SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
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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) May 11, 2000 (May 5, 2000)
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Commission file number 1-12917
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WELLSFORD REAL PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
Maryland 13-3926898
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
535 Madison Avenue, New York, NY 10022
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(Address of principal executive offices)
(Zip Code)
(212) 838-3400
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(Registrant's telephone number, including area code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEMS 1. - 4. NOT APPLICABLE.
ITEM 5. OTHER EVENTS.
On May 5, 2000, the Company privately placed with ERP
Operating Limited Partnership ("ERPOLP"), the operating
partnership of Equity Residential Properties Trust (NYSE:
EQR), a real estate investment trust, (the "Private
Placement") 1,000,000 8.25% Convertible Trust Preferred
Securities (liquidation amount $25 per security) representing
undivided beneficial interests in the assets of WRP
Convertible Trust I, a Delaware statutory business trust ("WRP
Trust I"), with an aggregate liquidation amount of $25,000,000
(the "Preferred Securities"). The Preferred Securities were
issued by WRP Trust I, a newly formed consolidated subsidiary
of the Company, concurrently with the related issuance and
sale to WRP Trust I of the Company's 8.25% Convertible Junior
Subordinated Debentures in the aggregate principal amount of
$25,775,000 (the "Convertible Debentures").
The Company sponsored the formation of WRP Trust I, pursuant
to the Declaration of Trust, dated as of May 5, 2000 (the
"Declaration"), by the Trustees (as defined therein), the
Company, as sponsor, and ERPOLP. A Certificate of Trust for
WRP Trust I was filed in the State of Delaware on May 5, 2000.
The Preferred Securities were offered and sold pursuant to the
Declaration and the Preferred Securities Purchase Agreement,
dated as of May 5, 2000 (the "Purchase Agreement"), among the
Company, WRP Trust I, as issuer, and ERPOLP. Pursuant to the
Declaration, the proceeds obtained from the Private Placement,
together with the proceeds obtained from the issuance and sale
by WRP Trust I to the Company of 31,000 8.25% Convertible
Trust Common Securities (liquidation amount $25 per security),
pursuant to a Subscription Agreement, dated as of May 5, 2000,
representing undivided beneficial interests in the assets of
WRP Trust I with an aggregate liquidation amount of $775,000
(the "Common Securities" and together with the Preferred
Securities, the "Securities"), were used to purchase from the
Company $25,775,000 aggregate principal amount of Convertible
Debentures which were issued under an Indenture, dated as of
May 5, 2000, between the Company and Wilmington Trust Company,
as trustee (the "Indenture"). The Convertible Debentures are
the sole assets of WRP Trust I and will mature on May 4, 2022
(the "Maturity Date").
The proceeds from the sale of the Convertible Debentures will
be applied to the Company's general corporate purposes.
Distributions and amounts payable upon liquidation or
redemption and otherwise, with respect to the Securities are
guaranteed by the Company pursuant to the Preferred Securities
Guarantee Agreement, (the "Preferred Securities Guarantee")
and the Common Securities Guarantee Agreement, both dated as
of May 5, 2000, (the "Common Securities Guarantee" and
together with the Preferred Securities Guarantee the
"Guarantees"). Pursuant to the Guarantees, the Company has
agreed, in the event of any distribution of Convertible
Debentures to the holders of Securities in an amount that is
less than the aggregate principal amount of Convertible
Debentures that such holder is entitled to receive, then the
Company shall issue additional Convertible Debentures, so that
the holder receives the aggregate amount of Convertible
Debentures to which he is entitled.
2
Interest and distributions payable on each Convertible
Debenture and on each Security are fixed at a rate per annum
of 8.25% of the stated liquidation amount of $25 per
Convertible Debenture or Security, as the case may be ($2.2625
per annum or $0.515625 per quarter) from and including May 5,
2000 to and including May 4, 2022. Interest and distributions
on the Convertible Debentures and Securities are cumulative
and are required to be paid quarterly in arrears on the
fifteenth day of July, October, January and April of each
year, commencing on July 17, 2000. For any twelve quarterly
interest periods during the term of the Convertible
Debentures, and whether or not the Company has available cash
to pay interest, the Company shall have the right to pay the
interest due on the Convertible Debentures by the issuance of
additional Convertible Debentures. If interest on the
Convertible Debentures is paid by the issuance of additional
Convertible Debentures, WRP Trust I shall satisfy its
obligation to pay distributions on the Securities by issuing
an equivalent amount of additional Securities. If principal
and interest are not paid on the Convertible Debentures, no
amounts will be paid on the Securities.
The Indenture provides, subject to certain exceptions, that
upon an event of default under the Indenture or under the
Preferred Securities Guarantee, the Company will be prohibited
from (x) declaring or paying dividends or making other
distributions on, or redeeming, purchasing or making
liquidation payments with respect to, its capital stock and
(y) paying interest, principal or premium on, or repaying,
repurchasing, or redeeming any of the Company's debt
securities ranking pari passu with or junior to the
Convertible Debentures or making any guarantee payments with
respect to any guarantee by the Company of the debt securities
or any of the Company's subsidiaries if such guarantee ranks
pari passu with or junior in interest to the Convertible
Debentures.
Under the Indenture, the Company may redeem the Convertible
Debentures in whole or in part (pro rata among the holders) on
or after May 30, 2002 at a price equal to 100% of the
principal amount of the Convertible Debentures plus accrued
and unpaid interest to the redemption date. Upon the repayment
of the Convertible Debentures the proceeds thereof will be
applied to redeem an equivalent amount of Securities;
provided, however, that no partial redemption of the
Convertible Preferred Securities may be effected if after
giving effect thereto the aggregate liquidation amount of the
Convertible Preferred Securities is less than $10,000,000.
