EOP ad hoc noteholders committee working to block company's tender offer and consent solicitation

By Jennifer Lanning Drey

Portland, Ore., Jan. 3 - An ad hoc committee of Equity Office Properties Trust unsecured noteholders is working to block the tender offer and consent solicitation announced in connection with the proposed merger agreement under which Blackstone Real Estate Partners will acquire EOP.

During a conference call held Tuesday, Andrew Rosenberg, an attorney for the committee, said the offer uses "a divide and conquer strategy," and that under its terms, the committee believes holders of certain series of notes will not receive their full contractual entitlements.

Although EOP amended the tender terms set forth on Dec. 26 to include a minimum of par on the notes, the ad hoc committee believes holders of 7.25% notes due 2028, holders of 7.50% notes due 2029 and holders of 7.85% notes due 2031 would still not receive their full contractual entitlements, according to a statement issued by the committee on Wednesday.

"The committee is looking to prevent these amendments from taking place and to deny the company the 51% of consenting noteholders that they need to strip the covenants," Rosenberg said during Tuesday's call.

The 15-member committee is asking individual noteholders to sign a prepared document stating that they will not provide their consent by EOP's early tender deadline, which is Jan. 9 at 5 p.m. ET.

"For the moment, the best way to counteract the divide-and-conquer strategy, obviously, is not to be divided," Rosenberg said.

Under EOP's amended cash tender offer, the total consideration for each series of notes is subject to a minimum price of $1,000 per $1,000 principal amount of notes, according to an EOP news release.

The company said the changes were made in order to ensure that investors have the opportunity to receive at least par for notes tendered on or prior to the consent payment deadline and that the change was made in response to changes in prices for U.S. Treasury securities since Dec. 26.

According to the release, the total consideration includes a consent payment of $50 per $1,000 principal amount of notes other than internotes and a consent payment of $10 per $1,000 principal amount of the internotes identified in the offer to purchase.

The ad hoc committee's prepared agreement will only become effective if 51% of noteholders under an indenture have signed it by 12 p.m. on Jan. 5, Rosenberg said.

"It is, in our view, purely an option until we get the requisite majorities," he said.

Noteholders interested in viewing or signing the ad hoc committee's prepared agreement can call Rosenberg at Paul, Weiss, Rifkind, Wharton & Garrison LLP at 212-373-3000.

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