participate in the Proposed
Settlement who hold more than 10% of the shares of MPI Preferred Stock
outstanding as of the close of business on August 25, 1998, the date that MPI
has set as the record date for the Rule 13e-3 transaction, do not opt out of
the Proposed Settlement. Notice of the Settlement Hearing will be sent to all
holders of record of shares of MPI Preferred Stock as of October 23, 1995 and
their successors in interest through the Settlement Effective Date and to all
holders of record of shares of the MPI Common Stock as of the Record Date and
their successors in interest through the Settlement Effective Date. The
Settlement Agreement provides that the Settlement Notice initially will be
sent to all holders of record of shares of MPI Preferred Stock as of October
23, 1995 and their successors in interest through the close of business on the
Record Date and to all holders of record of shares of MPI Common Stock as of
the close of business on the Record Date at least 60 days prior to the
Settlement Hearing.
The Settlement Notice initially will be sent to all holders of
record of shares of MPI Preferred Stock as of October 23, 1995 and their
successors in interest through the close of business on the Record Date and to
all holders of record of shares of MPI Common Stock as of the close of
business on the Record Date for the purpose of providing such persons with
substantive information regarding the terms of the Proposed Settlement and
their rights in
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connection therewith, as well as providing them with the procedural guidelines
to be followed for purposes of opting out of the Proposed Settlement and for
participating in the Preferred Settlement but appearing and objecting to the
terms of the Proposed Settlement at the Settlement Hearing. The Settlement
Notice will also be sent to the successor holders in interest of each class of
MPI stock who acquired (or acquire) their shares of MPI stock after the Record
Date through the Settlement Effective Date for the purpose of providing such
persons with substantive information regarding the terms of the Proposed
Settlement and their therewith, and, in connection with persons receiving the
Settlement Notice prior to the Settlement Hearing, procedural guidelines in
connection with appearing and objecting to the terms of the Proposed Settlement
at the Settlement Hearing.
The Defendants, members of their families, their affiliates and their
associates are not eligible to participate in the Proposed Settlement.
Anyone who owned shares of MPI Preferred Stock as of October 23, 1995
and their successors in interest through the date that is one day prior to the
Settlement Hearing who do not opt out of the Proposed Settlement, and anyone
who owned shares of MPI Common Stock as of the close of business on August 25,
1998 and their successors in interest through the date that is one day prior
to the Settlement Hearing, may submit objections to the Proposed Settlement by
appearing in person or by his or her attorney at the Settlement Hearing and
presenting evidence or arguments that may be proper and relevant. However, no
person other than the named plaintiff to the Pending Actions and his counsel
and the Defendants and their counsel are entitled to be heard, and no papers,
briefs, pleadings or other documents submitted by any such persons will be
received and considered by the Court (except if the Court, in its discretion,
otherwise directs upon application of such person and for good cause shown),
unless no later than 10 days prior to the Settlement Hearing (i) a written
notice of the intention to appear, (ii) a detailed statement of such person's
objections to any matter before the Court, and (iii) the grounds therefor or
the reasons why such person desires to appear and to be heard, as well as all
documents and writings which such person desires the Court to consider, are
served by hand or first class mail, postage prepaid, with the Register in
Chancery and the respective counsel of the named plaintiff to the Pending
Actions and the Defendants, as provided for in the Order Scheduling Fairness
Hearing and Approving Notice, the form of which is annexed to the Settlement
Agreement as Exhibit A. Any person who fails to object in the foregoing manner
will be deemed to have waived such objections and will be forever barred from
raising such objections or otherwise contesting the Proposed Settlement at the
Settlement Hearing or in any other action or proceeding. MPI Preferred
Stockholders who are eligible to participate in the Proposed Settlement and
who opt out of the Proposed Settlement cannot appear at the Settlement Hearing
and object to the Proposed Settlement. Such holders cannot participate in the
Settlement hearing because, by electing not to participate in the Proposed
Settlement, they would neither be bound by the terms of the Settlement
Agreement nor be eligible to receive the benefits of the Proposed Settlement.
Therefore, their rights as holders would not be effected in any meaningful way
by the outcome of the Settlement Hearing. Any person eligible to submit
objections at the Settlement Hearing but who does not, or believes that he
did not, receive a copy of the Settlement Notice with sufficient time to
object in the foregoing manner would need to apply to the Court for leave and
show good cause therefor in order to be heard.
MPI Preferred Stockholders who are eligible to participate in the
Proposed Settlement and who do not opt out of the Proposed Settlement are
entitled to appear, or be otherwise
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represented, at the Settlement Hearing and object to the terms of the Proposed
Settlement. However, such holders would not thereafter be eligible to opt out of
the Proposed Settlement even if their objections are not accepted by the Court
and the Proposed Settlement is not modified in such a way as to incorporate such
objections.
MPI Preferred Stockholders who acquired (or acquire) their shares of
MPI Preferred Stock after August 25, 1998 are not entitled to opt out of the
Proposed Settlement and, if the Proposed Settlement is approved, would only be
entitled to receive the settlement consideration if they hold shares of MPI
Preferred Stock on the Settlement Effective Date. MPI Preferred Stockholders
who acquired (or acquire) their shares of MPI Preferred Stock after the Record
Date are not (and will not be) eligible to opt out of the Proposed Settlement
because by acquiring their shares of MPI Preferred Stock after the Proposed
Settlement was publicly announced, they effectively "opted into" (or will
effectively "opt into") the Proposed Settlement. Since, pursuant to the
Settlement Agreement, the Defendants have the right not to proceed with the
Proposed Settlement if holders of more than 10% of the outstanding shares of
MPI Preferred Stock opt out of the Proposed Settlement, it was deemed
practical and fair to all parties to the Settlement Agreement for
administrative purposes to set a date for determining with certainty the
actual number of opt out shares.
Pursuant to Rule 13e-3(a)(3), the acquisition of the MPI Preferred
Stock by MPI is a "Rule 13e-3 transaction." See Item 5(f) of this Schedule
13E-3.
(b) There is no term or arrangement concerning the Rule 13e-3
transaction relating to any security holder of MPI which is not identical to
that relating to other security holders of the same class of securities of
MPI, except that, as described above, the Defendants and their affiliates are
not eligible to participate in the Proposed Settlement.
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a) Except for the cancellation of all shares of MPI Preferred Stock
acquired by MPI as part of the Proposed Settlement and as described in the
responses set forth in this Schedule 13E-3 to parts (b), (d) and (e) of Item
5, there are no plans or proposals of any of the Filers which relate to or
would result in an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving MPI or any of its subsidiaries.
