Sizeler's SEC Filing Triggers Higher Offer

KENNER, LA-Compson Holding Corp. of Boca Raton, FL has leveled another offer for Sizeler Property Investors Inc.'s portfolio--now that behind-the-scene details are available in an SEC filing. Compson's offer, which expires 5 p.m. Thursday, boosts the ante to $16.10 per share for the 30-property package of retail and multifamily assets.

"They have a fiduciary obligation to entertain all offers, but based on their action to date and the action of their agent, I have no idea how they will treat this," Michael Comparato, Compson's president, tells GlobeSt.com.

Sizeler last Thursday filed its preliminary proxy detailing the sequence of events that led to the decision to sell the company to Toronto-based Revenue Properties Co. Ltd. and its majority owner, Morguard Corp.. In the SEC filing, Sizeler reported it declined to amend its charter April 18 to allow the Canadian companies, now the largest stockholder with 2.12 million shares, to exceed the ceiling and buy up to 19.9% of its stock in one or more privately negotiated deals. At that time, Sizeler's chairman and third largest shareholder Michael Tanz was on the boards of Revenue Properties and Morguard, but he recused himself from the vote and resigned from both boards the next day to avoid possible conflicts of interest, according to the SEC filing. Also that day--April 19--Wachovia contacted 87 potential bidders, with 44 subsequently executing confidentiality agreements.

The SEC report says Wachovia returned May 22 to the Sizeler board with 10 proposals. Eight days later, Wachovia "advised that a number of second round bidders might not continue in the process." The offers ranged from $12.37 per share to $15.75 per share. The final call was made June 22, with re-trading eventually producing a $15.10 per share offer from Revenue Properties.

The tell-all didn't settle well with Comparato, one of the 10 first-round offers. "We did not make a second offer because we were discouraged by Wachovia to do so," Comparato says. "Furthermore, the stipulations that Wachovia set for us were nothing short of absurd."

Compson's first offer was $15.50 per share as was at least one other bid. "The response from Wachovia was our offer was short on price and not acceptable due to the inclusion of a 14-day due diligence," Comparato says. "In verbal negotiations with Wachovia, we agreed to increase our price to $16 per share, however required the 14-day due diligence." He says the other stickling point was Compson didn't want the entire company. "We were told to no longer pursue the transaction unless our offer was for the entire company, not solely the assets, and had no contingency period," he says.

Comparato is sticking by an offer to buy the real estate, but not the Sizeler company. "We don't buy companies," he says. "We buy real estate. I don't have an interest in taking on employees or potential liabilities that come when a company is bought."

Under the pact with Revenue Properties-Morguard, Sizeler president and CEO Thomas A, Masilla Jr. and CFO Guy M. Cheramie will be retained on an at-will basis. If the merger closes Nov. 1, Masilla's cash severance will be about $1.82 million and Cheramie's $1.08 million. Besides his per-share take, Tanz also will get $165,000 in cash immediately prior to closing in lieu of 150,000 options for Sizeler common stock.

The proposed merger's break-up cost is $6.5 million or all expenses incurred by Revenue Properties--whichever is cheaper. If Sizeler follows normal schedules, a final proxy will be filed by the end of September. It's anticipated that a shareholders' vote will be held in mid-October.