1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 3, 1998
EASTGROUP PROPERTIES, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND
- --------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION
1-7094 13-2711135
- ------------------------ ----------------------------------
(Commission File Number) (IRS Employer Identification No.)
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
P.O. BOX 22728
JACKSON, MISSISSIPPI 39225-2728
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (601) 354-3555
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Page 1 of 7
2
Form 8-K
EastGroup Properties, Inc.
Item 1. Description of Registrant's Securities to be Registered.
On December 3, 1998, the Board of Directors of EastGroup Properties,
Inc. (the "Company") adopted a shareholder rights plan. On December 3, 1998, the
Board of Directors of the Company declared a dividend distribution of one Right
for each outstanding share of the Company's common stock, par value $0.0001 per
share (the "Common Stock"), to stockholders of record at the close of business
on December 28, 1998. Each Right entitles the registered holder to purchase from
the Company one one-thousandth (1/1,000) of a share of Series C Preferred Stock,
par value $0.0001 per share (the "Preferred Stock"), at a Purchase Price of $70
per one one-thousandth (1/1,000) of a share, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Harris Trust and Savings Bank, as
Rights Agent (the "Rights Agent"). Also, each share of Common Stock issued after
December 28, 1998 and before the Distribution Date (defined below) will receive
one Right, and each share of the Company's Series B Cumulative Convertible
Preferred Stock, $0.0001 par value ("Series B Preferred Stock") issued after
December 28, 1998 will receive 1.1364 Rights.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock or Series B
Preferred Stock upon the earlier of (i) ten business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15 percent or more of the outstanding shares of Common Stock or
the Company has determined that a Person is an Adverse Person (the "Stock
Acquisition Date"), (ii) ten business days (or such later date as the Board of
Directors determines) following the commencement of a tender or exchange offer
that would result in a person or group beneficially owning 15 percent or more
of such outstanding shares of Common Stock, or (iii) ten business days after
the Board of Directors declares that a person or group of affiliated or
associated persons (an "Adverse Person") owns a substantial percentage of the
outstanding Common Stock (not less than 9.8 percent) and determines that such
person's ownership (a) is intended to cause pressure on the Company to take
action or enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under circumstances where
the best long-term interests of the Company and its stockholders would not be
served by such action or transactions at that time or (b) is causing or is
reasonably likely to cause a material adverse impact on the business or
prospects of the Company (including but not limited to, jeopardization of the
Company's status as a real estate investment trust under the Internal Revenue
Code of 1986, as amended; impairment of relationships with the Company's
tenants, customers, lenders, providers of financial and other services, or
regulators; or impairment of the Company's ability to maintain its competitive
position). The date the Rights separate is referred to as the "Distribution
Date."
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock or Series B Preferred Stock certificates and will be transferred
with and only with such certificates, (ii) new Common Stock or Series B
Preferred Stock certificates issued after December 28, 1998 will contain a
notation incorporating the Rights Agreement by reference,
Page 2 of 7
3
and (iii) the surrender for transfer of any certificates for Common Stock or
Series B Preferred Stock outstanding will also constitute the transfer of the
Rights associated with the Common Stock or Series B Preferred Stock represented
by such certificates. Pursuant to the Rights Agreement, the Company reserves the
right to require prior to the occurrence of a Triggering Event (as defined
below) that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 3, 2008, unless earlier redeemed by
the Company as described below.
In the event that (i) the Company is the surviving corporation in a
merger or other business combination with an Acquiring Person or an Adverse
Person (or any associate or affiliate thereof) and its Common Stock remains
outstanding and unchanged, (ii) any person shall acquire beneficial ownership
of more than 15 percent of the outstanding shares of Common Stock except
pursuant to certain consolidations or mergers involving the Company or sales or
transfers of the combined assets, cash flow or earning power of the Company and
its subsidiaries, or (iii) there occurs a reclassification of securities, a
recapitalization of the Company or any of certain business combinations or
other transactions (other than certain consolidations and mergers involving the
Company and sales or transfer of the combined assets, cash flow or earning
power of the Company and its subsidiaries) involving the Company or any of its
subsidiaries which has the effect of increasing by more than one percent the
proportionate share of any class of the outstanding equity securities of the
Company or any of its subsidiaries beneficially owned by an Acquiring Person or
an Adverse Person (or any associate or affiliate thereof), then each holder of
a Right (other than the Acquiring Person or Adverse Person and certain related
parties) will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the Purchase Price of the Right.
However, Rights are not exercisable following the occurrence of any of the
events described above until such time as the Rights are no longer redeemable
by the Company as described below. Notwithstanding any of the foregoing,
following the occurrence of any of the events described in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person or Adverse Person
will be null and void.
For example, at a Purchase Price of $70 per Right, each Right not owned
by an Acquiring Person or an Adverse Person (or by certain related parties or
transferees thereof) following an event set forth in the preceding paragraph
would entitle its holder to purchase $140 worth of Common Stock (or other
consideration, as noted above) for $70. Assuming that the Common Stock had a per
share market price of $20 at such time, the holder of each valid Right would be
entitled to purchase seven shares of Common Stock for $70.
