Vornado says in a filing with the Securities and Exchange Commission that the foreclosure auction will occur "on or about Feb. 25." However, chairman Michael Reschke's Primestone Investment Partners, L.P. has asked a Delaware court to issue a temporary restraining order to stop the auction because they believe the collateral is worth far more than the $104 million the company owes. That did not compute Friday, as Prime Group stock traded at $9.65 per share, making the one-third stake involved worth less than $77 million.
The actual collateral is 7.9 million partnership units in Primestone, which are convertible into nearly one-third of the REIT's outstanding shares. Vornado, which co-owns the collateral for more than $104 million in debt with Montreal-based Cadim inc., is proceeding with the auction following the dismissal last month of Primestone's bankruptcy filing. Cadim inc. dropped a tender offer this summer to buy most of Prime Group's stock.
As a condition to the $40-million, high-interest loan to Primestone, Reschke and Curto submitted letters of resignations in the event of default on the loan. Both say their attorneys advise them the letters of resignations are not valid because neither intend to resign. Prime Group's board of directors, which includes former Governor James R. Thompson, has taken no action on the letters of resignations.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.