Grubb & Ellis does not get needed consents for 7.95% convertibles

By Angela McDaniels

Tacoma, Wash., April 12 - Grubb & Ellis Co. did not receive the consents it needed from the holders of its $31.5 million of outstanding 7.95% senior convertible notes due 2015, according to an 8-K filing with the Securities and Exchange Commission.

A consent solicitation for the convertibles began March 8 and ended at 5 p.m. ET on April 11 after being extended from April 4 and March 25.

The company solicited consents to amend the indenture governing the convertibles to exclude subsidiaries Daymark Realty Advisors, Inc. and NNN Realty Advisors, Inc. - and each of these subsidiaries' direct and indirect subsidiaries - from the determination of an event of default under the indenture.

The proposed amendment required the consent of the holders of a majority-in-interest of the principal amount of the convertibles outstanding.

The company said it retains the right to re-solicit consents in a new consent solicitation at a future date should it choose to do so.

As a consent fee, holders were offered a number of unregistered shares of common stock equal to 4% of par divided by the closing price of Grubb & Ellis stock on the expiration date, subject to a minimum share price of $0.89 and a maximum share price of $0.99.

When the offer began, the consent fee was fixed at 36.036 unregistered shares per $1,000 principal amount of notes. At the time, this number of shares was worth roughly 4% of par, but then the share price declined and Grubb & Ellis amended the fee.

Under a registration rights agreement, the company said it would attempt to file a shelf registration statement for the resale of the restricted shares no later than April 15. If the company defaulted on its obligations under the agreement, it would have been required to pay an amount equal to 2% per month on the average daily aggregate market value of the restricted stock issued as the consent fee, determined daily by multiplying the amount of that restricted stock by $1.11 per share, until all registration defaults were cured.

MacKenzie Partners, Inc. was the information and tabulation agent.

Grubb & Ellis is a Santa Ana, Calif.-based real estate services and investment firm.

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