Page 3 of 7
4
In the event that, at any time following the Stock Acquisition Date,
(i) the Company enters into a merger or other business combination transaction
in which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a consolidation, merger or similar transaction
pursuant to which all or part of the outstanding shares of Common Stock are
changed into or exchanged for stock or other securities of any other person or
cash or any other property, or (iii) more than 50 percent of the combined
assets, cash flow or earning power of the Company and its subsidiaries is sold
or transferred (in each case other than certain consolidations with, mergers
with and into, or sales of assets, cash flow or earning power by or to
subsidiaries of the Company as specified in the Rights Agreement), then each
holder of a Right (except Rights which previously have been voided as set forth
above) will thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the Purchase Price
of the Right. The events described in this paragraph and in the second
preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights, options or warrants
to subscribe for Preferred Stock or securities convertible into Preferred Stock
at less than the current market price of the Preferred Stock, if applicable, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness, cash (excluding regular quarterly cash dividends), assets (other
than dividends payable in Preferred Stock), or subscription rights or warrants
(other than those referred to in (ii) immediately above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one percent of the
Purchase Price. No fractional shares of Preferred Stock are required to be
issued (other than fractions which are integral multiples of 1/1,000 of a
share of Preferred Stock) and, in lieu thereof, the Company may make an
adjustment in cash based on the market price of the Preferred Stock, if
applicable, on the trading date immediately prior to the date of exercise.
At any time after any person or group becomes an Acquiring Person or
an Adverse Person and prior to the acquisition by such person or group of 50
percent or more of the outstanding shares of Common Stock, the Board of
Directors of the Company may, without payment of the Purchase Price by the
holder, exchange the Rights (other than Rights owned by such person or group,
which will become void), in whole or in part, for shares of Common Stock at an
exchange ratio of one-half the number of shares of Common Stock (or in certain
circumstances Preferred Stock) for which a Right is exercisable immediately
prior to the time of the Company's decision to exchange the Rights (subject to
adjustment).
At any time until ten business days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price
of $0.0001 per Right (payable in cash, shares of Common Stock or other
consideration deemed appropriate by the Board of Directors). Immediately upon
the action of the Board of Directors ordering
Page 4 of 7
5
redemption of the Rights, the Rights will terminate and the holders of Rights
only right will be to receive the $0.0001 redemption price.
EastGroup has entered into an agreement with Five Arrows Realty
Securities II L.L.C. ("Five Arrows") pursuant to which EastGroup may issue and
sell to Five Arrows up to 2,800,000 shares of Series B Preferred Stock (which
would be convertible into 3,181,920 shares of Common Stock). There are
currently no shares of Series B Preferred Stock outstanding. Five Arrows will
not be deemed to be either an Acquiring Person for purposes of the 15 percent
threshold or, an Adverse Person for purposes of the 9.8 percent threshold,
solely as a result of its ownership of Series B Preferred Stock or the Common
Stock it may acquire on the conversion of Series B Preferred Stock.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date; provided,
that any amendments after the Stock Acquisition Date must be approved by a
majority of the Disinterested Directors and that no amendment to adjust the
time period governing redemption can be made at such time as the Rights are not
redeemable. After the Distribution Date, the provisions of the Rights Agreement
may be amended by the Board in order to cure any ambiguity, inconsistency or
defect, to make changes that do not adversely affect the interest of holders of
Rights (excluding the interest of any Acquiring Person or Adverse Person), or to
shorten or lengthen any time period under the Rights Agreement; provided, that
any amendments after the Stock Acquisition Date must be approved by a majority
of the Disinterested Directors.
The term "Disinterested Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Disinterested
Directors, but it does not include an Acquiring Person or an Adverse Person, or
an affiliate or associate of an Acquiring Person or an Adverse Person or any
representative of the foregoing entities.
Until a Right is exercised, the holder thereof will have no rights as
a stockholder of the Company associated with the Rights, including, without
limitation, the right to vote or to receive dividends. While the distribution
of the Rights will not be taxable to stockholders or to the Company,
stockholders may, depending upon the circumstances, recognize taxable income in
the event that the Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of an acquiring company as
set forth or in the event that the Rights are redeemed.
Page 5 of 7
6
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4 Rights Agreement, dated as of December 3, 1998, by and between
EastGroup Properties, Inc. and Harris Trust and Savings Bank,
as Rights Agent (incorporated by reference to the Registrant's
Form 8-A filed December 9, 1998).
99 Press Release dated December 3, 1998 (incorporated by
reference to the Registrant's Form 8-A filed December 9,
1998).
Page 6 of 7
7
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 hereunto duly authorized.
Dated: December 8, 1998
EASTGROUP PROPERTIES, INC.
By: /s/ N. Keith McKey
-------------------------------
N. Keith McKey, CPA
Executive Vice President,
Chief Financial Officer, and
Secretary
Page 7 of 7