SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant / /
File by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Pursuant to ss.240.14a-12
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
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(Name of Registrant as Specified In Its Charter)
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NEWS RELEASE
AMERICAN RESIDENTIAL URGES STOCKHOLDERS TO VOTE THE WHITE PROXY
CARD IN SUPPORT OF THE COMPANY'S STRATEGIC BUSINESS PLAN
(San Diego, California-June 21, 2002) American Residential Investment Trust,
Inc. (NYSE: INV) today announced that it is mailing the attached letter, along
with a white proxy card, to all of its stockholders.
Included in the attached letter is information regarding the loan origination
volume of American Mortgage Network, the Company's taxable REIT subsidiary. It
is anticipated that American Mortgage Network will fund an estimated $600
million of mortgages in only its second full operating quarter and is on track
to produce monthly volumes of $500 million of mortgages per month by the end of
this year.
YOUR VOTE IS EXTREMELY IMPORTANT
June 21, 2002
Dear Fellow Stockholder:
You may be receiving proxy material from two dissident stockholders, MacKenzie
Patterson, Inc. and C.E. Patterson. We will refer to them as The Patterson
Group. These dissidents are trying to derail your Company's strategic business
plan - which is to focus on our rapidly growing and most promising American
Mortgage Network business unit. If you receive their green proxy card, we urge
you to disregard it and not return it.
Since we began to implement our strategic initiative nearly seven months ago and
began to talk with investors about American Mortgage Network and its goals and
its recent progress, your Company's trading volume has increased substantially,
and its share price has risen significantly from $1.70 per share on November
16th to $5.00 per share seven months later on June 17th. We believe that this
has been as a result of the market's positive response to our plan. IF THE
MARKET LIKES IT SO MUCH, WHY DOESN'T THE PATTERSON GROUP? PERHAPS THEY HAVE
ANOTHER AGENDA!
Furthermore, ask yourself why the three largest owners of our stock,
representing approximately 33.6% of our outstanding stock, have advised us that
they intend to vote in support of your Board's position on all proposals? WE
BELIEVE THE ANSWER IS CLEAR - THEY ARE SUPPORTING YOUR BOARD'S PROPOSALS BECAUSE
THEY BELIEVE THEIR PASSAGE WILL BE IN
THE BEST INTERESTS OF STOCKHOLDERS.
YOUR BOARD OF DIRECTORS HAS ALWAYS BEEN
COMMITTED TO DOING WHAT IS IN THE BEST INTERESTS
OF ALL OF THE COMPANY'S STOCKHOLDERS. NOW WE NEED
YOUR VOTE ON THE ENCLOSED WHITE PROXY CARD.
Six out of the eight Board members are independent and consist of a former
President of Fannie Mae, a former President of the Federal Home Loan Bank Board,
the current President of the Lincoln Land Institute at Harvard University, a
Managing Director of one of the nations most successful sub-prime mortgage
banks, a well-known and respected homebuilder, and a Managing Director of
TCW/Crescent, a large institutional investment firm affiliated with Trust
Company of the West.
YOUR BOARD AND MANAGEMENT TEAM HAVE WORKED TIRELESSLY ON YOUR BEHALF TO TAKE
DECISIVE ACTIONS TO POSITION THE COMPANY FOR FUTURE GROWTH.
OUR STATEGIC PLAN IS THE BEST ALTERNATIVE.
Prior to making its decision to terminate American Residential's REIT status,
American Residential's independent Board of Directors conducted a review of
strategic alternatives with the aid of an outside consultant in March 2001 and
September 2001. The review consisted of an analysis of the following potential
strategies:
o Liquidation of assets, both immediate or gradual, with proceeds paid
out to stockholders;
o Continued mortgage portfolio investments (both re-investing run-off or
selling the current portfolio and re-investing proceeds into new
portfolios); and
o Potential mergers (share exchanges) with other REITs.