(b) and (e) MPI entered into an agreement (the "SGSC Agreement") on
January 9, 1998, effective December 24, 1997, with Societe Generale Securities
Corporation ("SGSC") pursuant to which MPI and certain of its affiliates
retained SGSC to act as a financial advisor in connection with a transaction
(a "Proposed Transaction") involving the proposed sale by the partnerships
(the "Partnerships") of which affiliates of MPI and Concord are general
partners, of a number of shopping center properties owned by such affiliates
and the proposed sale by MPI of two retail properties. Certain of the shopping
center properties to be sold by the Partnerships are subject to wraparound
mortgages held by MPI which would need to be satisfied and released prior to
the consummation of a Proposed Transaction. The fee properties to be sold and
the wraparound mortgage debt to be repaid to MPI in connection with a Proposed
Transaction could represent a substantial portion of MPI's real estate related
assets.
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MPI and the Partnerships have been considering a Proposed Transaction
because they believe that the market for selling the types of properties
(community and neighborhood shopping centers and large, single-tenant
properties) being offered is favorable to their respective interests. A
Proposed Transaction involving the sale of community shopping centers and
other large properties (and related assets) would enable MPI to capitalize on
current market conditions and to continue to re-focus its efforts on the
ownership of smaller unanchored retail properties, in part by providing MPI
with cash to acquire additional smaller commercial properties and for other
corporate purposes. As part of this strategy, MPI purchased in September 1997,
a 16,994 square foot shopping center property located in Sunrise, Florida for
approximately $1,100,000, in April 1998, a 34,436 square foot shopping center
property located in Jacksonville, Florida for $2,150,000, in April 1998, a
21,509 square foot shopping center property located in Orange Park, Florida
for $1,500,000, in July 1998, a 22,589 square foot shopping center property
located in Boca Raton, Florida for $2,075,000, in September 1998, a 16,642
square foot shopping center property located in West Palm Beach, Florida for
$1,100,000, and in October 1998, a 63,346 square foot shopping center property
located in Jacksonville, Florida for $4,650,000.
(c) MPI has not paid dividends on the MPI Preferred Stock for more
than the past two years. As a result, the holders of the MPI Preferred Stock
have the right to elect an additional director to MPI's Board of Directors at
MPI's 1998 Annual Meeting of Stockholders or at a special meeting of
stockholders held for such purpose.
(d) Although MPI has not paid (and was not required to pay) dividends
on the MPI Preferred Stock for more than the past two years (nor is it
obligated to declare or pay dividends thereon in the future), it is not
precluded from paying dividends on the MPI Preferred Stock and may determine
to do so at any time in the future. Any decision as to the payment of
dividends in the future on the MPI Preferred Stock will depend, in part, on
MPI's results of operations and financial condition at that time and on such
other factors as MPI's Board of Directors deems relevant.
Although MPI believes that immediately subsequent to the Proposed
Settlement it would have sufficient cash to continue operating in the ordinary
course of business for the next 12 months, MPI is considering opportunities to
acquire additional properties which would require MPI to raise funds through a
public or private sale of debt or equity securities, by conducting rights
offerings, by selling or realizing on assets (including, but not limited to, a
Proposed Transaction (as discussed in the response set forth in this Schedule
13E-3 to parts (b) and (e) of Item 5 of Schedule 13E-3) or other sales of its
properties and interests in wraparound mortgage notes), through corporate
borrowings, or by other means. Because of (i) the conditional nature of any
Proposed Transaction, (ii) the considerable time horizon necessary to
consummate a Proposed Transaction once one is negotiated, and (iii) the
current condition of the domestic economic market which, in MPI's belief, is
not favorable to other alternatives, MPI would probably conduct a rights
offering if it decided that it would be beneficial to raise additional
capital. In a rights offering, MPI would offer existing holders of shares of
MPI Common Stock rights to acquire additional shares of MPI Common Stock in
exchange for monetary consideration in order to obtain funds to be used to
finance potential property acquisitions. The foregoing is a forward looking
statement and there can be no assurances that MPI will be able to undertake
successfully, if at all, such a transaction. If MPI conducts a rights
offering, it would need to issue additional shares of MPI Common Stock and to
amend its Certificate of Incorporation in order to authorize the issuance of
such additional shares of MPI Common Stock.
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MPI's Certificate of Incorporation currently authorizes it to issue up to
10,000,000 shares of MPI Common Stock and, as of October 15, 1998, 4,251,042
shares thereof were outstanding. If MPI conducts such a rights offering, holders
of shares of MPI Common Stock who do not participate therein would have the
aggregate value of their shares of MPI Common Stock, as well as their ownership
interest in MPI, diluted.
(f) If holders of a sufficient number of shares of the MPI Preferred
Stock participate in the Rule 13e-3 transaction pursuant to the Proposed
Settlement, the MPI Preferred Stock would become eligible for termination of
registration.
(g) There are no plans or proposals of MPI which relate to or would
result in the suspension of MPI's obligation to file reports pursuant to
Section 15(d) of the Exchange Act.
Item 6. Source and Amount of Funds or Other Consideration.
(a) The total amount of funds necessary for the purchase of the
maximum number of shares of MPI Preferred Stock to be acquired in the Rule
13e-3 transaction is $8,980,989. Additional expenses of approximately
$1,400,000 are anticipated to be incurred in connection with the Rule 13e-3
transaction. The source of the funds necessary to effectuate such transaction
would be from MPI's existing cash reserves.
MPI maintains a directors and officers insurance and company
reimbursement policy (the "National Policy") issued by National Union Fire
Insurance Company of Pittsburgh, PA ("National Union") with a $2,000,000 limit
and an excess directors and officers liability and company reimbursement
policy (the "Stonewall Policy") with Stonewall Surplus Lines Insurance Company
("Stonewall") with a $2,000,000 limit. MPI believes that the amounts that it
would have to pay pursuant to the Proposed Settlement and in connection with
the Pending Actions would be covered losses under both the National Union
Policy and the Stonewall Policy. In addition, MPI believes that the legal fees
and other expenses incurred by MPI and the other Defendants in connection with
the Pending Actions are also covered losses under the National Union and
Stonewall Policies. In connection with a previous proposed settlement of the
Pending Actions which was never consummated, the terms of which are described
in the response to Item 7(b) of this Schedule 13E-3, National Union and
Stonewall both refused to contribute to such proposed settlement, asserting
that such proposed settlement did not encompass any covered loss (as defined
in the National Policy and the Stonewall Policy, respectively). On January 29,
1998, the Filers, along with the other Defendants, commenced a lawsuit in the
United States District Court for the Southern District of New York against
National Union and Stonewall in connection with such refusal to contribute to
such proposed settlement. In the complaint, the plaintiffs alleged that
National Union and Stonewall wrongfully failed to contribute to the proposed
settlement and sought reimbursement from National Union and Stonewall up to
the limits of their respective policies. National Union and Stonewall both
answered the complaint and denied liability. As a result of the termination of
the previously proposed settlement, MPI on one hand, and Stonewall and
National Union, on the other hand, agreed to dismiss such action without
prejudice and such action was dismissed on May 29, 1998 by the United States
District Court for the Southern District of New York. MPI has given National
Union and Stonewall notices of the Proposed Settlement and has provided each
of them with a copy of the Settlement Agreement. National Union has reviewed
the Proposed Settlement and has informed MPI that its basic position, denying
coverage, has not changed and, therefore, it is likely that MPI will assert a
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claim against National Union. If Stonewall also asserts that the Proposed
Settlement is not a covered loss under the Stonewall Policy, it is likely that
MPI would assert a claim against Stonewall. MPI is not in a position to render
an opinion as to the likelihood of success of any such action if one is
commenced.
