Item 1.01. Entry into a Material Definitive Agreement.
On
May 22, 2007, Crescent Real Estate Equities Company, a Texas real estate investment
trust (the
“Company”), Crescent Real Estate Equities Limited Partnership, a Delaware limited
partnership (the
“Operating Partnership”), Moon Acquisition Holdings LLC, a Delaware limited
liability company (
“Parent”), Moon Acquisition LLC, a Delaware limited liability company and
wholly-owned subsidiary of Parent (
“REIT Merger Sub”), and Moon Acquisition Limited Partnership, a
Delaware limited partnership of which Parent is the sole general partner (
“Partnership Merger Sub”
and, together with Parent and REIT Merger Sub, the
“Buyer Parties”), entered into a definitive
Agreement and
Plan of Merger (the
“Merger Agreement”) pursuant to which the Buyer Parties, all of
which are affiliates of Morgan Stanley Real Estate, will acquire
the Company in an all-cash
transaction (the
“Transaction”).
Pursuant to the terms of the Merger Agreement, at closing
the Company will merge with and into
REIT Merger Sub, which will be the surviving entity (the
“Company Merger”), and Partnership Merger
Sub will merge with and into the Operating Partnership, which will be the surviving entity (the
“Partnership Merger” and, together with
the Company Merger, the
“Mergers”).
Upon the effective time of the Mergers: (i) each outstanding Common Share not owned by
the Company or its affiliates or not subject to dissenter’s rights, will automatically
be canceled and converted into the right to receive cash, without interest, equal to $22.80 per
Common Share (the
“Common Share Consideration”), (ii) each outstanding unit of interest in the
Operating Partnership other than a Restricted Unit (a
“Unit”) will automatically be canceled and
converted into the right to receive cash, without interest, equal to $45.60 per Unit (the
“Unit
Consideration”), (iii) each outstanding option to purchase Common Shares or Units (an
“Option”)
will automatically be canceled and converted into the right to receive cash equal to the product of
(x) the number of Common Shares or Units issuable upon exercise of the Option, and (y) the excess
of the Common Share Consideration or Unit Consideration, as applicable, over the exercise price of
the Option per Common Share or Unit, respectively, and (iv) each restricted unit issued under the
long-term incentive plans of the Operating (a
“Restricted Unit”) will automatically be canceled and
converted into the right to receive $45.60 per Restricted Unit, plus accrued and unpaid dividends.
The Transaction was unanimously approved by
the Company’s Board of Trust Managers, which
recommended that the holders of the Common Shares approve the transaction. In addition, Mr.
Richard E. Rainwater, Chairman of
the Company’s Board of Trust Managers, entered into a voting
agreement pursuant to which he agreed to vote the Common Shares that he beneficially owns in favor
of Company Merger, and
the Company and Crescent Real Estate Equities, Ltd., a Delaware corporation
and the sole general partner of the Operating Partnership, entered into a voting agreement pursuant
to which they agreed to vote their partnership interests in favor of the Partnership Merger, in
each case for so long as the Merger Agreement has not been terminated.
The Company, the Operating Partnership and the Buyer Parties have made various
representations, warranties and covenants in the Merger Agreement. Among other things,
the Company
is subject to restrictions on its ability to solicit third-party proposals, or provide information
to and engage in discussions with such third parties. Subject to the terms of the Merger
Agreement, however,
the Company may provide information and participate in discussions with respect
to any unsolicited third party proposal that the Board of Trust Managers, after consultation with its advisors
and notice to the Buyer Parties, determines is reasonably likely to be or become a
“Superior
Proposal” as defined in the Merger Agreement.
The Merger Agreement may be terminated by
the Company and/or Parent under certain
circumstances, including if the Mergers have not been consummated on or before
October 31, 2007, if
the Company’s shareholders do not approve the Transaction, if a party is in breach of the
representations and warranties contained in the Merger Agreement such that a condition to closing
is incapable of being satisfied, or if
the Company has approved a Superior Proposal in accordance
with the Merger Agreement. In the event the Merger Agreement is terminated because
the Company’s
Board of Trust Managers decides to recommend a Superior Proposal to
the Company’s shareholders or
if
the Company’s shareholders do not approve the Transaction and
the Company announces an
“Acquisition Proposal” (as defined in the Merger Agreement) before the Merger Agreement is
terminated and enters into an agreement with respect to such proposal within 12 months of the
termination of the Merger Agreement,
the Company is obligated to pay a fee of $64,200,000 to
Parent.
Completion of the Transaction is subject to approval by the affirmative vote of the holders of
at least two-thirds of the outstanding Common Shares, as well as to the satisfaction of certain
customary closing conditions and the
possible review and clearance of necessary filings by the Securities and Exchange Commission
and other governmental authorities. Morgan Stanley and Morgan Stanley Real Estate Funding II, L.P.
have agreed to guarantee the payment obligations of the Buyer Parties under the Merger Agreement in
the amount of up to $300,000,000.
The foregoing description of the Mergers and the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the Merger Agreement,
which is attached as
Exhibit 2.01 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
The following exhibits are included in this Form 8-K.
(d) Exhibits
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2.01 |
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Agreement and Plan of Merger among Crescent Real Estate Equities
Company, Crescent Real Estate Equities Limited Partnership, Moon
Acquisition Holdings LLC, Moon Acquisition LLC and Moon Acquisition
Limited Partnership, dated as of May 22, 2007
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99.1 |
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Press Release, dated May 22, 2007, of Crescent Real Estate Equities Company relating to the execution of an Agreement and Plan of Merger
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ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
The foregoing summary of the terms of the agreement between
the Company and Morgan Stanley does not
purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is filed as an exhibit to this Current Report on Form 8-K.
The Company’s trust managers, executive officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from the shareholders of
the Company in
favor of the proposed Transaction. Information about
the Company and its trust managers and executive
officers, and their ownership of
the Company’s securities, is set forth in
the Company’s Amendment
to Annual Report on Form 10-K/A, which was filed with the SEC on
April 30, 2007 and amended
on
May 2, 2007. Additional information regarding the interests of those persons may be obtained by
reading the proxy statement when it becomes available.
In connection with the proposed merger,
the Company also will file a proxy statement with the SEC and,
upon SEC clearance, will mail the proxy to shareholders. Shareholders of
the Company are urged to read
the proxy statement regarding the proposed merger when it becomes available, because it will
contain important information. Shareholders will be able to obtain a copy of the proxy statement as
well as other filings containing information about
the Company, when available, without charge, at the
SEC’s Internet site (
http://www.sec.gov). In addition, copies of the proxy statement can be
obtained, when available, without charge, by directing a request to
the Company via the telephone
numbers listed below.
Jane E. Mody, Managing Director and Chief Financial Officer, Crescent (
817) 321-1086
Jeremy C. Sweek, Investor & Media Relations Senior Manager, Crescent (
817) 321-1464
Alyson D’Ambrisi, Media Relations, Morgan Stanley +44 207 425 2431
FORWARD-LOOKING STATEMENTS
This
press release may include
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts, included in this
press release
that address activities, events or developments that the partnership expects, believes or
anticipates will or may occur in the future are forward-looking statements. These statements
subject to a number of assumptions, risks and uncertainties, many of which are beyond the control
of
the Company, which may cause
the Company’s actual results to differ materially from those
implied or expressed by the forward-looking statements. Crescent assumes no duty whatsoever to
update these forward-looking statements or to conform them to future events or developments.