IT WAS ONLY AFTER EACH OF THESE ALTERNATIVES WAS
CAREFULLY CONSIDERED THAT IT WAS DECIDED THAT
AMERICAN RESIDENTIAL SHOULD FOCUS ON BECOMING
A MORTGAGE ORIGINATION COMPANY.
Based upon this decision, the Company decided to move forward with the proposal
to relinquish its REIT status so that it would be free to further invest in the
promising future of the mortgage origination business without the restrictions
that govern a REIT.
THE BOARD AND MANAGEMENT HAVE THE SUPPORT
OF THE THREE LARGEST STOCKHOLDERS, REPRESENTING
APPROXIMATELY 33.6% OF OUR OUTSTANDING STOCK, WHO, LIKE ALL OF US
STOCKHOLDERS, WILL BE DIRECTLY AFFECTED
BY THE OUTCOME OF THE VOTE ON THIS IMPORTANT ISSUE.
The Patterson Group has made numerous false and misleading statements in an
effort to confuse stockholders about this plan and about American Mortgage
Network, including calling it an untested and unproven start-up and pejoratively
labeling it a "Pet Project". NOTHING COULD BE FURTHER FROM THE TRUTH.
DO NOT BE MISLED!
American Mortgage Network, American Residential's taxable subsidiary which began
operations in November of 2001, is on track with its projections, and your Board
believes The Patterson Group fails to tell you several very important points
which you should consider before voting:
o Your management team has a very successful and broad record in Mortgage
Banking, having created a similar mortgage bank, which it took public,
and later sold at a handsome premium to a major international bank.
o American Mortgage Network will fund an estimated $600 million of
mortgages in only its second full operating quarter and is on track to
produce a monthly volume of $500 million of mortgages per month by the
end of this year.
o We do not have the capital base to pursue both a REIT (portfolio
investment) strategy and a fast growing mortgage banking operation.
o Terminating the REIT status will clarify and re-position your Company
in the market as a specialty finance growth company as opposed to being
linked to the REIT sector where valuation methodologies are
inconsistent with those used for growth companies.
o The mortgage banking strategy represented by American Mortgage Network
is beginning to take hold and in our opinion is the best way to restore
earnings and over time increase share price.
o The NYSE requires that any REIT be delisted when it is no longer a
REIT. This is a standard process, and the NYSE will assist us in an
orderly move from its exchange to another national exchange. Our
stockholders will have the same liquidity opportunities as they do
today.
PROTECT YOUR INVESTMENT - VOTE YOUR
WHITE PROXY CARD TODAY!
THE INTERESTS OF YOUR BOARD AND MANAGEMENT TEAM ARE ALIGNED WITH
YOURS - TO ENHANCE STOCKHOLDER VALUE!
The Board wants to assure all of you that the creation of stockholder value is
our Board's and management's priority, each and every day. Our drive for a
significantly higher stock price and company valuation is what led to a
comprehensive strategic alternatives evaluation and the creation of American
Mortgage Network. The Board asks that you consider the following:
o That I, as Chairman and Chief Executive Officer, and Mr. Fuller, as
President and Chief Operating Officer, have had one 5% cost of living
increase to our base salaries in four years.
o We have not re-priced or re-issued options for any employee of American
Residential. The vast majority of management's options are still priced
at $15.00, $12.50 and $7.50, helping to ensure that we are motivated to
create a company that commands a stock price well above these levels.
Personally, in addition to my options, I own approximately 135,000
shares of American Residential stock (purchased with the same after tax
dollars you used to purchase your shares) at prices ranging from
approximately $15.00 to $3.50. I PLAN TO CONTINUE TO BE A PURCHASER OF
OUR STOCK BECAUSE I BELIEVE IN OUR FUTURE.
The Patterson Group criticizes our plan on one hand and then implies that the
Company should magically return to paying dividends like we did in 1999. THIS IS
A RECKLESS AND MISLEADING ATTEMPT DESIGNED SIMPLY TO GET YOUR VOTE. Our assets
have changed, the environment has changed, and we need to redirect the Company
and continue to invest in the growth potential of our origination business in
order to have the best opportunity of building value for all stockholders.
