Grubb & Ellis extends consent bid for 7.95% convertibles, amends fee

By Angela McDaniels

Tacoma, Wash., March 25 - Grubb & Ellis Co. extended the consent solicitation for its $31.5 million of outstanding 7.95% senior convertible notes due 2015 to 5 p.m. ET on April 4 from 5 p.m. ET on March 25, according to an 8-K filing with the Securities and Exchange Commission.

The company is soliciting consents to amend the indenture governing the notes to exclude subsidiaries Daymark Realty Advisors, Inc. and NNN Realty Advisors, Inc. (and each of these subsidiaries' direct and indirect subsidiaries) from the determination of an event of default under the indenture.

The proposed amendment requires the consent of the holders of a majority-in-interest of the principal amount of the notes outstanding.

As a consent fee, holders are being offered a number of unregistered shares of common stock equal to 4% of par divided by the closing price of Grubb & Ellis stock on the expiration date, subject to a minimum share price of $0.89 and a maximum share price of $0.99.

When the offer began, the consent fee was fixed at 36.036 unregistered shares per $1,000 principal amount of notes. At the time, this number of shares was worth roughly 4% of par. The company's shares closed at $0.98 on March 25 (NYSE: GBE), giving 36.036 shares a value equal to 3.5% of par.

The consent solicitation began March 8 and is open only to holders of record as of March 7.

Under a registration rights agreement, the company will attempt to file a shelf registration statement for the resale of the restricted shares no later than April 15. If the company defaults on its obligations under the agreement, it will have to pay an amount that will accrue at a rate of 2% per month on the average daily aggregate market value of the restricted stock issued as the consent fee, determined daily by multiplying the amount of that restricted stock by $1.11 per share, until all registration defaults are cured.

JMP Securities is the company's financial adviser. MacKenzie Partners, Inc. is the information and tabulation agent for the consent solicitation.

Grubb & Ellis is a Santa Ana, Calif.-based real estate services and investment firm.

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