(b) The expenses incurred or estimated to be incurred in connection
with the Rule 13e-3 transaction, which would be paid by MPI, are as follows:
Plaintiff's attorneys'
fees and expenses $ 750,000
Cash payment 8,982,621
Printing and mailing 100,000
Accounting fees 15,000
Exchange agent fees 15,000
MPI's legal fees and expenses 500,000
Miscellaneous 20,000
------------
Total $ 10,382,621
The aggregate amount of MPI's legal fees and expenses, incurred and
estimated to be incurred, set forth above, includes amounts previously paid.
(c) No part of such funds discussed in paragraph (b) of this Item 6
or any other consideration is expected to be, directly or indirectly, borrowed
for the purpose of the Rule 13e-3 transaction.
(d) No part of the funds to be used in the Rule 13e-3 transaction is
to be from a loan made by a bank.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a) The Rule 13e-3 transaction is being effected in connection with
the Proposed Settlement, which is described in Item 4(a) of this Schedule
13E-3 and in the Settlement Notice.
(b) The Proposed Settlement arose from arm's length negotiations
between counsel to the Filers and the other Defendants, on one hand, and
independent counsel for the MPI Preferred Stockholders (the plaintiff class in
the purported class action), on the other hand. As originally proposed, the
MPI Preferred Stockholders would have received $.50 in cash and a $2.50
principal amount non-interest bearing eight-year note for each share of MPI
Preferred Stock and the release of all claims against any and all of the
Defendants relating to the Transactions. After negotiations with independent
counsel for the MPI Preferred Stockholders, the terms of the Proposed
Settlement were modified, at such counsel's request, to $.75 in cash and a
$2.25 redeemable preferred share of an affiliate of Concord in exchange for
each share of MPI Preferred Stock and the release of all claims against any
and all of the Defendants relating to the Transactions, and a settlement
agreement, subject to certain conditions similar to those of the Proposed
Settlement, including court approval, was entered into memorializing such
terms. The closing price on the NYSE of the MPI Preferred Stock on the day
immediately prior to the public announcement of the first proposed settlement
was $.50 per share. In connection with such proposed settlement, the
Defendants' counsel sent a letter (the "No-Action Request") to the Office of
the Chief Counsel of the Division of Corporate Finance of the SEC requesting
that the
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staff (the "Staff") of the SEC affirmatively concur with certain determinations
of MPI and its counsel relating to certain exemptions from registration
regarding the redeemable preferred stock of the Concord affiliate and other
filing requirements and notice procedures implicated by such settlement
agreement. During the period of time after such settlement agreement was entered
into by the parties to the Pending Actions and while the Defendants and their
counsel were communicating with the Staff regarding the issues presented in the
No-Action Request, MPI's financial condition improved and the SGSC Agreement was
entered into, making the consummation of a Proposed Transaction more likely. As
a result, independent counsel for the MPI Preferred Stockholders withdrew its
support of such settlement agreement. After further negotiations between
independent counsel for the MPI Preferred Stockholders and counsel to MPI and
the other Defendants, the terms of the proposed settlement were again modified,
pursuant to a proposal by independent counsel to the MPI Preferred Stockholders,
to the current terms of $3.00 in cash, payable by MPI, for each share of MPI
Preferred Stock and the release of all claims against any and all of the
Defendants relating to the Transactions, and the Settlement Agreement was
entered into memorializing such terms. The closing price on the OTC Bulletin
Board of the MPI Preferred Stock on the day immediately prior to the public
announcement of the Proposed Settlement was $.875 per share.
Other resolutions of the Pending Actions (including judicial
determination of the Pending Actions) may not have resulted in a Rule 13e-3
transaction.
(c) The Rule 13e-3 transaction was structured as an acquisition by
MPI of each share of MPI Preferred Stock held by MPI Preferred Stockholders or
their successors in interest eligible to participate in the Proposed
Settlement who do not properly opt out of the Proposed Settlement and the
release of all claims against any and all of the Defendants relating to the
Transactions by such MPI Preferred Stockholders, or such successors in
interest, for $3.00 per share, payable in cash by MPI. To receive his or her
settlement consideration, an MPI Preferred Stockholder (other than any of the
Defendants, members of their families, their affiliates and their associates,
none of whom are entitled to participate in the Proposed Settlement at the
request of the independent counsel to the MPI Preferred Stockholders) must
surrender for acquisition by MPI all (and not less than all) of the shares of
MPI Preferred Stock owned by such holder together with a letter of transmittal
which provides for the release of all claims such holder may have against the
Defendants in connection with the Transactions as of the Settlement Effective
Date. As a result of, and upon, the consummation of the Proposed Settlement,
unless an MPI Preferred Stockholder who is eligible to participate in the
Proposed Settlement opts out of the Proposed Settlement in the manner and
within the time period provided for in the Settlement Agreement, all claims of
such holder against any and all of the Defendants relating to the Transactions
would be released and all shares of MPI Preferred Stock held by such MPI
Preferred Stockholder would cease to be outstanding and would be cancelled and
retired and would cease to exist as of the Settlement Effective Date, and such
holder would thereafter cease to have any rights with respect to such shares,
except the right to receive, without interest, the settlement consideration,
in each case, whether or not such MPI Preferred Stockholder has delivered to
MPI certificates representing his or her shares of MPI Preferred Stock (or
some other indicia of ownership thereof acceptable to MPI) and/or a letter of
transmittal therefor. MPI Preferred Stockholders who do not opt out of the
Proposed Settlement must surrender the certificates representing their shares
of MPI Preferred Stock (or some other indicia of ownership thereof acceptable
to MPI) in order to receive the settlement consideration. The transaction
would allow the MPI Preferred Stockholders (the plaintiff class) to obtain
cash
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immediately for their claims against the Defendants and shares of MPI Preferred
Stock and allow both sides to avoid the costs and risks of continued litigation.