THE PATERSON GROUP MAY ALSO WANT TO LIQUIDATE
OUR ASSET PORTFOLIO - FORCING STOCKHOLDERS
TO SETTLE FOR LITTLE OR NO PREMIUM.
The Patterson Group has stated that it believes that liquidating the Company or
selling the Company's assets would maximize stockholder value. However, your
Board is convinced that liquidation of American Residential's current portfolio
assets would most likely net stockholders little, if any, premium over today's
stock price of approximately $5.00 per share1. Because all of our sub-prime
mortgages held for investment have been permanently financed by issuing
non-recourse, collateralized mortgage obligations (CMO bonds), we essentially
own a right to receive excess interest and principal on the mortgage pool, after
the debt has been serviced. As such, our portfolio assets are referred to as
"CMO residuals".
o REMEMBER, THERE IS NOT AN ACTIVE, LIQUID MARKET FOR THESE RESIDUALS,
SINCE MOST CMO ISSUERS PREFER TO RETAIN THESE RESIDUALS FOR INVESTMENT,
AS WE HAVE DONE.
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This is based upon an estimated value equal to the discounted present value
of the expected excess cash flows.
o ACCORDINGLY, IF LIQUIDATED, THESE WOULD SUFFER A SIGNIFICANT PRICE
DISCOUNT COMPARED TO THE ACTUAL CASH FLOWS, WHICH WOULD BE REALIZED
OVER THE NEXT FEW YEARS BY RETAINING THESE ASSETS.
The Board asks for your support and strongly recommends that you allow your
Board and management the time and the opportunity to create long term
stockholder value with the growth of American Mortgage Network now and in the
future.
WE ASK YOU TO JOIN US AND YOUR THREE LARGEST
STOCKHOLDERS IN VOTING IN FAVOR OF THE
BOARD'S PROPOSALS TODAY. PLEASE SIGN, DATE
AND MAIL YOUR NEW WHITE PROXY CARD
IN THE ENVELOPE PROVIDED.
DO NOT SIGN THE GREEN PROXY SENT BY THE PATTERSON GROUP. ONLY YOUR LATEST
DATED PROXY WILL BE COUNTED.
Your Board thanks you for your continued interest in the Company and pledges to
use maximum effort to move American Residential forward to benefit all
stockholders. If you have any questions or require assistance in voting, please
call our proxy solicitor at (888) 410-7852.
On Behalf of Your Board of Directors
Sincerely,
/s/ John M. Robbins
John M. Robbins
Chairman and Chief Executive Officer
ADDITIONAL INFORMATION
PROPOSALS TO REQUEST THAT THE BOARD OF DIRECTORS REDEEM THE OUTSTANDING RIGHTS
UNDER THE RIGHTS PLAN AND TO APPROVE AN AMENDMENT TO THE AMENDED AND RESTATED
BYLAWS
The Patterson Group has recently filed a Preliminary Proxy Statement with the
SEC indicating that it intends to present two proposals at the Company's Annual
Meeting. The first proposal recommends a request that the Company's Board of
Directors redeem all Preferred Stock Purchase Rights issued and outstanding
under the Rights Agreement, dated February 2, 1999, between the Company and
American Stock Transfer & Trust
Company. The other proposal recommends a director nomination amendment to the
Bylaws of the Company that would require that a director can be nominated for
re-election only if the director voted to approve the redemption or elimination
of the Rights Plan within 180 days after the stockholders' approved the request
to have the Board do so, if such request is approved by the stockholders.
Your Board believes that the Rights Agreement is a fundamental negotiating tool
and is substantially identical to the rights plans employed by hundreds, if not
thousands, of public companies. The Rights Agreement inhibits abusive conduct
and is designed to protect stockholders against practices which do not treat all
stockholders fairly and equally (unsolicited takeover attempts which utilize
abusive tactics include, for example, a gradual accumulation of shares in the
open market, a partial or two-tier tender offer that does not treat all
stockholders equally, or a squeeze-out merger that squeezes out certain
stockholders). The Rights Agreement strengthens the Company's negotiating power
and positions the Board of Directors to negotiate the best price for
stockholders where a sale of the Company is in the best interests of the
stockholders. The Board believes that keeping the Rights Agreement in place
allows the Company to improve its financial performance, while, if necessary,
using the Rights Agreement to either deter short term speculators and/or to
negotiate a higher offer price should the Company receive a fair acquisition
proposal.
