CHEVY CHASE, MD-Gazit-Globe, an Israeli real estate firm that has acquired a 9% stake in the Mills Corp., filed a complaint against the locally based REIT in a Delaware court, urging it to hold its annual meeting in a timely manner. Gazit purchased its interests in Mills last month, and executives say they are willing to spend $1.2 billion to recapitalize the firm.
In a letter to Mark Ordan, Mills' chief executive officer, Gazit chairman Chaim Katzman claims that Mills' board has avoided Gazit's proposal to revamp the company. "We believe your purpose is not to bring us into the strategic process, but rather to baffle, frustrate and ultimately deter Gazit's efforts to give its recapitalization proposal the hearing it deserves," the letter says.
It claims that Mills' board needs to take the matter of recapitalization before shareholders, stressing that the company has delayed its annual meeting "because it has been unable to get its fiscal house in order." Mills was scheduled to file its 10-K with the SEC on Nov. 1 but has delayed that process for three to four weeks. The company also has yet to prior past financial reports with the commission.
Katzman's letter also stresses that it does not want any definitive agreement to sell Mills or any substantial assets until all interested bidders are given 14 days to assess the REIT's financials. A Mills company announcement last month said it was considering the offers of Gazit and other firms as part of the strategic process, but was concentrating on executing its financial filings.
A Mills spokesman did not respond to this article by deadline. The company, which owns 39 malls and retail-entertainment centers across the US, came under fire last year for accounting irregularities, an SEC investigation, higher-than-projected development costs, and other issues. Since that time, the firm has put itself up for sale and let go about 160 employees.
A Gazit SEC filing says that it is willing to invest the $1.2 billion through preferred stock at a price per share of $24.50. Through existing funds, it has $700 million to invest in Mills. The Royal Bank of Canada will provide additional financing, the filing says.
Gazit-Globe owns 41% of publicly traded grocery-center owner North Miami Beach, FL-based Equity One, among other real estate firms. Katzman is the chairman of both Gazit-Globe and Equity One.
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