Prime Group reaches an $8.25 million settlement with preferreds holder

By Susanna Moon

Chicago, Feb. 27 – Prime Group Realty Trust reached an $8.25 million settlement with a series B preferred holder in the lawsuit against the company, according to a press release by Berger & Montague, PC, a lead counsel.

The proposed settlement was achieved on behalf of holders of Prime Group Realty Trust's preferred holders for the period Oct. 10, 2011 through Dec. 26, 2012, according to a Friday press release.

As previously announced, Prime Group said that on Nov. 21 preferred shareholder Patricia Fox filed a putative class action lawsuit in the U.S. District Court for the Northern District of Illinois against the company, the company's trustees and Five Mile Capital Partners LLC and some of its affiliates.

The lawsuit was for the merger agreement dated Sept. 28 between Prime Group and Five Mile. Five Mile agreed to acquire Prime Group's outstanding series B preferred shares for $5.25 in cash per preferred. The merger was subject to approval by holders of a majority of the company's common stock and at least two-thirds of the company's series B preferreds.

Fox alleged that

• Prime Group and its trustees breached their contractual obligations with respect to the series B preferreds by approving the proposed merger;

• The trustees and Five Mile breached alleged fiduciary duties to the series B preferred holders by approving the proposed merger; and

• Five Mile would be unjustly enriched to the detriment of the series B preferred holders as a result of the merger.

The plaintiff sought declaratory and injunctive relief, including enjoining the completion of the proposed merger, as well as damages.

Prime Group previously said it believed that the allegations in the complaint were without merit and intended to defend the action vigorously.

The company expected to incur significant expenses and costs to defend against the allegations.

The company and Five Mile agreed to delay the closing of the merger – assuming the necessary shareholder approvals were received at the special meeting – until the earlier of Dec. 12 or the resolution of Fox's motion for a preliminary injunction.

Instructions for receiving the merger payment of $5.25 per series B preferred was to be sent to the holders only after the merger is completed.

If Prime Group and Five Mile are preliminarily enjoined from completing the transaction, the merger agreement may terminate, the company previously said.

Prime Group's trustees are Jeffrey A. Patterson, James G. Glasgow, Jr., Scott R. Leitman, David L. Reynolds, John M. Sabin, Shawn R. Tominus and George R. Whittemore.

Prime Group is a real estate investment trust that owns, manages, leases, develops and redevelops office and industrial real estate in metropolitan Chicago.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.