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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. 5)
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 and opt outs, fewer shares of such
preferred stock would be available for acquisition as of the date of this
Amendment) 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 was approved by the Court of Chancery of the State
of Delaware on January 28, 1999, which approval must become final and no
longer be subject to appeal by the expiration of a 30 day appeal period
beginning on February 3, 1999, the day that the court's order approving the
proposed settlement was entered upon the court's docket, and ending at the
close of business on March 5, 1999, without an appeal being filed, the
affirmation of such approval on appeal, or otherwise, 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
Milestone Properties, Inc. ("MPI"), a Delaware corporation, Concord
Assets Group, Inc. ("Concord"), a New York corporation, Leonard S. Mandor and
Robert A. Mandor have filed a Rule 13e-3 Transaction Statement on Schedule
13E-3 in connection with a proposed settlement (the "Proposed Settlement") of a
purported class action and derivative lawsuit. The Proposed Settlement was
approved by the Court of Chancery of the State of Delaware (the "Court") on
January 28, 1999, as further described below. 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. Said Schedule 13E-3, as
previously amended and as amended by this amendment, is referred to herein as
this "Schedule 13E-3."
A copy of this Schedule 13E-3 was 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"), dated November 13, 1998,
a copy of the form of which is annexed to this Schedule 13E-3 as Exhibit 1,
that has been, and will continue to be, distributed to all holders of record of
shares of MPI's $.78 Convertible Series A preferred stock, par value $.01 per
share (the "Preferred Stock"), as of October 23, 1995 and their successors in
interest through the Settlement Effective Date (as defined herein) 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 through the Settlement Effective Date.
This Schedule 13E-3, and particularly the section entitled "Summary of
the Rule 13e-3 Transaction," and Items 4, 7 and 8 hereof, is being amended to
(i) reflect that on January 28, 1999, the Court approved the fairness of the
Proposed Settlement at a hearing held for such purpose at which anyone who
owned shares of MPI Preferred Stock as of October 23, 1995 and their successors
in interest through January 27, 1999 who had not "opted 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 January
27, 1999, was eligible to submit objections to the Proposed Settlement, (ii)
reflect that nobody objected to the Proposed Settlement at the settlement
hearing, (iii) reflect that Preferred Stockholders holding approximately 0.2%
of the outstanding shares of MPI Preferred Stock properly opted out of the
Proposed Settlement, and (iv) attach as Exhibit 8 hereto a copy of the Current
Report on Form 8-K that was filed by MPI with the Securities and Exchange
Commission on February 11, 1999 in connection with the Court's approval.
Pursuant to both Delaware Supreme Court Rule 6 and Delaware case law, the order
(the "Final Order") of the Court approving the Proposed Settlement will become
final and no longer be subject to appeal upon the expiration of a 30 day appeal
period beginning on February 3, 1999, the date that the Final Order was entered
upon the docket of the Court, and ending at the close of business on March 5,
1999, without an appeal being filed, the affirmation of the approval of the
Proposed Settlement on appeal, or otherwise. If the Proposed Settlement is
ultimately consummated, after taking into account the shares of MPI Preferred
Stock held by Preferred Stockholders who properly opted out of the Proposed
Settlement, MPI would acquire and cancel approximately 3.0 million shares of
the MPI Preferred Stock pursuant to the terms and conditions of the Settlement
Agreement.
This amendment assumes that the Final Order will not be successfully
appealed (if at all appealed) and that all remaining conditions to the
consummation of the Proposed Settlement pursuant to the terms
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and conditions of the Settlement Agreement will be satisfied. The Filers
believe the foregoing assumptions to be reasonable, however, no assurances can
be given in this regard. Things that could affect the ultimate consummation of
the Proposed Settlement include a successful or protracted appeal or a change
in any relevant law that is adverse to the consummation of the Proposed
Settlement.
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 the 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, alleged 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.
