SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 22, 1998
Stratus Properties Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-19989 72-1211572
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation or Number)
organization)
98 San Jacinto Blvd., Suite 220
Austin, Texas 78701
(Address of principal executive offices)
(512) 478-5788
(Registrant's telephone number, including area code)
FM Properties Inc.
98 San Jacinto Blvd. Suite 220
Austin, Texas 78701
(Former name or former address, if changes since last report)
Item 5. Other Events.
On May 22, 1998, Stratus Properties Inc. (STRS) and
Olympus Real Estate Corporation (Olympus), an affiliate of Hicks,
Muse, Tate & Furst Incorporated, formed their previously announced
strategic alliance to develop certain of STRS' existing properties and
to pursue new real estate acquisition and development opportunities.
Under the terms of the agreements, Olympus made an approximately $10
million investment in a STRS mandatory redeemable preferred stock,
provided a $10 million convertible debt financing facility to a
wholly owned subsidiary of STRS and made available up to $50 million
of capital for direct investment in joint STRS/Olympus projects.
Pursuant to a Securities Purchase Agreement, a copy of
which is filed as Exhibit 99.2 to this report, STRS issued to
Olympus 1,712,328 shares of Series B Participating Preferred
Stock (the Preferred Stock) at a stated value of $5.84 per share,
the average closing price of a share of STRS common stock on the
Nasdaq Stock Market during the 30 trading days ending March 2,
1998, the date of STRS/Olympus letter of intent for the
transaction. The designations, preferences and rights of the
Preferred Stock are set forth in a Certificate of Designations, a
copy of which is filed as Exhibit 4.1 to this report. In
addition, Olympus has certain rights with respect to the
Preferred Stock and certain other rights, including the right to
designate for nomination 20 percent of STRS' board membership,
as set forth in an Investors Rights Agreement, a copy of which is
filed as Exhibit 4.2 to this report.
The shares of Preferred Stock are redeemable (i) at the
option of Olympus at any time after May 22, 2001 for an amount
per share approximating the economic benefit that would have
accrued had the shares been converted into common stock on a
one-to-one basis and sold (the "common stock equivalent value")
or (ii) at the option of STRS after May 22, 2003 (and in no event
later than May 22, 2004 at which time the Preferred Stock is
required to be redeemed) for the greater of their common stock
equivalent value or their par value per share, plus accrued and
unpaid dividends, if any. STRS has an option to satisfy the
redemption with shares of its common stock, subject to certain
limitations. The Preferred Stock will share any dividends or
distributions ratably with the STRS common stock, which currently
pays no dividend. STRS used the proceeds from the sale of the
Preferred Stock to repay debt.
The $10 million convertible debt facility is available to
a wholly owned subsidiary of STRS in whole or in part through May
22, 2004, to finance STRS' equity investment in new STRS/Olympus
joint venture opportunities in properties not currently owned by
STRS. A copy of the Loan Agreement is filed as Exhibit 4.3 to
this report. The interest rate on the convertible debt will be
12 percent per year, with interest payable quarterly or accrued.
Outstanding principal under the facility will be convertible at
any time into STRS common stock at a conversion price of $7.31,
which is 125 percent of the average closing price of STRS common
stock on the Nasdaq Stock Market during the 30 trading days
ending March 2, 1998. If not converted into common stock, the
convertible debt will be repaid by May 22, 2004. If the
combination of interest at 12 percent and the value of the
conversion right does not provide Olympus with at least a 15
percent annual return on the convertible debt, STRS will pay
Olympus additional interest upon retirement of the convertible
debt in an amount necessary to yield a 15 percent annual return.
The convertible debt is secured by a pledge of STRS' interests
in investments in new STRS/Olympus joint venture opportunities
financed with the proceeds of the convertible debt and is
non-recourse to STRS.
Pursuant to a Master Agreement, a copy of which is filed
as Exhibit 99.1 to this report, Olympus has made available
through May 22, 2001, up to $50 million for its share of capital
for direct investments in STRS/Olympus joint acquisition and
development activities. Through May 22, 2001, STRS has provided
Olympus a right of first refusal to participate for no less than
a 50 percent interest in all new acquisition and development
projects on properties not presently owned by STRS, as well as
development opportunities on existing properties in which STRS
seeks third-party equity participation.
Item 7. Financial Statements and Exhibits.
(c) Exhibit 4.1 Certificate of Designations of the Series B
Participating Preferred Stock of Stratus
Properties Inc.
Exhibit 4.2 Investors Rights Agreement, dated as of May
22, 1998, by and between Stratus Properties Inc.
and Oly/Stratus Equities, L.P.
Exhibit 4.3 Loan Agreement, dated as of May 22, 1998, by
and among Stratus Ventures I Borrower L.L.C., Oly
Lender Stratus, L.P. and Stratus Properties Inc.
Exhibit 99.1 Master Agreement, dated as of May 22, 1998,
by and among Oly Fund II GP Investments, L.P., Oly
Lender Stratus, L.P., Oly/Stratus Equities, L.P.,
Stratus Properties Inc. and Stratus Ventures I
Borrower L.L.C.
Exhibit 99.2 Securities Purchase Agreement, dated as of
May 22, 1998, by and between Oly/Stratus Equities,
L.P. and Stratus Properties Inc.
Exhibit 99.3 Press Release issued jointly by STRS and
Olympus on May 26, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Stratus Properties Inc.
By: /s/ C. Donald Whitmire
-----------------------
C. Donald Whitmire
Controller-Financial Reporting
(Authorized signatory)
Date: June 03, 1998
Stratus Properties Inc.
EXHIBIT INDEX
Exhibit
Number
4.1 Certificate of Designations of the Series B
Participating Preferred Stock of Stratus Properties
Inc.
4.2 Investors Rights Agreement, dated as of May 22, 1998,
by and between Stratus Properties Inc. and Oly/Stratus
Equities, L.P.
4.3 Loan Agreement, dated as of May 22, 1998, by and among
Stratus Ventures I Borrower L.L.C., Oly Lender Stratus,
L.P. and Stratus Properties Inc.
99.1 Master Agreement, dated as of May 22, 1998, by and
among Oly Fund II GP Investments, L.P., Oly Lender
Stratus, L.P., Oly/Stratus Equities, L.P., Stratus
Properties Inc. and Stratus Ventures I Borrower L.L.C.
99.2 Securities Purchase Agreement, dated as of May 22,
1998, by and between Oly/Stratus Equities, L.P. and
Stratus Properties Inc.
99.3 Press Release issued jointly by STRS and Olympus on May
26, 1998.