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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [x]
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[ ] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
CAPTEC NET LEASE REALTY, INC.
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(Name of Registrant as Specified in Its Charter)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[CAPTEC LOGO]
NEWS RELEASE
For Immediate Release
CAPTEC MAILS DEFINITIVE PROXY MATERIALS
SPECIAL MEETING OF STOCKHOLDERS SCHEDULED FOR NOVEMBER 19, 2001
ANN ARBOR, Mich., October 11, 2001 - Captec Net Lease Realty Inc. (NASD: CRRR)
announced today that it is commencing the mailing of its definitive proxy
materials to all Captec stockholders to approve its proposed merger with
Commercial Net Lease Realty, Inc. (NYSE: NNN).
The proposed merger requires the approval of a majority of the outstanding
shares of Captec common stock. Captec stockholders of record as of October 9,
2001 will be entitled to vote at a Special Meeting of Stockholders, which has
been scheduled for 10:00 a.m. on November 19, 2001. The meeting will be held at
the Ritz-Carlton Hotel in Dearborn, MI.
Captec also announced today that it has mailed the following letter, together
with the definitive proxy materials, to all Captec stockholders:
Dear Fellow Captec Stockholder:
On July 2, 2001, the board of directors of Captec unanimously approved a
definitive merger agreement with Commercial Net Lease Realty, Inc.
(CNLR), a leading net lease REIT. Under the agreement, CNLR will acquire
all of Captec's outstanding shares for a combination of cash and stock
with an aggregate value of approximately $124 million, based on a value
of $13.05 per share of Captec common stock, at the time the agreement
was executed. The stock portion is expected to be tax-free to Captec
stockholders and the transaction is expected to be completed during the
fourth quarter of 2001.
Our merger with CNLR will create one of the nation's largest owners of
triple net leased, freestanding retail properties with total assets of
approximately $1 billion. We are asking Captec stockholders to approve
the merger at a special meeting to be held at 10:00 a.m., local time, on
November 19, 2001 at the Ritz-Carlton Hotel, 300 Town Center Drive,
Fairlane Plaza, Dearborn, MI 48126. To ensure that you receive the value
this transaction offers, YOUR BOARD OF DIRECTORS RECOMMENDS THAT ALL
CAPTEC STOCKHOLDERS SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD
TODAY TO VOTE FOR THE PROPOSED MERGER.
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YOUR BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THAT THE PROPOSED MERGER WITH
CNLR IS IN THE BEST INTERESTS OF CAPTEC AND ALL OF ITS STOCKHOLDERS.
We expect that the greater scale and financial resources of a combined
CNLR-Captec will provide Captec stockholders with greater opportunities
for growth and long-term value than Captec could achieve on its own.
Captec stockholders will benefit from immediate cash consideration and
the opportunity to participate in the upside potential of a continued
investment in a combined CNLR-Captec.
- ATTRACTIVE CONSIDERATION FOR YOUR CAPTEC SHARES - Under the terms of
the merger agreement, Captec stockholders will receive in exchange
for each share of Captec common stock a combination of $1.27 in
cash, 0.4575 shares of CNLR common stock and 0.21034679 shares of a
new class of CNLR preferred stock, 9.0% Series A Non-Voting
Preferred Stock. Based upon the closing price of CNLR common stock
on June 29, 2001, the last trading day prior to the merger
announcement, and assuming the $25.00 liquidation preference as the
value of the preferred stock, Captec stockholders would receive
total consideration of approximately $13.05 per Captec share --
representing a premium of nearly 20% to Captec's closing stock price
on September 27, 2000, one day prior to the announcement of the
board's decision to pursue a sale of the company.
- CNLR HAS AN 11-YEAR HISTORY OF PAYING INCREASING DIVIDENDS - For
each of the past 11 years, CNLR has paid increasing dividends to its
stockholders. CNLR's common stock dividend, which is currently $1.26
per share, is significantly more secure than Captec's dividend.
Captec, which has a dividend payout ratio of 97.8%, would likely
have to reduce its dividend in the future were it to continue as an
independent company.
- CNLR WILL BECOME A LARGER, MORE DIVERSIFIED REIT - As a result of
this merger, CNLR will become one of the largest public REITs in the
net lease sector with an enhanced portfolio of more than 377
properties in 40 states. After the merger, CNLR will have total
gross leaseable area of approximately seven million square feet -
approximately seven times Captec's current total gross leaseable
area. CNLR's diversified tenant base will become even more diverse
with 96 tenants in 27 different retail lines of trade.