The Proposed Settlement will 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 has not
opted out of the Proposed Settlement will 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 have properly opted out of the Proposed Settlement, an MPI
Preferred Stockholder who is eligible to participate in the Proposed Settlement
would have had to 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 was 45
days from the date that the Settlement Notice was mailed to MPI Preferred
Stockholders stating such Preferred Stockholder's desire to opt out of the
Proposed Settlement. Any MPI Preferred Stockholder who is eligible to
participate in the Proposed Settlement but who did not return a properly
completed opt-out election on or prior to the time set forth above is 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 will be cancelled. Consummation of the Proposed
Settlement is subject to the Court's order approving the Proposed Settlement
becoming final and no longer being subject to appeal as well as a number of
other conditions which may be waived at the option of the Defendants. At the
Settlement Hearing (which was held on January 28, 1999), the Court issued an
order approving
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the Proposed Settlement. The Final Order was entered upon the docket of the
Court on February 3, 1999 and will become final and no longer be subject to
appeal as of the close of business on March 5, 1999 unless an appeal is filed
before such date. As of the last date that eligible MPI Preferred Stockholders
were eligible to opt out of the Proposed Settlement, MPI Preferred Stockholders
holding approximately 0.2% of the outstanding shares of the MPI Preferred Stock
had opted out of the Proposed Settlement. In accordance with the terms of the
Settlement Agreement, the Settlement Notice was sent at least 60 days prior to
the Settlement Hearing 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. In addition,
notice of the Settlement Hearing has been sent, and will continue to be sent,
to all holders of record of shares of MPI Preferred Stock as of the Record Date
and their successors in interest through the Settlement Effective Date and to
all holders of record of shares of MPI Common Stock as of the Record Date and
their successors in interest through the Settlement Effective Date.
The Settlement Notice was initially 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 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 has also been, and will continue to 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 rights in connection therewith.
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 January 27, 1999, the date that was
one day prior to the Settlement Hearing, who did 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 January
27, 1999, was eligible to 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 have been proper and relevant.
However, in general, no person other than the named plaintiff to the Pending
Actions and his counsel and the Defendants and their counsel were entitled to
be heard unless, no later than 10 days prior to the Settlement Hearing, a
written notice of their intention to appear was served with the Register in
Chancery and the respective counsel of the named plaintiff to the Pending
Actions and the Defendants. No such notice was received nor did anyone at the
Settlement Hearing request to be heard in opposition to the Proposed
Settlement. Any person who failed to object in the foregoing manner was deemed
to have waived such objections and is 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 have opted out
of the Proposed Settlement were not entitled to appear at the Settlement
Hearing and object to the Proposed Settlement. Such holders were not eligible
to
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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 have been affected in
any meaningful way by the outcome of the Settlement Hearing.
MPI Preferred Stockholders who acquired (or acquire) their shares of
MPI Preferred Stock after August 25, 1998 were not and are not entitled to opt
out of the Proposed Settlement and, if the Final Order becomes final and no
longer subject to appeal, will 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 were not and are not
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 had the right not to proceed with the Proposed Settlement if holders
of more than 10% of the outstanding shares of MPI Preferred Stock opted 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 and the stockholders who
could exercise such right.
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 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 staff (the "Staff") of the SEC
affirmatively concur with certain determinations of MPI and its
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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 (the "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. Such Letter of Transmittal will be sent to all
participants in the Proposed Settlement after the Final Order becomes final and
is no longer subject to appeal and all other conditions to the consummation of
the Proposed Settlement are satisfied or waived. 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 opted out of the
Proposed Settlement, all claims of such holder against any and all of the
Defendants relating to the Transactions will be released and all shares of MPI
Preferred Stock held by such MPI Preferred Stockholder will cease to be
outstanding and will be cancelled and retired and will cease to exist as of the
Settlement Effective Date, and such holder will 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 in lieu thereof, a completed, executed and
notarized Affidavit of Lost or Destroyed Certificate) and a Letter of
Transmittal therefor. MPI Preferred Stockholders who have not opted out of the
Proposed Settlement must (i) complete and sign (with signatures guaranteed, if
required) a Letter of Transmittal, or a copy thereof, in accordance with the
instructions in the Letter of Transmittal, (ii) complete and sign the
Substitute Form W-9 certification included as part of the Letter of
Transmittal, (iii) enclose the certificates representing their shares of MPI
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Preferred Stock being surrendered, if available (or in lieu thereof, complete,
execute and have notarized the Affidavit of Lost or Destroyed Certificate
included as part of the Letter of Transmittal and (iv) deliver all of the
foregoing to the exchange agent (the "Exchange Agent") designated in the Letter
of Transmittal at the address indicated in the Letter of Transmittal. The
transaction will allow the MPI Preferred Stockholders (the plaintiff class) to
obtain cash 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 will be consummated upon the
Final Order of the Court approving the Proposed Settlement becoming final and
no longer being subject to appeal upon the expiration of a 30 day appeal period
beginning on February 3, 1999, the date that the Final Order was entered upon
the docket of the Court, and ending at the close of business on March 5, 1998,
without an appeal being filed, the affirmation of the approval of the Proposed
Settlement on appeal, or otherwise. In approving the Proposed Settlement, the
Court determined, as is required under Delaware law, 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
September 30, 1998 were approximately $13.2 million, and can fluctuate
significantly with the acquisition and disposition of properties.) MPI believes
that immediately subsequent to the completion of the Rule 13e-3 transaction, it
will 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 will 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 completion of
the Rule 13e-3 transaction it will 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 have not opted
out of the Proposed Settlement, attorneys' fees and other
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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 have not opted 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.
