GlobeSt.com UPDATE: Stock Offer Closes, $26.1M Cash

The news of the day is that the Dallas-based powerhouse satisfied "the requirements of the final settlement with the plaintiff's counsel in the Olive litigation," said Ted P. Stokely, board chairman and director for American Realty and its affiliates. The offer arose from an October 2001 settlement of a shareholders' lawsuit against American Realty, Transcontinental Realty Investors Inc., Income Opportunity Realty Investors Inc., Basic Capital Management and Gene E. Phillips of Dallas.

The tender offer, launched in November 2002, has put another 1.21 million shares of Transcontinental common stock and 258,470 shares of Income Opportunity into American Realty's hands. The Transcontinental offering raked in 15% of the outstanding stock, bought for $17.50 per share or more than $21.2 million. The Income Opportunity offering pulled in 17.9% of the outstanding shares at a cost of $19 per share or slightly more than $4.9 million. American Realty and its affiliates now own 79.3% of Transcontinental versus the pre-offer level of 64.3% and 77.9% of Income Opportunity, up from 59.9%.

A company source wouldn't go into detail on the $61-million merger status, but did say it's safe to say that the plan is up in the air. For now, the three companies will continue to operate and trade individually, GlobeSt.com is told.

In reality, American Realty can't follow through with merger plans until it completes procedures to register its preferred stock with the SEC. With that undone, it's business as usual, but with control heavily weighted toward American Realty. If the deal is consummated, it's been said the end result will be a $1.6-billion, New York Stock Exchange-listed corporation in a play that strips the REIT status from Income Opportunity.

The merger play is being carefully watched because of Phillips, a local powerbroker with capital ties that spirited a federal indictment for alleged securities fraud. Acquitted in New York City in February 2002, he is the representative to the Gene E. Phillips Children's Trust, sole owner of Basic Capital Management which controls the trio of companies, all headquartered at Mercer Crossing in Dallas.