The Rule 13e-3 transaction would be entered into pursuant to the Court's order
approving the Proposed Settlement. In approving the Proposed Settlement, the
Court would be required under Delaware law to determine that the Proposed
Settlement is fair, reasonable, adequate and in the best interests of MPI and
its stockholders and the Settlement Class.
(d) The Rule 13e-3 transaction is expected to have the following
economic effects on MPI, its affiliates, and its unaffiliated security
holders:
There will be a reduction of MPI's cash reserves by approximately
$10.4 million as a result of the payment of the cash portion of the Proposed
Settlement ($9.0 million), the legal fees and expenses of the plaintiff class
attorneys ($750,000) and MPI's counsel ($500,000 (including amounts already
paid)) and other estimated expenses to be incurred in connection with the
Proposed Settlement ($100,000). (MPI's unrestricted cash reserves as of June
30, 1998 were approximately $12.8 million, and can fluctuate significantly
with the acquisition and disposition of properties.) MPI believes that
immediately subsequent to the Proposed Settlement, it would have sufficient
cash to continue operating in the ordinary course of business for the next 12
months. The foregoing is a forward-looking statement and there can be no
assurances that this would be the case. Factors which could cause such a
statement to become untrue include the fact that (i) MPI's plans, strategies,
objectives, expectations and intentions are subject to change at any time at
the discretion of MPI; (ii) general economic and business conditions, which,
among other things, affect the demand for retail space or retail goods,
availability, and creditworthiness of prospective tenants, lease rents and the
terms and availability of financing, are subject to change; (iii) adverse
changes in the real estate markets including, among other things, competition
with other companies, may occur; and (iv) adverse changes in the properties
owned by MPI could require the expenditure of funds to fix or maintain such
properties.
Although MPI believes that immediately subsequent to the Proposed
Settlement it would have sufficient cash to continue operating in the ordinary
course of business for the next 12 months, MPI is considering opportunities to
acquire additional properties which would require MPI to raise funds through a
public or private sale of debt or equity securities, by conducting rights
offerings, by selling or realizing on assets (including, but not limited to, a
Proposed Transaction (as discussed in the response set forth to parts (b) and
(e) to Item 5 of Schedule 13E-3) or other sales of its properties and
interests in wraparound mortgage notes), through corporate borrowings, or by
other means.
To the extent that the costs incurred by MPI in connection with the
Proposed Settlement, including, without limitation, the cash settlement
consideration to be paid to the MPI Preferred Stockholders who do not opt out
of the Proposed Settlement, attorneys' fees and other expenses, are allocable
to the acquisition of the shares of MPI Preferred Stock to be acquired by MPI
pursuant to the Proposed Settlement, no federal income tax benefits will be
available to MPI as a result thereof. To the extent, if any, that the costs
incurred by MPI in connection with the Proposed Settlement, including, without
limitation, the cash settlement consideration to be paid to the MPI Preferred
Stockholders who do not opt out of the Proposed Settlement, attorneys' fees
and other expenses, are allocable to the release of claims provided for
pursuant to the Proposed Settlement, MPI may be entitled to a federal income
tax deduction in such amounts, although this matter is not free from doubt.
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A corporation that is a personal holding company ("PHC") is subject
not only to regular federal corporate income tax (at rates as high as 35%),
but is also subject to an additional tax of 39.6% on undistributed personal
holding company income (generally, the net income after taxes of the PHC on a
consolidated basis with any subsidiaries, subject to certain adjustments, to
the extent not distributed to stockholders). A PHC is any corporation (i) more
than 50% of the stock of which, measured by value, is owned, directly or
indirectly, by five or fewer individuals (the "stock test") and (ii) which
receives 60% or more of its consolidated gross income, subject to certain
adjustments, from certain passive sources (the "income test").
If the Proposed Settlement were to be effected (which would not be
expected to occur prior to the end of 1998) and none or only a small number of
the eligible MPI Preferred Stockholders opted out of the Proposed Settlement,
more than 50% of the outstanding shares of all stock of MPI, by value,
thereafter would be owned, directly or indirectly, by five or fewer
individuals. Absent changes in MPI's business activities and/or a sale of its
wraparound mortgage positions, it is currently anticipated that for 1999 and
thereafter, MPI would derive more than 60% of its consolidated gross taxable
income from passive sources such as interest and, therefore, it is likely that
MPI would be classified for federal income tax purposes as a PHC for 1999 and
thereafter. MPI intends to manage its affairs for 1999 and thereafter so as to
attempt to avoid or minimize the imposition of the PHC tax, including by means
of restructuring its holdings and/or its corporate structure, or changing its
business and investment strategies to alter the nature of its income to the
extent consistent with its other business goals, but no assurances can be
given in this regard. It may be necessary for 1999 and thereafter for MPI to
cause "consent" or "deficiency" dividends to be deemed paid to its
stockholders to avoid the PHC tax. If this were done, MPI's stockholders would
be required to pay tax on such deemed dividends for which they would receive
no cash to pay the tax thereon. MPI will seek to minimize its stockholders'
exposure to income tax as a result of consent or deficiency dividends.
Concord and its affiliates would continue to own beneficially
approximately 71% of the outstanding shares of MPI Common Stock and, if none
of the MPI Preferred Stockholders eligible to participate in the Proposed
Settlement opt out of the Proposed Settlement, Concord and its affiliates
would own beneficially a majority of the outstanding shares of MPI Preferred
Stock. Therefore, Concord and its affiliates could control the vote on all
matters submitted to holders of either class of MPI's stock, including the
election of directors and extraordinary corporate transactions, such as
mergers. This would not have any immediate effect on the unaffiliated MPI
Common Stockholders, since Concord and its affiliates already control MPI and
the unaffiliated MPI Common Stockholders' shares are already subject to the
MPI Preferred Stock liquidation and dividend preferences. However, if holders
of a sufficient number of shares of MPI Preferred Stock participate in the
Proposed Settlement, the possibility that Concord and its affiliates would
lose absolute control (although Concord probably would not lose effective
control) of MPI would be eliminated (Concord and its affiliates currently
would own beneficially approximately 40% of the outstanding shares of MPI
Common Stock on a fully diluted basis, as each share of MPI Preferred Stock is
currently convertible, for no consideration, into 1.1 shares of MPI Common
Stock). Generally, holders of shares of MPI Preferred Stock do not have voting
rights except in connection with the election of one director to MPI's Board
of Directors (or two directors if, as is currently the case, MPI does not pay
dividends on the MPI Preferred Stock for a period of time) and, under Delaware
law and the Certificate of Designations of the MPI Preferred Stock, in
connection with certain extraordinary corporate actions that could affect the
rights of holders of shares of MPI Preferred Stock (i.e., by amending the
terms and provisions of the MPI
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Preferred Stock in a manner which would adversely affect the rights or
preferences of the MPI Preferred Stock (e.g., by creating a class of stock (or
security convertible into a class of stock) that ranks pari passu or is superior
to the MPI Preferred Stock, or by increasing the authorized number of shares of
MPI Preferred Stock)).