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").
Upon the consummation of the Proposed Settlement, because only a small
number of the eligible MPI Preferred Stockholders have opted out of the
Proposed Settlement, more than 50% of the outstanding shares of all stock of
MPI, by value, thereafter will 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.
Upon the consummation of the Proposed Settlement, Concord and its
affiliates will continue to own beneficially approximately 71% of the
outstanding shares of MPI Common Stock and will own beneficially approximately
50% of the outstanding shares of MPI Preferred Stock. In addition, certain of
the Defendants and other persons who are associated with Concord and MPI will
continue to own additional shares of MPI Preferred Stock. Therefore, Concord
and its affiliates could effectively control the vote on all matters submitted
to holders of either class of MPI's stock (if the other Defendants and their
associates who are prohibited from participating in the Proposed Settlement act
in concert with Concord, in the case of the MPI Preferred Stock), including the
election of directors and extraordinary corporate transactions, such as
mergers. This will 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. 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
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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 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)). Concord and its affiliates do not currently
have any intention to take any such action.
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 has opted out of the Proposed Settlement, all shares of MPI
Preferred Stock held by such MPI Preferred Stockholder will cease to be
outstanding and will be cancelled and retired and will cease to exist as of the
Settlement Effective Date, and such holder will 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 have not opted out of the
Proposed Settlement will 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 who have opted 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 have not opted out
of the Proposed Settlement must (i) complete and sign (with signatures
guaranteed, if required) a Letter of Transmittal, or a copy thereof, in
accordance with the instructions in the Letter of Transmittal, (ii) complete
and sign the Substitute Form W-9 certification included as part of the Letter
of Transmittal, (iii) enclose the certificates representing their shares of MPI
Preferred Stock being surrendered, if available (or in lieu thereof, complete,
execute and have notarized the Affidavit of Lost or Destroyed Certificate
included as part of the Letter of Transmittal and (iv) deliver all of the
foregoing to the Exchange Agent at the address indicated in the Letter of
Transmittal. There are currently approximately 1,579 holders of record of MPI
Preferred Stock. Since a sufficient number of holders of the MPI Preferred
Stock will participate in the Rule 13e-3 transaction pursuant to the Proposed
Settlement (i.e., by not "opting out"), there will be fewer than 300 MPI
Preferred Stockholders, and, therefore, the MPI Preferred Stock will become
eligible for termination of registration pursuant to Section 12(g) of the
Exchange Act and the rules promulgated thereunder. The Company does not
currently have any intention to take such action.
In general, for U.S. federal income tax purposes, the Proposed
Settlement should result in a holder of MPI Preferred Stock who has opted 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
9
<PAGE>
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.
Item 8. Fairness of the Transaction.
(a) Each of the Filers believes that the Rule 13e-3 transaction will
be fair to the unaffiliated stockholders of MPI. No director of MPI dissented
to or abstained from voting on the Proposed Settlement, which will result in
the Rule 13e-3 transaction.
(b) The foregoing belief is based principally upon the fact that the
Court was required to, and at a hearing held for such purpose on January 28,
1999 did, find that the Proposed Settlement, which was established through
arms-length negotiations between the parties to the Pending Actions, is fair to
MPI, the Settlement Class and the MPI Common Stockholders, both substantively
and procedurally. The belief is also based upon the cash premium 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 market price of $2.75 as of the close of business on
January 29, 1999, the date that the Court's approval of the Proposed Settlement
was announced, and the MPI Preferred Stock's current market price ($2.77 per
share as of the close of business on February 16, 1999). In addition, each of
the Filers believes that the Rule 13e-3 transaction is fair because the
opportunity to receive the proposed settlement consideration will enable MPI
Preferred Stockholders to liquidate their holdings in an otherwise illiquid
market for the MPI Preferred Stock.
