UNITED STATES
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): June 2, 2005
WILSHIRE ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 1-4673 84-0513668
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
ONE GATEWAY CENTER, NEWARK, NEW JERSEY 07102
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (201) 420-2796
921 Bergen Avenue, Jersey City, New Jersey 07306
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On June 2, 2005, Wilshire Enterprises, Inc. ("Wilshire" or the
"Company") completed a transaction with respect to its property located in West
Orange, New Jersey known as the Wilshire Grand Hotel and Banquet Facility (the
"Wilshire Hotel"). As previously reported, the Company leased the Wilshire Hotel
under two 25-year operating leases, one for the hotel and one for the banquet
facility, to an experienced hotel operator (the "Hotel Operator"). The Hotel
Operator had encountered financial adversity and ceased payments in 2004 on its
mortgage obligations held by Proud Three LLC ("Proud Three"). The Hotel Operator
was also delinquent on its lease payments to the Company since January 2005. The
Company explored a number of alternatives to resolve this situation.
The resolution of this matter included the termination of the
leases with the Hotel Operator and the contribution of the Wilshire Hotel by the
Company to a newly formed limited liability company, WO Grand Hotel, LLC. Proud
Three contributed its loan receivable of $11.9 million from the Hotel Operator,
and the Company and Proud Three are the sole members of the LLC.
The operating agreement of the LLC, a copy of which will be
filed with the Company's second quarter financial results, provides that the
first $7.5 million in profits and gains will be allocated to Wilshire, the next
$7.5 million in profits and gains will be allocated to Proud Three, and the
profits and gains above $15 million will be allocated equally between the
Company and Proud Three. The operating agreement gives the Company total
operational control over the LLC and the Wilshire Hotel, including the right to
sell that property. The operating agreement contains other provisions relating
to rights of first refusal and call options. The operating agreement provides
Proud Three with a call option to acquire Wilshire's equity in the LLC for a
minimum of $5.25 million during the six-month period beginning January 2, 2006.
As part of the resolution of this matter, Proud Three arranged
for the payment of 50% of the delinquent rent to the Company.
Because Proud Three is affiliated with the Company's Chairman
and CEO, the transaction was reviewed and approved by a special independent
committee of the Company's Board of Directors that had been appointed for this
purpose. As part of its review process, this committee retained an independent
investment banking firm to evaluate the transaction and received an opinion from
that firm that the transaction was fair to the Company and its stockholders from
a financial point of view.
In its capacity as the manager of the LLC, the Company has
arranged for the LLC to enter into an agreement with an independent, experienced
hotel management company to operate the Wilshire Hotel.
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The Company will report the financial results of the LLC with
its results from discontinued real estate operations.
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.
Dated: June 8, 2005 WILSHIRE ENTERPRISES, INC.
(Registrant)
By: /s/ Daniel C. Pryor
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Daniel C. Pryor
President
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