A special meeting of holders of the company's common stock has been scheduled for June 28 to vote on the proposed merger with Lakewood, NJ-based Lightstone Group. If the sale closes this month, preferred shareholders will get $3.375 per share, representing six quarters of dividends. If the closing falls in the third quarter, preferred shareholders will collect $3.94 per share.
Lightstone Group is paying $172 million, or $7.25 per share, for the company's common stock. However, the deal is estimated to be worth nearly $734 million as Lightstone Group is assuming $426 million in mortgage debt, as well as the outstanding four million preferred shares.
Company executives and members of the board of directors own 11.4% of Prime Group Realty Trust common stock, according to a recent Securities and Exchange Commission filing outlining the deal. Paramus, NJ-based Vornado Realty Trust and Montreal-based Cadim inc. share a 16.8% stake in the company they were once in line to acquire. Orinda, CA-based Kensington Investment Group, Inc. owns 11.6% of the common shares, Arlington, VA-based Aegis Financial Corp. has a 10.5% stake while Donald Smith & Co. Inc., also based in Paramus, NJ, has 9.9% of the company stock.
The sale comes nearly five years after Prime Group Realty Trust began exploring strategic alternatives, ranging from disposing of individual assets to an outright sale of the entire company. The most recent sales effort, led by Wachovia Capital Markets, LLC, resulted in multiple offers for the company.
In May, Prime Group Realty Trust and a previous bidder for the office REIT settled a legal dispute, clearing the way for a sale of the company to Lightstone Group LLC.
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