Empire State Building IPO deadline push ahead

NEW YORK:

Voting on the plan for an initial public offering of a company including New York’s Empire State Building will be pushed beyond next week, extending a heated approval process as some investors campaign against the move.

Peter and Anthony Malkin, who lead the company that supervises the building, agreed to move the voting to at least April 8 from a previous deadline of March 25, Stephen Meister, the attorney representing a group of unitholders against the deal, said last night on a conference call organized by opponents. The extension was made to allow for New York state Supreme Court Justice O. Peter Sherwood to rule on whether investors who don’t approve the plan can be bought out for $100.

“There’s no pressure on anyone anymore,” Meister told investors on the call. “I would urge everyone to wait to hear what Justice Sherwood has to say, because I can’t imagine making this decision and not knowing whether the $100 buyout is legal or illegal.”

The Malkins had been urging quick approval of a plan to form a real estate investment trust owning the landmark tower and about 20 other New York-area properties, saying a longer process would be more costly, and at greater risk of disruption. They must win support from 80 percent of the shares held by Empire State Building unitholders, many of whom are retirees or second- and third-generation holders who had stakes in the building passed down after a syndication in the 1960s.

A group of investors opposed to the deal say disadvantages to a REIT include the potential loss of a reliable income stream that should rise as renovations are finished, while the Malkins have said their proposal would provide greater liquidity, larger and more steady distributions, and growth opportunities.

The Malkins said in a regulatory filing today that the solicitation will be extended to the earlier of the court’s ruling on the matter or May 2, the date of a fairness hearing on a proposed $55 million class action settlement in the matter that Meister’s clients oppose. The extension will “simplify matters” and allow participants to enjoy “restful holidays” during Passover and Easter week, they said.

Sherwood gave the parties until April 8 to file briefs on the $100 buyout issue, Meister said on the call. The provision allows for investors to receive just $100 per $10,000 originally invested, should 80 percent of the other shares vote for the plan. Participants have 10 days to change their mind once the 80 percent is achieved.

Meister, speaking before Sherwood last month, called the provision “extremely coercive,” and illegal under state liability law. The Malkins’ company, Malkin Holdings, said in its offering statement that it as a “practical” way to allow it to act on behalf of an overwhelming majority of investors without having a small group hold up those actions.

Sherwood last month said that if he strikes the provision, then consents obtained while it was alive “would be irrelevant and void.”

Votes have been running 9 to 1 in favor of the REIT plan, with about two-thirds of the unitholders accounted for, the Malkins said last week. That still left holders of some 1,100 units out of a total 3,300 not tallied at that time.

Meister last night on the call said sentiment was running about 60 percent in favor of the REIT, since non-votes are equivalent to rejecting the plan.

“Mr. Malkin was at double the 20 percent blocking level days before the vote deadline,” he said, basing his comment on Malkin Holdings’ March 14 statement.

Andrew Penson, the owner of Manhattan’s Grand Central Terminal and an Empire State Building investor, also spoke against the plan on the call, and said the Malkins have suppressed the market for Empire State Building.