Each of the Filers also believes that the Rule 13e-3 transaction is
fair because the terms of the Proposed Settlement, including the amount of the
cash payment, was established through protracted arms-length negotiations by
the adversarial parties to the Pending Actions. Each side was also represented
by counsel in such negotiations. The required Court approval of the terms 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 necessarily passed upon the fairness, reasonableness and
adequacy of the consideration to be received by the MPI Preferred Stockholders.
The Filers' belief regarding the fairness of the Rule 13e-3
transaction is also based upon their belief that the Rule 13e-3 transaction
will 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. Even after the public announcement of the
Proposed Settlement, the market price per share of the MPI Preferred Stock did
not rise to the level of the cash payment to be made for each share of MPI
Preferred Stock pursuant to the terms of the Proposed Settlement, nor did the
market for the MPI Preferred Stock become liquid. The Proposed Settlement,
therefore, provides the MPI Preferred Stockholders with a premium to market
values and an opportunity to liquidate their investment in an otherwise
illiquid market for the MPI Preferred Stock. MPI is not obligated to declare or
pay (and has not paid for more than two
10
<PAGE>
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
will acquire from MPI Preferred Stockholders who are eligible to participate in
the Proposed Settlement and who have not opted 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 opted out of the Proposed Settlement,
all claims of such holder against any and all of the Defendants relating to the
Transactions will be released and all shares of MPI Preferred Stock held by
such MPI Preferred Stockholder will cease to be outstanding and will be
cancelled and retired and will cease to exist as of the Settlement Effective
Date, and such holder will 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 in lieu thereof, a completed, executed and notarized Affidavit of
Lost or Destroyed Certificate) and a Letter of Transmittal therefor. Any
eligible MPI Preferred Stockholder who has not opted 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 will 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 will continue to have such power if the Proposed
Settlement is consummated, and there can be no assurance that MPI will not
thereafter declare dividends on the MPI Preferred Stock or seek to effect a
liquidation.
In addition, while the net book value of the MPI Preferred Stock was
$8.18 per share as of September 30, 1998, 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). Furthermore, 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 $8.18 per share as of September
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 September 30, 1998 was $3.25 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 will receive in the Proposed
Settlement.
The Filers also believe that the Rule 13e-3 transaction is fair
because the unaffiliated holders of the MPI Common Stock will benefit from the
Proposed Settlement. The claims in the
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<PAGE>
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 will 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. In addition, shares of MPI
Preferred Stock are also owned by family members and other persons who are
associated with the other Defendants. 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, 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 upon the completion of the Proposed
Settlement. Whether or not Concord and its affiliates gain absolute 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
will 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, although there is no current intention on the part of Concord to
take any such action.
(c) The Proposed Settlement was submitted to the Court for approval on
January 28, 1999, which approval was obtained. If MPI Preferred Stockholders
who are eligible to participate in the Proposed Settlement and who held more
than 10% of the shares of MPI Preferred Stock that were outstanding as of the
close of business on August 25, 1998, the date that MPI set as the record date
for the Rule 13e-3 transaction, opted out of the Proposed Settlement, MPI would
not have been required to effect the Proposed Settlement. MPI could have,
nonetheless, waived such condition and proceeded 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) were required to be approved as fair by the Court.
(e) The Proposed Settlement, which will result in the Rule 13e-3
transaction, was approved unanimously by the MPI Board of Directors, including
all of its non-employee directors.
12
<PAGE>
(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 paragraphs (ii) and (iii) 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, 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.
iii. On February 1, 1999, MPI became aware of purported tender offers
to purchase shares of both MPI Preferred Stock and MPI Common Stock from the
holders thereof. In documents dated January 12, 1999, Sutter Opportunity Fund,
LLC ("Sutter") offered to purchase (i) up to 149,000 shares of MPI Preferred
Stock, on a first-come, first-buy basis, for $1.50 per share (the "Sutter
Preferred Offer") and (ii) up to 210,000 shares of MPI Common Stock, on a
first-come, first-buy basis, for $0.40 per share (the "Sutter Common Offer").
