MacKenzie makes tender offer for BRE Select Hotels 7% preferreds

By Marisa Wong

Madison, Wis., April 4 - BRE Select Hotels Corp. said it received an unsolicited tender offer by affiliates of MacKenzie Capital Management, LP to buy up to 9 million shares of its 7% series A cumulative redeemable preferred stock at a price of $1.30 per share, less any cash distributions made by the company after April 7.

Given that the company has declared a cash dividend of $0.0333 per share, payable on April 15 to holders of record on April 1, the current adjusted price of the MacKenzie offer is $1.2667 per share, according to a press release.

The company said that after careful evaluation of the terms of the tender offer, neither it nor its board of directors makes any recommendation as to whether the holders of the preferreds should tender or refrain from tendering shares.

The company noted that the adjusted offer price of $1.2667 per share represents a 33% discount to the initial liquidation preference of $1.90 per share. The adjusted offer price is also lower than the $1.30 per share that BRE Select Hotels Holdings LP, the holder of all of the company's outstanding common stock, paid for roughly 2 million preferred shares in a tender offer that expired on Sept. 27, 2013.

The BRE Holdings offer was made in response to a prior tender offer by MacKenzie, which had an initial offer price of $0.50 per share, or an adjusted price of $0.4771 per share taking into account a deduction for cash distributions.

The BRE Holdings offer had an initial offer price of $1.20 per share, which was increased to $1.30 per share after MacKenzie increased its offer price to $1.25 per share.

However, BRE Holdings does not intend to provide shareholders with an offer in response to the pending MacKenzie tender offer.

The current offer cap of 9 million shares represents less than 10% of the 97,032,848 outstanding preferreds.

MacKenzie is offering to purchase the 9 million shares on a "first-come, first-buy" basis.

Tenders may not be withdrawn.

BRE Select Hotels is a real estate investment trust based in New York.

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