As a result of, and upon, the consummation of the Proposed Settlement,
unless an MPI Preferred Stockholder who is eligible to participate in the
Proposed Settlement opts out of the Proposed Settlement, all shares of MPI
Preferred Stock held by such MPI Preferred Stockholder would cease to be
outstanding and would be cancelled and retired and would cease to exist as of
the Settlement Effective Date, and such holder would thereafter cease to have
any rights with respect to such shares, except the right to receive, without
interest, the settlement consideration upon the surrender to MPI of his or her
certificates representing such shares (or some other indicia of ownership
thereof acceptable to MPI). MPI Preferred Stockholders who are eligible to
participate in the Proposed Settlement and who do not opt out of the Proposed
Settlement would receive $3.00 in cash from MPI in exchange for each share of
MPI Preferred Stock surrendered to MPI and the release of all claims of such
holders against the Defendants relating to the Transactions. MPI Preferred
Stockholders who are eligible to participate in the Proposed Settlement but opt
out will retain their shares of MPI Preferred Stock and all of the rights
incidental thereto, including the liquidation and dividend preferences, and will
not release their claims against the Defendants relating to the Transactions.
MPI Preferred Stockholders who do not opt out of the Proposed Settlement must
surrender the certificates representing their shares of MPI Preferred Stock (or
some other indicia of ownership thereof acceptable to MPI) in order to receive
the settlement consideration. There are currently approximately 1,597 holders of
the MPI Preferred Stock. If a sufficient number of holders of the MPI Preferred
Stock participate in the Rule 13e-3 transaction pursuant to the Proposed
Settlement (i.e., by not "opting out") and, as a result, there are fewer than
300 MPI Preferred Stockholders, the MPI Preferred Stock would become eligible
for termination of registration pursuant to Section 12(g) of the Exchange Act
and the rules promulgated thereunder.
In general, for U.S. federal income tax purposes, the Proposed
Settlement should result in a holder of MPI Preferred Stock who does not opt
out realizing gain (or loss) equal to the amount by which the settlement
proceeds paid to such holder exceeds (or is less than) such holder's tax basis
in his or her MPI Preferred Stock. The gain (or loss) generally should be
capital gain (or loss) if such holder holds the MPI Preferred Stock as a
capital asset, and generally should be long-term capital gain or loss if such
holder has held his or her MPI Preferred Stock in excess of one year (such
capital gain (or loss) should result whether or not the settlement proceeds
are allocable to the redemption of the MPI Preferred Stock or to the release
of claims against the Defendants). However, to the extent that a portion of a
settlement payment to a holder of MPI Preferred Stock is properly allocable to
a release of claims against the Defendants, and not to the redemption of the
MPI Preferred Stock, the Internal Revenue Service could take the position that
such amount (or a portion thereof) is appropriately characterized as ordinary
income and not capital proceeds. This matter is not free from doubt.
See Item 8(b) of this Schedule 13E-3 for a discussion of certain
economic benefits MPI believes will be received by each of the MPI Preferred
Stockholders and the MPI Common Stockholders.
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Item 8. Fairness of the Transaction.
(a) Each of the Filers believes that the Rule 13e-3 transaction would
be fair to the unaffiliated stockholders of MPI. No director of MPI dissented
to or abstained from voting on the Proposed Settlement, which, if effected,
would result in the Rule 13e-3 transaction.
(b) The foregoing belief is based principally upon the fact that the
Proposed Settlement cannot be consummated unless the Court concludes after a
hearing (in which all interested parties are invited to participate) that the
Proposed Settlement is fair to MPI, the Settlement Class and the MPI Common
Stockholders, both substantively and procedurally. The belief is also based
upon the cash to be received by the holders of the MPI Preferred Stock as
compared to such stock's market price immediately prior to the public
announcement of the Proposed Settlement (and prior to the public announcement
of an earlier settlement proposal), the MPI Preferred Stock's current market
price ($2.00 per share on October 15, 1998), and the illiquidity of the market
for the MPI Preferred Stock.
The Rule 13e-3 transaction would provide significant value to the
holders of the MPI Preferred Stock. Immediately prior to the public
announcement of the Proposed Settlement, the MPI Preferred Stock traded
sporadically, in low volume, and had a market value of approximately $.875 per
share. MPI is not obligated to declare or pay (and has not paid for more than
two years) any dividends on such stock. The MPI Preferred Stockholders have no
means to compel dividends to be declared or paid. In addition, MPI is under no
obligation to redeem the MPI Preferred Stock. Under the terms of the Proposed
Settlement, as soon as practicable after the Settlement Effective Date, MPI
would acquire from MPI Preferred Stockholders who are eligible to participate
in the Proposed Settlement and who do not opt out of the Proposed Settlement,
all of such holders' shares of MPI Preferred Stock and their release of all
claims against the Defendants relating to the Transactions for $3.00 in cash
per share, payable by MPI. As a result of, and upon, the consummation of the
Proposed Settlement, unless an MPI Preferred Stockholder who is eligible to
participate in the Proposed Settlement opts out of the Proposed Settlement,
all claims of such holder against any and all of the Defendants relating to
the Transactions would be released and all shares of MPI Preferred Stock held
by such MPI Preferred Stockholder would cease to be outstanding and would be
cancelled and retired and would cease to exist as of the Settlement Effective
Date, and such holder would thereafter cease to have any rights with respect
to such shares, except the right to receive, without interest, the settlement
consideration, in each case, whether or not such MPI Preferred Stockholder has
delivered to MPI certificates representing his or her shares of MPI Preferred
Stock (or some other indicia of ownership thereof acceptable to MPI) and/or a
letter of transmittal therefor. Any eligible MPI Preferred Stockholder who
does not opt out of the Proposed Settlement must exchange all (and not less
than all) of such holders shares of MPI Preferred Stock together with a letter
of transmittal providing for his or her release of claims with MPI in order to
receive his or her settlement consideration. MPI would cancel all shares so
acquired. Although the MPI Preferred Stock has a $10 liquidation preference,
there is no current intention to liquidate by MPI and no means for the MPI
Preferred Stockholders to force liquidation and realize such preference.