- CNLR IS AN ECONOMICALLY ROBUST, INVESTMENT GRADE COMPANY - The
combined CNLR-Captec, in comparison to Captec as an independent
company, will have a larger market capitalization and is expected to
have higher average trading volumes, increased liquidity and a lower
cost of capital. Furthermore, the transaction is expected to be
immediately accretive to CNLR's funds from operation (FFO) by adding
between $0.05 and $0.07 per share. In addition, the nation's leading
credit rating agencies, Standard & Poor's, Moody's and Fitch, have
already affirmed that CNLR's debt will continue to be rated
investment grade. We are confident that these factors greatly
improve the growth prospects to Captec's stockholders.
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THE CNLR MERGER AGREEMENT RESULTS FROM A SALE PROCESS THAT WAS DESIGNED TO
MAXIMIZE THE VALUE OF YOUR INVESTMENT IN CAPTEC
A SPECIAL COMMITTEE OF YOUR BOARD OF DIRECTORS CONDUCTED A THOROUGH AND
COMPLETE SALE PROCESS TO SEEK THE HIGHEST VALUE FOR YOUR CAPTEC SHARES
- A special committee of independent directors, together with its
outside financial advisor, UBS Warburg LLC, undertook a thorough
sale process in which more than 50 companies were invited to
participate.
- UBS Warburg provided the special committee with an opinion that, as
of the date of the opinion, the merger consideration to be received
by Captec's stockholders in the CNLR merger is fair, from a
financial point of view.
- The special committee and the board of directors, considering, among
other things, the opinion from UBS Warburg, unanimously determined
that the CNLR merger proposal is in the best interests of Captec and
all of its stockholders.
As further discussed in our proxy materials, CNLR conditioned its merger
proposal on the sale of certain of Captec's non-real estate assets.
Patrick Beach, Captec's chairman, president and chief executive officer,
agreed to acquire these assets for $7.5 million, plus the assumption of
related liabilities. In recommending to the board of directors that it
approve the asset sale agreement with Mr. Beach, the special committee
considered the following:
- Other participants in the sale process indicated either that they
were not interested in acquiring these non-real estate assets or
would offer only nominal value for them.
- Captec's stockholders would receive immediate and certain cash
consideration of $0.79 per share for the non-real estate assets as a
result of the asset sale.
The special committee determined, after a comprehensive sale process and
consideration of all viable alternatives, that the asset sale agreement
was the best option available for those assets, and that the merger with
CNLR, together with the asset purchase agreement, were in the best
interests of Captec and all of its stockholders.
CAPTEC'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSED MERGER WITH CNLR. TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED WHITE PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED, SELF-ADDRESSED, STAMPED ENVELOPE. YOUR VOTE IS EXTREMELY
IMPORTANT. FAILURE TO VOTE YOUR SHARES HAS THE SAME EFFECT AS VOTING
AGAINST THE MERGER. If you have any questions or require any assistance
in executing or delivering your proxy or voting instructions, please
call our proxy solicitor, Georgeson Shareholder Communications at
800-223-2064 (toll-free).
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On behalf of Captec's Board of Directors,
/s/ Edward G. Ptsazek
Edward G. Ptsazek
Secretary
Captec Net Lease Realty, Inc.
ABOUT CAPTEC
Captec Net Lease Realty, Inc. is a real estate investment trust (REIT) that
invests in long-term net leased restaurant and retail properties. At June 30,
2001, Captec owned and/or managed a diversified portfolio of 229 freestanding
restaurant, retail and entertainment properties throughout the United States.
For more information about Captec toll-free via fax, dial 1-800-PRO-INFO or
1-800-776-4636, follow the voice menu prompts and enter the company code "CRRR"
or 2777 on any touch tone phone or visit the Captec web site at www.captec.com.
FORWARD-LOOKING STATEMENT
This communication contains certain "forward-looking statements" which represent
Captec's expectations or beliefs, including, but not limited to, statements
concerning industry performance and Captec's operations, performance, financial
condition, plans, growth and strategies. Any statements contained in this
communication that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may," "will," "expect," "anticipate," "intend," "could,"
"estimate" or "continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties,
certain of which are beyond Captec's control, and actual results may differ
materially depending on a variety of important factors, many of which are beyond
the control of Captec.
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INVESTORS / MEDIA CONTACT:
Matt Sherman
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449