Oct. 23, 2009 (PR Newswire) --
SANTA ANA, Calif., Oct. 23 /PRNewswire-FirstCall/ -- Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm, today announced that the company has entered into definitive agreements with qualified institutional buyers and accredited investors to effect the sale of 900,000 shares of a new issuance of a 12 percent cumulative participating perpetual convertible preferred stock for $90 million in gross proceeds. The company has also granted the initial purchaser and placement agent a 45-day option to purchase up to an additional 100,000 shares of preferred stock.
The closing of the transaction is expected to occur on or about Nov. 6, 2009, and the company intends to use the offering proceeds to repay in full its credit facility at the agreed reduced principal amount equal to approximately 65 percent of the principal amount outstanding under such facility. The balance of the offering proceeds will be used for general working capital purposes and transaction costs. As part of the preferred stock offering, the $5 million subordinated loan provided on Oct. 2, 2009 to the company by an affiliate of its largest stockholder will be converted into the preferred stock at the offering price and accrued interest will be paid with respect to the subordinated loan.
"This is a transformational event for Grubb & Ellis. Upon closing, Grubb & Ellis will be one of the stronger capitalized companies in the real estate services industry," said C. Michael Kojaian, the company's chairman and largest stockholder. "We are extremely pleased with the demand for the security and the quality of the institutional investors attracted to the company."
The company intends to immediately seek stockholder approval to amend its certificate of incorporation to, among other things, increase the authorized capital of the company. In the event the requisite stockholder approval is obtained to increase the company's authorized capital, each share of preferred stock would thereafter be convertible into 60.606 shares of common stock, equivalent to a conversion price of $1.65 per share of common stock, and is a 10.0 percent premium to the closing price of the company's common stock on Oct. 22, 2009.
"Upon completion of the transaction, the company will have a much improved balance sheet, with minimal debt obligations and additional working capital to fund our growth initiatives," said Richard W. Pehlke, executive vice president and chief financial officer.
