Mack-Cali Realty Corp. confirmed that its chairman recently terminated settlement discussions with activist shareholder Bow Street LLC and detailed the reasons for the termination.
The real estate investment trust said the parties had agreed to form a board committee to review the company's strategic direction. With the help of one or more independent real estate valuation firms, the committee would decide the value that could be realized in a potential sale of Mack-Cali or all or a portion of its assets, and make a recommendation to the board.
The activist shareholder, however, did a "180-degree flip" on the settlement terms previously agreed upon by the parties by coming up with a revised draft, the REIT said.
In the revised draft, Bow Street said the strategic review committee would undertake a sales process, including hiring an investment banker and receiving acquisition proposals from third parties.
The draft also contemplated that the shareholder would be actively involved in the committee's work, including engaging with potential bidders "to the extent Bow Street deems necessary" and sharing its remarks with the committee at least twice before the committee would make any final recommendation.
Mack-Cali, therefore, concluded that Bow Street is not interested in reaching a fair settlement with the REIT, saying the only purpose of the shareholder's proxy contest involves expediting its "self-interested" proposal to acquire Mack-Cali's office assets at a "grossly inadequate price or to force a 'fire sale' of the company."
The REIT argued that while it continues to believe that an amicable resolution of Bow Street's "expensive and disruptive" proxy contest would be in the best interests of Mack-Cali and the company's stockholders, it had no choice but to end the settlement discussions given these scenarios.