Upon the occurrence of a Securities Event of Default, as
hereinafter defined, or on or after May 30, 2012, whichever
comes first, any holder of Securities may, at its option cause
the WRP Trust I to redeem all Securities held by such holder.
A Securities Event of Default means (i) the non-payment of any
distribution either in cash or by the issuance of additional
Securities for any three quarterly distribution periods or
(ii) the failure to comply with any material term, condition
or obligation or failure to provide any material right under
the Securities. Notwithstanding the foregoing, provided a
Securities Event of Default has not occurred, then the date
during which a redemption is not permitted may be extended for
two separate additional five year periods beyond May 30, 2012
if the interest rate on the Securities is changed to the then
market rate for preferred stock comparable to the Preferred
Securities. If the Securities are so redeemed, then the
Company will be required to redeem an equal amount of
Convertible Debentures, the proceeds of which would be applied
to redeem the Securities.
3
Pursuant to the Declaration, at any time prior to the Maturity
Date (or, in the case of Securities called for redemption,
prior to the redemption date), the Securities will be
convertible into shares of common stock, $.01 par value per
share, of the Company (the "Common Shares"), pursuant to the
direction of the holder of the Securities to the conversion
agent to exchange such Securities for a portion of the
Convertible Debentures theretofore held by WRP Trust I on the
basis of one Security per $25 principal amount of Convertible
Debentures and immediately convert such amount of Convertible
Debentures into Common Shares at an initial rate of 2.2474
Common Shares per $25 principal amount of Convertible
Debentures (which is equivalent to a conversion price of
$11.124 per Common Share), subject to certain adjustments.
The Preferred Securities rank pari passu and payment thereon
shall be made pro rata with the Common Securities except that,
where an event of default under the Declaration occurs and is
continuing, the rights of holders of the Common Securities to
payment in respect of distributions and payments upon
liquidation, redemption and otherwise are subordinated to the
rights to payment of the holders of the Preferred Securities.
In connection with the Private Placement, on May 5, 2000, the
Registrant and ERPOLP also executed the Amendment to
Registration Rights Agreement pursuant to which the Investors
are entitled to certain registration rights with respect to
the Common Shares which are issuable upon conversion of the
Securities and/or the Convertible Debentures.
In connection with the transactions described herein the
Company and ERPOLP have exchanged the 339,806 shares of Class
A Common Stock of the Company held by ERPOLP for an equal
number of the Company's Class A-1 Common Stock issued pursuant
to the Articles Supplementary with respect to the Company's
Class A-1 Common Stock, which were filed with the State of
Maryland on May 5, 2000. The terms and conditions of the Class
A-1 Common Stock are substantially similar to those of the
Class A Common Stock. As was the case with the Class A Common
Stock, each share of Class A-1 Common Stock is convertible
into one Common Share. The Class A-1 Common Stock differs from
the Class A Common Stock primarily in that the Class A-1
Common Stock takes into account the issuance of the Preferred
Securities and Convertible Debentures.
The Securities, Convertible Debentures and shares of Class A-1
Common Stock were issued pursuant to an exemption from the
registration requirements under the Securities Act of 1933, as
amended (the "Act") pursuant to Section 4(2) thereof, and may
not be offered or sold in the United States without
registration under, or an applicable exemption from the
registration requirements of the Act and applicable state
securities laws.
In addition, the Company and ERPOLP have agreed to terminate
the obligations set forth in the Common Stock and Preferred
Stock Purchase Agreement dated as of May 30, 1997 entered into
by them, pursuant to which ERPOLP agreed to acquire
$25,000,000 of the Company's Series A Convertible Redeemable
Preferred Stock (the "Preferred Stock") and the Company agreed
to sell ERPOLP the Preferred Stock.
ITEM 6. NOT APPLICABLE.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
None.
(b) Pro forma Financial Information.
None.
(c) Exhibits.
The following exhibits are filed with this Form 8-K:
EXHIBIT NO. EXHIBIT
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10.89 Certificate of Trust of WRP Convertible Trust I, as
filed with the Secretary of State of the State of
Delaware on May 5, 2000;
10.90 Declaration of Trust of WRP Convertible Trust I, dated
as of May 5, 2000, by and among Rodney F. Du Bois and
James J. Burns as Regular Trustees, Wilmington Trust
Company as both Delaware Trustee and Institutional
Trustee and Wellsford Real Properties, Inc., as
Sponsor;
10.91 Indenture for 8.25% Convertible Junior Subordinated
Debentures, dated as of May 5, 2000, by and between
Wellsford Real Properties, Inc. and Wilmington Trust
Company, as Trustee;
10.92 Preferred Securities Purchase Agreement, dated as of
May 5, 2000, by and among Wellsford Real Properties,
Inc., WRP Convertible Trust I and ERP Operating Limited
Partnership;
10.93 Preferred Securities Guarantee, dated as of May 5,
2000, by and between Wellsford Real Properties, Inc.
and Wilmington Trust Company, as Trustee;
10.94 Common Securities Guarantee, dated as of May 5, 2000,
by Wellsford Real Properties, Inc.;
10.95 Amendment to Registration Rights Agreement, dated as
of May 5, 2000, by and between Wellsford Real
Properties, Inc. and ERP Operating Limited Partnership;
10.96 Articles Supplementary reclassifying and designating
350,000 shares of unissued Common Stock as Class A-1
Common Stock, dated as of May 5, 2000; and
99.1 Press release dated May 9, 2000, of Wellsford Real
Properties, Inc.
ITEMS 8 - 9. NOT APPLICABLE.
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SIGNATURES
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.
WELLSFORD REAL PROPERTIES, INC.
By: /s/Edward Lowenthal
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Edward Lowenthal
President
Dated: May 11, 2000
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