However, MPI's Board of Directors has the power to declare dividends and to
recommend to the MPI Common Stockholders that MPI be liquidated and would
continue to have such power if the Proposed Settlement is consummated, and
there can be no assurance that MPI would not thereafter declare dividends on
the MPI Preferred Stock or seek to effect a liquidation.
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The net book value of the MPI Preferred Stock was $8.06 per share as
of June 30, 1998. However, unlike the proposed payment of the settlement
consideration, there is no current likelihood of MPI Preferred Stockholders
realizing the net book value of the MPI Preferred Stock (or the net book value
of the MPI Common Stock, after conversion of the MPI Preferred Stock), because
such holders cannot force MPI's liquidation and there is no current intention
to liquidate by MPI (although the MPI Board of Directors always has the right
to seek liquidation). In addition, even if MPI were to be liquidated, any cash
received from the disposition of its assets would be offset by expenses, which
could be significant, including, but not limited to, wind-down expenses, lease
termination fees, taxes and termination and severance payments. After payment
of cash expenses and the satisfaction of all debts having priority over the
MPI Preferred Stockholders' liquidation preference, MPI estimates that the net
proceeds of the liquidation available to MPI Preferred Stockholders, on a per
share basis, would be significantly lower than the net book value of such
shares (which was $8.06 per share as of June 30, 1998), which is less than the
full $10 per share liquidation preference. The net book value of the MPI
Common Stock (assuming conversion of all of the outstanding shares of MPI
Preferred Stock into MPI Common Stock at a rate of 1.1 shares of MPI Common
Stock for each share of MPI Preferred Stock converted) as of June 30, 1998 was
$3.20 per share, which is not substantially more than the $3.00 per share
(including the portion thereof allocable to the release of claims) that MPI
Preferred Stockholders would receive in the Proposed Settlement.
The required Court approval of the Proposed Settlement is also
significant to the belief of the Filers that the Rule 13e-3 transaction is
fair because in approving the Proposed Settlement, the Court would be
necessarily passing upon the fairness, reasonableness and adequacy of the
consideration to be received by the MPI Preferred Stockholders.
The Filers also believe that the Rule 13e-3 transaction is fair
because the unaffiliated holders of the MPI Common Stock would benefit from
the Proposed Settlement. The claims in the purported class action include a
claim that the conversion ratio for the MPI Preferred Stock should be
significantly higher than the current ratio of 1.1 shares of MPI Common Stock
for each share of MPI Preferred Stock. If the plaintiff were to be successful
on such claim, the ownership interests of the MPI Common Stockholders could be
significantly diluted. In addition, the MPI Common Stockholders would benefit
from the elimination of the plaintiff's other claims which could result in
significant cost and expense to MPI associated with continued litigation.
Concord and its affiliates, to the Filers' knowledge, own in the
aggregate 5,672 shares of MPI Preferred Stock and certain of the Defendants
and other persons who are associated with Concord and MPI own in the aggregate
an additional 372 shares of MPI Preferred Stock. Since Concord and its
affiliates (as well as the other Defendants, members of their families, their
affiliates and their associates who are not affiliated with Concord) are
prohibited from participating in the Proposed Settlement under the terms of
the Settlement Agreement unless holders of at least 5,300 shares of the MPI
Preferred Stock opt out of the Rule 13e-3 transaction (or holders of at least
6,044 shares of the MPI Preferred Stock if the other Defendants and their
associates who are prohibited from participating in the Proposed Settlement
and who own 372 shares of the MPI Preferred Stock act in concert with
Concord), Concord and its affiliates (together with such other Defendants and
their associates acting in concert with Concord and its affiliates, if
applicable) would own beneficially a majority, and therefore control any vote
by the holders, of the MPI Preferred Stock. Nonetheless, even if Concord and
its affiliates gain control of the vote of the MPI Preferred Stock, there
would be no legal effect on the rights of unaffiliated
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MPI Common Stockholders because the preferential terms of the MPI Preferred
Stock vis-a-vis the MPI Common Stock will be unchanged and Concord and its
affiliates already control MPI via their approximate 71% beneficial ownership of
the MPI Common Stock. However, subject to the fulfillment of the fiduciary
obligations owed by MPI's Board of Directors to the unaffiliated holders of
shares of MPI's Common Stock, Concord and its affiliates would be in a position
to approve corporate actions that benefit the holders of shares of MPI Preferred
Stock but adversely affect the holders of shares of MPI Common Stock.
(c) The Proposed Settlement will be submitted to the Court for
approval, but if MPI Preferred Stockholders who are eligible to participate in
the Proposed Settlement and who hold more than 10% of the shares of MPI
Preferred Stock that are outstanding as of the close of business on August 25,
1998, the date that MPI has set as the record date for the Rule 13e-3
transaction, opt out of the Proposed Settlement, MPI would not be required to
effect the Proposed Settlement. MPI may, nonetheless, waive such condition and
proceed with the Proposed Settlement. Substantially all of the MPI Preferred
Stock is held by non-affiliates of MPI.
(d) The non-employee directors of MPI did not retain any
representative to act solely on behalf of unaffiliated security holders for
purposes of negotiating the Rule 13e-3 transaction or preparing a fairness
opinion because the plaintiff security holders were represented by independent
counsel, the terms of the Proposed Settlement were negotiated by such counsel
and the terms of the Proposed Settlement (and, therefore, effectively, the
Rule 13e-3 transaction) are required to be approved as fair by the Court.
(e) The Proposed Settlement, which would result in the Rule 13e-3
transaction, was approved unanimously by the MPI Board of Directors, including
all of its non-employee directors.
(f) No firm offers have been made during the last 18 months, to the
knowledge of the Filers, by any unaffiliated person for the merger or
consolidation of MPI into an unaffiliated person or of an unaffiliated person
into MPI, for the purchase or transfer of all or a substantial portion of
MPI's assets, or for the acquisition of control of MPI. Certain offers, which
are described below, have been made that may be of the type required to be
disclosed under Item 8(f) of Schedule 13E-3, except that none of them meet the
criteria for disclosure because, in the case of paragraph (i) below, the offer
was not firm and, in the case of paragraph (ii) below, the proposed
transaction would not enable the acquirer of MPI securities to exercise
control of MPI.
i. During 1998, MPI engaged in negotiations with an unrelated third
party regarding a Proposed Transaction pursuant to which such third party
would have acquired two retail properties from MPI and 23 retail properties
from the Partnerships. Twenty-two of the properties which were to be sold by
the Partnerships are subject to wraparound mortgages held by MPI which would
have to have been released if such Proposed Transaction had been consummated.