Both the Sutter
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<PAGE>
Preferred Offer and the Sutter Common Offer expired on February 16, 1999. Sutter
is not affiliated with MPI or any of the Defendants. It is MPI's belief that
neither the Sutter Preferred Offer nor the Sutter Common 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 Sutter
Preferred Offer or the Sutter Common Offer was fair to the unaffiliated holders
of the MPI Preferred Stock or the MPI Common Stock, respectively. The cash
offered for each share of MPI Preferred Stock pursuant to the Sutter Preferred
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 Sutter Preferred Offer was open (the MPI
Preferred Stock traded on the OTC Bulletin Board between January 12, 1999 and
February 16, 1999 at a range of $2.50 to $2.8125 per share) and the cash offered
for each share of MPI Common Stock pursuant to the Sutter Common Offer was
significantly lower than the market price of shares of MPI Common Stock during
the time that the Sutter Common Offer was open (the MPI Common Stock traded
on the OTC Bulletin Board between January 12, 1999 and February 16, 1999 at a
range of $0.8125 to $1.25 per share).
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.
7. MPI's Quarterly Report on From 10-Q for the Quarterly Period Ended
September 30, 1998.
8. MPI's Current Report on Form 8-K filed with the SEC on February 11,
1999.
No other documents are required to be filed as exhibits to this Schedule 13E-3.
14
<PAGE>
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.
February 18, 1999
-----------------------------------------------
(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.
7. MPI's Quarterly Report on Form 10-Q for the Quarterly Period Ended
September 30, 1998.
8. MPI's Current Report on Form 8-K filed with the SEC on February 11,
1999.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 28, 1999
-----------------------------
MILESTONE PROPERTIES, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-10641 65-0158204
- -------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
150 East Palmetto Park Road, 4th Floor, Boca Raton, FL 33432
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (561) 394-9533
-----------------------
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
On January 29, 1999, Milestone Properties, Inc. (the "Registrant")
announced that the Court of Chancery of the State of Delaware (the "Court") had
approved the settlement (the "Settlement") of a purported class action and
derivative lawsuit (the "Actions") brought against the Registrant, certain past
and present members of its Board of Directors and executive officers, and
Concord Assets Group, Inc., a New York corporation, by a holder of the
Registrant's $.78 Convertible Series A preferred stock, par value $.01 per
share (the "Preferred Stock"), on his own behalf, purportedly on behalf of all
holders of the Registrant's Preferred Stock and derivatively on behalf of the
Registrant. On February 10, 1999, the Registrant announced that the Court's
order (the "Order") approving the Settlement had been entered upon the docket
of the Court on February 3, 1999. The Order will become final effective upon
the expiration of a 30 day appeal period which ends at the close of business on
March 5, 1999, unless an appeal is taken before such time. In the case of an
appeal, the Order would become final if it is affirmed on appeal. Reference is
made to (i) "Item 3. - Legal Proceedings" of (a) the Registrant's Annual Report
on Form 10-K for the Year Ended December 31, 1997 and (b) Amendment No. 1 to
the Registrant's Annual Report on Form 10-K/A for the Year Ended December 31,
1997, (ii) "Item 1. - Legal Proceedings" of the Registrant's (a) Quarterly
Report on Form 10-Q for the Quarterly Period Ended March 31, 1998, (b)
Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 1998, and
(c) Quarterly Report on Form 10-Q for the Quarterly Period Ended September 30,
1998, and (iii) the Rule 13e-3 Transaction Statement on Schedule 13E-3
initially filed with the Commission on September 3, 1998, as amended, for a
description of the Actions and the rights of the Registrant's stockholders with
respect thereto. A copy of the press release announcing the Court's approval of
the Settlement, dated January 29, 1999, is filed as Exhibit 99.1 hereto and a
copy of the press release announcing the entry of the Order upon the Court's
docket, dated February 10, 1999, is filed as Exhibit 99.2 hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit Number Description
99.1 Milestone Properties, Inc. Press Release, dated
January 29, 1999.
99.2 Milestone Properties, Inc. Press Release, dated
February 10, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MILESTONE PROPERTIES, INC.
(Registrant)
Date: February 10, 1999 By /s/ Patrick S. Kirse
-------------------------------------
Patrick S. Kirse
Vice President of Accounting
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
99.1 Milestone Properties, Inc. Press Release, dated January 29, 1999.
99.2 Milestone Properties, Inc. Press Release, dated February 10, 1999.
<PAGE>
PRESS RELEASE
Milestone Properties Inc.
150 East Palmetto Park Road - 4th Floor
Boca Raton, FL 33432
FOR IMMEDIATE RELEASE
Boca Raton, Florida, January 29, 1999 -- Milestone Properties, Inc.