While the Rights Agreement has certain anti-takeover effects, the Board believes
that the Rights Agreement does not affect any takeover proposal which the Board
of Directors determines, in the exercise of its fiduciary duties, adequately
reflects the value of the Company and is in the best interests of the Company's
stockholders. Under the terms of the Rights Agreement, the Board of Directors,
acting in the best interests of the Company and the stockholders, may redeem the
rights issued pursuant to the Rights Agreement to permit a fair, equitable and
noncoercive acquisition.
In adopting the Rights Agreement originally, the Board considered carefully the
Rights Agreement's limited purposes and benefits. The Board believes, although
it cannot be certain, that the continued application of the Rights Agreement
will result in a higher premium paid to stockholders for the sale of their
interests in the Company. The Board also believes that the presence of the
Rights Agreement does not and will not deter potential bidders or acquirors from
acquiring the Company through a tender offer or other takeover type transaction.
The continuation of the Rights Agreement will not impede any vote to replace the
Board or to propose and elect alternative nominees for the directors.
If the Rights Agreement Proposal is properly brought before the Annual Meeting,
the Company will present the proposal to its stockholders. With respect to the
Bylaw Amendment Proposal, however, as previously noted in our Definitive Proxy
Statement, we have obtained a reasoned opinion from Maryland counsel indicating
that the Bylaw Amendment Proposal is not a proper proposal for stockholder
action under Maryland law. If the Bylaw Amendment Proposal is properly brought
before the Annual Meeting, and it receives the requisite vote to pass, namely a
majority of the outstanding shares, then the
Board never-the-less reserves its right to exercise its fiduciary duty and to
take whatever action it deems necessary and appropriate, taking into
consideration the reasoned opinion of Maryland counsel and such other factors as
the Board determines to be relevant.
If either of these proposals are properly brought before the Annual Meeting, the
persons named as Proxies on the enclosed WHITE proxy card intend to vote for or
against each such proposal as the votes represented by such proxies so instruct.
If no instructions are given, the named Proxies intend to vote the proxies
AGAINST each of the proposals. If you have previously voted on the WHITE proxy
card delivered to you with the Company's Definitive Proxy Statement and you do
not vote again on the WHITE proxy card enclosed with this letter (which will
revoke your prior proxy card), your shares will not be voted AGAINST the
proposals.
IT IS VERY IMPORTANT THAT YOU DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED WHITE
PROXY CARD, FOR WHICH A RETURN STAMPED ENVELOPE IS PROVIDED.
The affirmative vote of a majority of the shares of outstanding common stock is
required for approval of each of the proposals. Abstentions and broker
non-votes, if any, will be counted as present for purposes of determining if a
quorum is present. Abstentions and broker non-votes, if any, will have the same
effect as a "No" vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE ADOPTION OF THE PROPOSAL
TO REDEEM THE OUTSTANDING RIGHTS UNDER THE RIGHTS PLAN AND THE AMENDMENT TO THE
AMENDED AND RESTATED BYLAWS.