In September 1998, such negotiations terminated and the Proposed Transaction
was not consummated. The retail properties which would have been sold by MPI
and the wraparound mortgage debt which would have been repaid to MPI in
connection with such Proposed Transaction represent a substantial portion of
MPI's real estate related assets.
ii. On August 19, 1998, MPI became aware of purported tender offers
to purchase shares of both the MPI Preferred Stock and the MPI Common Stock
from the holders thereof. In an undated document, Salvage Investors
("Salvage") offered (the "Salvage Offer") to purchase up to 125,000 shares of
MPI Preferred Stock, on a first-come, first-buy basis, for $1.18 per share. In
a document dated August 10, 1998, Peachtree Partners ("Peachtree") offered
(the "Peachtree Offer") to purchase up to 148,000 shares of MPI Common Stock,
on a first-come, first-buy basis,
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for $0.32 per share. Both the Salvage Offer and the Peachtree Offer expired on
September 11, 1998. Neither Salvage nor Peachtree are affiliated with MPI or any
of the Defendants. It is MPI's belief that neither the Salvage Offer nor the
Peachtree Offer was in compliance with Section 14(d) of the Exchange Act, and
the rules and regulations promulgated thereunder. In addition, MPI does not
believe that either the Salvage Offer or the Peachtree Offer was fair to the
unaffiliated holders of the MPI Preferred Stock or the MPI Common Stock,
respectively, and MPI so advised the MPI Preferred Stockholders and the MPI
Common Stockholders. The cash offered for each share of MPI Preferred Stock
pursuant to the Salvage Offer was significantly lower than both the cash amount
of the settlement consideration ($3.00 per share) and the market price of shares
of MPI Preferred Stock during the time that the Salvage Offer was open (the MPI
Preferred Stock traded on the OTC Bulletin Board between August 10, 1998 and
September 11, 1998 at a range of $1.80 to $2.33 per share) and the cash offered
for each share pursuant to the Peachtree Offer was significantly lower than the
market price of shares of MPI Common Stock during the time that the Peachtree
Offer was open (the MPI Common Stock traded on the OTC Bulletin Board between
August 10, 1998 and September 11, 1998 at a range of $0.87 to $1.13 per share).
MPI has learned that 2,771 shares of MPI Common Stock have been transferred to
Peachtree.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a) None of the Filers has received any report, opinion or appraisal
from an outside party that is materially related to the Rule 13e-3
transaction. The fairness of the Proposed Settlement will be submitted for
approval by the Court pursuant to Rules 23e and 23.1 of Delaware Chancery
Rules. A copy of the Court's proposed order is annexed hereto as Exhibit 3.
Certain information regarding the properties and assets being offered to
potential acquirers by SGSC is set forth in Item 2., Table 1. Summary of
Properties and Underlying Debt and Table 2. Summary of Wraparound Notes of
MPI's Annual Report on Form 10-K for the year ended December 31, 1997, as
amended, a copy of which is annexed hereto as Exhibit 4, and incorporated
herein by reference.
(b) and (c) Not applicable, as no report, opinion or appraisal from
an outside party that is materially related to the Rule 13e-3 transaction
exists.
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Item 10. Interest in Securities of the Issuer.
(a) The following table sets forth the beneficial ownership interests
of the persons identified in Item 2 of this Schedule 13E-3 who own shares of
MPI Preferred Stock. No shares of MPI Preferred Stock are owned by any
pension, profit sharing or similar plan of MPI, Concord or any of their
respective affiliates.
Name of Beneficial Owner Number of Shares
------------------------ ----------------
Robert A. Mandor 5,346
Leonard S. Mandor 2,500
Concord Assets Group, Inc. 2,500
Joseph P. Otto 326
Gregory McMahon 100
The 5,346 shares of MPI Preferred Stock beneficially owned by Robert
A. Mandor includes 2,846 shares of MPI Preferred Stock owned directly by
Robert A. Mandor and 2,500 shares of MPI Preferred Stock owned directly by
Concord. The 2,500 shares of MPI Preferred Stock beneficially owned by Leonard
S. Mandor are all directly owned by Concord.
In addition, Joan LeVine, a former director and executive officer of
MPI, a former executive officer of Concord, and a Defendant, directly owns 272
shares of MPI Preferred Stock.
(b) Neither MPI nor any of the other persons referred to in part (a)
to this Item 10 has effected any transaction involving the MPI Preferred Stock
in the last 60 days.
Item 11. Contracts, Arrangements or Understandings With Respect to the
Issuer's Securities.
There are no contracts, arrangements, understanding or relationships
relating, directly or indirectly, to the Rule 13e-3 transaction between any
Filer or any executive officers or directors of MPI or Concord on one hand and
any other person on the other hand with respect to any securities of MPI
(including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities,
joint ventures, loan or option arrangements, puts or calls, guaranties of
loans, guaranties against loss, or the giving or withholding of proxies,
consents or authorizations) other than the Settlement Agreement. Reference is
made to the Settlement Notice and, in particular, to the discussion therein
under the heading "The Settlement" for a description of the terms of the
Settlement Agreement. Such information is incorporated herein by reference.
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Item 12. Present Intention and Recommendation of Certain Persons With Regard
to the Transaction.
(a) The executive officers, directors and affiliates of MPI and the
other persons identified in Item 2 of this Schedule 13E-3 (who, to the Filers'
knowledge, own in the aggregate, 5,772 of the 2,999,707 shares of MPI
Preferred Stock outstanding as of October 15, 1998), pursuant to the terms of
the Settlement Agreement, do not have the right to (and therefore will not)
exchange any shares of MPI Preferred Stock in the Rule 13e-3 transaction.
(b) None of the Filers, after making reasonable inquiry, believes
that any person named in paragraph (a) of this Item 12 has made a
recommendation in support of or opposed to the Rule 13e-3 transaction, except
that Leonard S. Mandor, Robert A. Mandor and Joseph P. Otto, in their capacity
as directors of MPI, have approved the Rule 13e-3 transaction as being in the
best interests of MPI and its stockholders, which approval appears in the
Settlement Notice to be provided to all MPI stockholders and, as a result, may
be perceived to be a recommendation to the Court and the MPI Stockholders in
favor of the Proposed Settlement.
Item 13. Other Provisions of the Transaction.