(Over-The-Counter Bulletin Board: MPRP / MPRPP) announced today that the Court
of Chancery of the State of Delaware has approved, at a hearing held on January
28, 1999 for such purpose, the proposed settlement of a purported class action
and derivative lawsuit brought against the Company, certain past and present
members of its Board of Directors and executive officers, and Concord Assets
Group, Inc. by a holder of the Company's $.78 Convertible Series A Preferred
Stock on his own behalf, purportedly on behalf of all holders of the Company's
Preferred Stock and derivatively on behalf of the Company.
As previously announced on August 5, 1998, counsel for the Company and the
other defendants to the lawsuit entered into an agreement of settlement with
plaintiff's counsel in connection with such action. The Court's order approving
the settlement will become final on February 28, 1999 unless an appeal is
taken, in which case the order would become final upon its affirmance on
appeal.
If the Court's order becomes final and the settlement is consummated, (1) each
Preferred Stockholder who is eligible to participate in the settlement and who
did not properly opt out of the settlement and who owns shares of the Company's
Preferred Stock on the date that the settlement is consummated will surrender
his or her shares of Preferred Stock to the Company and receive $3.00 in cash
from the Company in exchange for each such share and the releases provided for
in the settlement agreement; (2) the Company's stockholders will release all
derivative claims in connection with the transactions that are the subject of
the litigation; (3) the holders of shares of the Company's Preferred Stock
between October 23, 1995 and the date on which the settlement is consummated
will release any claims they may have against the Company and the other named
defendants in connection with the transactions that are the subject of the
litigation; and (4) the action will be dismissed.
Milestone, directly and through its wholly owned subsidiaries, is engaged in
the business of owning, acquiring, managing, developing and investing in real
estate and real estate related assets.
FOR MORE INFORMATION, CONTACT:
Karen Renza, Director of Stockholder Services
Milestone Properties Inc.
561 394 9533 Fax: 561 392 8311
<PAGE>
PRESS RELEASE
Milestone Properties Inc.
150 East Palmetto Park Road - 4th Floor
Boca Raton, FL 33432
FOR IMMEDIATE RELEASE
Boca Raton, Florida, February 10, 1999 -- Milestone Properties, Inc.
(Over-The-Counter Bulletin Board: MPRP/MPRPP) announced today that the order of
the Court of Chancery of the State of Delaware approving the settlement of a
purported class action and derivative lawsuit brought against the Company,
certain past and present members of its Board of Directors and executive
officers, and Concord Assets Group, Inc. by a holder of the Company's $.78
Convertible Series A Preferred Stock on his own behalf, purportedly on behalf
of all holders of the Company's Preferred Stock and derivatively on behalf of
the Company will become final effective as of the close of business on March 5,
1999 unless an appeal is taken, in which case the order will become final upon
its affirmance on such appeal. The order approving the settlement was signed by
the Court at a hearing held on January 28, 1999 and was entered upon the
Court's docket on February 3, 1999, at which time a 30 day appeal period began.
The Company had previously announced that the order would become final, in the
absence of an appeal, on February 28, 1999 (30 days from the date that the
Court's order was signed).
If the Court's order becomes final and the settlement is consummated, (1) each
Preferred Stockholder who is eligible to participate in the settlement and who
did not properly opt out of the settlement and who owns shares of the Company's
Preferred Stock on the date that the settlement is consummated will surrender
his or her shares of Preferred Stock to the Company and receive $3.00 in cash
from the Company in exchange for each such share and the releases provided for
in the settlement agreement entered into on August 5, 1998 by counsel for the
Company and the other defendants to the lawsuit on one hand and the plaintiff's
counsel on the other hand; (2) the Company's stockholders other than preferred
stockholders who properly opted out of the settlement will release all
derivative claims in connection with the transactions that are the subject of
the litigation; (3) the holders of shares of the Company's Preferred Stock
between October 23, 1995 and the date on which the settlement is consummated
other than preferred stockholders who properly opted out of the settlement will
release any claims they may have against the Company and the other named
defendants in connection with the transactions that are the subject of the
litigation; and (4) the action will be dismissed.
Milestone, directly and through its wholly owned subsidiaries, is engaged in
the business of owning, acquiring, managing, developing and investing in real
estate and real estate related assets.
FOR MORE INFORMATION CONTACT:
Karen Renza, Director of Stockholder Services
Milestone Properties, Inc.