COST AND METHOD OF SOLICITING
This solicitation is being made by the Company. The cost of soliciting proxies
will be borne by the Company. In addition to solicitations by mail, a number of
directors, officers and other employees of the Company and of its subsidiaries
may (without additional compensation) solicit proxies in person or by telephone,
telegraph, telex, facsimile, e-mail and postings on the Company's website. The
Company has also retained MacKenzie Partners, Inc. (not related in any way to
The Patterson Group), for a fee not to exceed $100,000, and reimbursement of
out-of-pocket expenses, to aid in the solicitation of proxies. MacKenzie
Partners, Inc. will be indemnified against certain liabilities and expenses,
including certain liabilities under the federal securities laws. MacKenzie
Partners, Inc. will solicit proxies from individuals, brokers, banks, bank
nominees and other institutional holders. The Company has requested banks,
brokerage houses and other custodians, nominees and fiduciaries to forward all
solicitation materials to the beneficial owners of the shares they hold of
record. The Company will reimburse these record holders for their reasonable
out-of-pocket expenses in so doing. It is anticipated that MacKenzie Partners,
Inc. will employ approximately 40 persons to solicit
the Company's stockholders for the Annual Meeting.
The Company currently estimates that the total amount which it will spend in
connection with this solicitation of proxies to be approximately $300,000. The
Company also estimates that, through the date hereof, its total expenditures to
date in connection with this proxy solicitation are approximately $125,000. This
amount excludes (i) the salaries and fees of officers, directors and employees
of the Company and (ii) the normal expenses of an uncontested election.
CONTACTS:
American Residential Investment Trust, Inc.
Judith Berry, 858-909-1230
or
Clay Strittmatter, 858-909-1340
FORWARD LOOKING STATEMENTS
Except for historical information contained in this press release and the
attachments thereto, the information contained in this press release and the
attachments thereto may constitute forward-looking statements within the meaning
of federal securities laws. Forward-looking statements include statements
regarding American Residential's anticipated loan volumes, increases in the
American Residential's stock prices, and growth, profitability and valuation of
American Residential and American Mortgage Network. Actual results and the
timing of certain events could differ materially from those projected in or
contemplated by these forward-looking statements due to a number of factors,
including but not limited to: lack of American Residential's experience in
generating mortgage loans; general economic conditions; overall interest rates;
the availability of financing for the origination of mortgage assets; the impact
of leverage; American Residential's liquidity position; volatility in the
commitments made to fund mortgages; and other risk factors included in American
Residential's most recent report on Form 10-Q, report on Form 10-K for the year
ended December 31, 2001, and other filings made with the Securities and Exchange
Commission. All forward-looking statements included in this press release and
the attachments thereto are based upon information available to American
Residential as of the date hereof, and American Residential assumes no
obligation to update any such forward-looking statements.
PARTICIPANT INFORMATION
American Residential Investment Trust, Inc. and certain other persons named
below may be deemed to be participants in the solicitation of proxies of the
American Residential's stockholders to approve the proposals set forth in
American Residential's Definitive Proxy Statement filed with the Securities and
Exchange Commission on June 7, 2002 and to vote against the stockholder
proposals set forth in the Preliminary Proxy Statement filed with the SEC on
June 11, 2002 by MacKenzie Patterson, Inc. The participants may include: (a) the
directors of American Residential: H. James Brown, Jay M. Fuller
(also President and Chief Operating Officer), Keith Johnson, Ray W. McKewon,
Richard T. Pratt, Mark J. Riedy, John M. Robbins (also Chief Executive Officer
and Chairman of the Board), and John C. Rocchio; (b) the executive officers of
American Residential: Judith A. Berry, Executive Vice President and Chief
Financial Officer; Lisa S. Faulk, Senior Vice President, Operations; and Randall
A. Myres, Senior Vice President, Chief Information Officer; and (c) other key
employees: Clayton Strittmatter, Senior Vice President of Finance. As of the
date of this press release, the participants listed above beneficially own in
the aggregate approximately 14.1% of American Residential's common stock
(including 0.5% beneficially owned by Mr. Strittmatter). Of the 14.1%
beneficially owned by the participants, 3.2% is represented by outstanding
shares and 10.9% is represented by outstanding options. Additional information
regarding the interest of the directors and executive officers of American
Residential is contained under the headings, "Stock Ownership of Certain
Beneficial Owners and Management," "Executive Compensation and Other Matters,"
and "Stock Options" in American Residential's Proxy Statement for its 2002
Annual Meeting of Stockholders filed with the SEC on June 7, 2002.