(a) No appraisal rights are provided under applicable law with
respect to the Rule 13e-3 transaction, nor will any be provided. In lieu of
participating in the Proposed Settlement, MPI Preferred Stockholders may opt
out of the class and continue to hold their stock. MPI Preferred Stockholders
who are eligible to participate in the Proposed Settlement but who opt out
would retain their shares of MPI Preferred Stock and all of the rights
incidental thereto, including the liquidation and dividend preferences (see
Item 8(b) of this Schedule13E-3), and would not receive any settlement
consideration and would not release their claims against the Defendants
relating to the Transactions. Effective September 11, 1998, shares of the MPI
Preferred Stock (as well as the MPI Common Stock) have been delisted from the
NYSE. The MPI Preferred Stock is currently being traded on the OTC Bulletin
Board. Subsequent to the effectuation of the Proposed Settlement, there can be
no assurance that the MPI Preferred Stock will continue to have a market on
the OTC Bulletin Board or that MPI will not seek to deregister the MPI
Preferred Stock pursuant to Section 12(g)(4) under the Exchange Act if it
becomes eligible to be deregistered (although it has no current intention to
do so).
(b) MPI Preferred Stockholders are not to be provided with access to
MPI's or Concord's corporate files (except as otherwise required by law) or
with counsel or appraisal services at the expense of any Filer. Subject to
Court approval, MPI would be paying the fees and expenses of the independent
counsel to the plaintiff class of up to $750,000.
(c) Not applicable, as the Rule 13e-3 transaction does not involve
the exchange of debt securities for the equity securities held by security
holders of MPI who are not affiliates of MPI.
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Item 14. Financial Information.
(a) The following information of MPI is provided in this Schedule
13E-3:
(1) Audited financial statements as of December 31, 1997 and
1996, and for each of the three years in the period ended December 31, 1997,
as set forth in MPI's Annual Report on Form 10-K for the year ended December
31, 1997, as amended, a copy of which is annexed hereto as Exhibit 4 and
incorporated herein by reference;
(2) Unaudited balance sheets and comparative year-to-date
statements of revenues and expenses and statements of cash flows and related
earnings per share amounts, as set forth in MPI's Quarterly Report on Form
10-Q for the quarterly periods ended March 31 and June 30, 1998, copies of
each of which are annexed hereto as Exhibit 5 and Exhibit 6, respectively, and
incorporated herein by reference;
(3) Earnings for the years ended December 31, 1997 and 1996,
and for the quarterly periods ended March 31 and June 30, 1998, were not
adequate to cover fixed charges by $4,151,965, $2,120,536, $1,021,332 and
$2,556,418, respectively; and
(4) Book value per share as of December 31, 1997 and 1996,
as set forth in MPI's Annual Report on Form 10-K for the year ended December
31, 1997, as amended, a copy of which is annexed hereto as Exhibit 4 and
incorporated herein by reference, and as of March 31 and June 30, 1998, as set
forth in MPI's Quarterly Report on Form 10-Q for the quarterly periods ended
March 31 and June 30, 1998, copies of which are annexed hereto as Exhibit 5
and Exhibit 6, respectively, and incorporated herein by reference.
(b) The Rule 13e-3 transaction is not expected to have a material
effect on MPI's balance sheet, statement of revenues and expenses, earnings
per share amounts, ratio of earnings to fixed charges or book value per share,
other than as a result of the payment of up to $9.0 million in cash (of which
approximately $6.3 million will be expensed in the statement of revenues and
expenses) to acquire shares of MPI Preferred Stock pursuant to the Settlement
Agreement and an estimated $1.4 million to cover expenses in connection with
the Proposed Settlement which will be reflected on MPI's balance sheet as a
reduction of unrestricted cash reserves.
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) Operational and financial personnel of MPI have been employed as
part of their normal responsibilities in preparing the financial statements
and other documentation for the Rule 13e-3 transaction, including this
Schedule 13E-3. They are not expected to be used in any other manner in
connection with the Rule 13e-3 transaction.
(b) The directors and officers of MPI and Concord, in their
capacities as such, have approved the Proposed Settlement and have assisted in
the negotiation of the Proposed Settlement and the preparation of the
Settlement Notice, the Settlement Agreement and this Schedule 13E-3. Other
than as set forth in the preceding sentence, no person will be employed,
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retained or compensated to make solicitations or recommendations in connection
with the Rule 13e-3 transaction.
Item 16. Additional Information.
No additional information is required to make the statements in this
Schedule 13E-3, in light of the circumstances under which they are made, not
materially misleading.
Item 17. Material to be Filed as Exhibits.
1. Form of Notice of Pendency of Class and Derivative Action, Proposed
Settlement, Settlement Hearing and Right to Appear.
2. Stipulation and Agreement of Settlement, dated August 5, 1998, by
and among John Winston and Leonard S. Mandor, Robert A. Mandor, Joan
LeVine, Harvey Jacobson, Gregory McMahon, Geoffrey S. Aaronson,
Milestone Properties, Inc. and Concord Assets Group, Inc.
3. Proposed Form of Final Order and Judgment of the Court of Chancery
of the State of Delaware.
4. Annual Report on Form 10-K of MPI for the Year Ended December 31,
1997 and Amendment No. 1 to Annual Report on Form 10-K/A of MPI for
the Year Ended December 31, 1997.
5. MPI's Quarterly Report on Form 10-Q for the Quarterly Period Ended
March 31, 1998.
6. MPI's Quarterly Report on Form 10-Q for the Quarterly Period Ended
June 30, 1998.
No other documents are required to be filed as exhibits to this Schedule 13E-3.
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SIGNATURE
After due inquiry and to the best of his or its knowledge and belief,
each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
October 21, 1998
----------------------------------
(Date)
MILESTONE PROPERTIES, INC.
By: /s/ Robert A. Mandor
------------------------------
Robert A. Mandor, President
CONCORD ASSETS GROUP, INC.
By: /s/ Robert A. Mandor
------------------------------
Robert A. Mandor, President
/s/ Leonard S. Mandor
------------------------------
Leonard S. Mandor
/s/ Robert A. Mandor
------------------------------
Robert A. Mandor
<PAGE>
EXHIBIT INDEX
Exhibit No.
1. Form of Notice of Pendency of Class and Derivative Action, Proposed
Settlement, Settlement Hearing and Right to Appear.
2. Stipulation and Agreement of Settlement, dated August 5, 1998, by and
among John Winston and Leonard S. Mandor, Robert A. Mandor, Joan LeVine,
Harvey Jacobson, Gregory McMahon, Geoffrey S. Aaronson, Milestone
Properties, Inc. and Concord Assets Group, Inc.
3. Proposed Form of Final Order and Judgment of the Court of Chancery of the
State of Delaware.
4. Annual Report on Form 10-K of MPI for the Year Ended December 31, 1997
and Amendment No. 1 to Annual Report on Form 10-K/A of MPI for the Year
Ended December 31, 1997.
5. MPI's Quarterly Report on Form 10-Q for the Quarterly Period Ended March
31, 1998.
6. MPI's Quarterly Report on Form 10-Q for the Quarterly Period Ended June
30, 1998.
