A group formed by Schottenstein and Michael L. Ashner owns 9.8% of Burnham common stock. Under the agreement announced by Burnham on Tuesday, the San Diego-based company has made Schottenstein co-chairman of its board and amended its shareholder's rights plan to allow the Schottenstein group to own up 19.9% of its common stock.
In exchange, the Schottenstein group has agreed to drop litigation against the companyand vote its shares in favor of both Burnham Pacific's previously announced liquidation plan and its own nominees for the board.
Schottenstein, chairman of Value City Department Stores and American Eagle Outfitters Inc., made a bid to buy the company for $13.50 a share last year. The REIT's old board rejected the bid as too low.
Though Schottenstein kept buying Burnham Pacific stock, its value kept dropping and the REIT made an unsuccessful attempt to find a new buyer. Last month, Schottenstein said he would oppose efforts to sell the company for less than $8 per share and would try to oust management and gain control at the Oct. 18 annual meeting.
A week ago, the board of directors formally approved the previously announced plans to liquidate the company and announced a deal to sell 15 properties for $355 million to acompeting REIT, Ohio-based Developers Diversified Realty, and its partners, Prudential Real Estate Investors and Coventry Real Estate Partners. The trio had been rumored for months to be courting a purchaseof the whole company.
Coventry and Developers Diversified also announced Tuesday that Burnham has retained them to act as liquidation agent for its remaining portfolio.
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