Sizeler, First Union Trade Jabs Over Stock Sale

NEW ORLEANS-Locally based Sizeler Property Investors and First Union Equity and Mortgage of Boston are trading jabs over Sizeler’s sale this week of about 2.65 million shares of newly issued common stock. First Union attempted to stop the sale in the Circuit Court of Baltimore City. Sizeler responded to the events by filing a complaint in Maryland court. The exchange sparked above average trading of shares in both companies that has lowered their share prices.First Union executive Michael Ashner says the stock sale is a blatant move by Sizeler management “to thwart First Union’s efforts to increase shareholder value and was designed to entrench current management,” which he describes as “under performing.” Sizeler executives say the sale positions the company to execute important components of its strategy for increasing shareholder value over the long term, and that First Union’s statements “are littered with disingenuous rhetoric.”Sizeler sold the stock on Wednesday at $10.75 pr share in a direct placement to a group of institutional REIT investors. The company says it plans to use the $27.2 million in proceeds to partially redeem its convertible debentures or, if the debentures are converted, to reduce other debt. Company executives say the transaction positions the company to accelerate growth by developing and acquiring retail and multifamily properties and portfolios in fast-growing Southeastern US markets, such as Florida. “This transaction enables us to accomplish beneficial near-term financial measures while positioning us to execute important components of our strategy that we believe will create lasting value for all of our shareholders,” says Sizeler CEO/chairman Sidney Lassen. On the day of the sale, First Union issued a statement saying the sale price for the stock is substantially below the stock’s current value. First Union implored Sizeler to allow shareholders or First Union itself to purchase the shares at between $11.25 and $11.50 per share or allow First Union to loan Sizeler the money to pay off the debentures without the sale. Its attempt to stop the sale in the Circuit Court of Baltimore City was unsuccessful.”We believe that the transaction reported today is an obvious attempt by an under-performing management to entrench themselves at the expense of shareholders equity as evidenced by the below market sale price and market reaction today,” says Ashner. “There is no reason for Sizeler to enter into this transaction at this time other than as an attempt to manipulate the outcome of the upcoming shareholders election.” First Union has filed with the SEC a preliminary proxy statement related to its solicitation of proxies to elect Michael L. Ashner, Peter Braverman and Steven Zalkind as directors at Sizeler’s 2005 Annual Meeting of Stockholders. “Ashner’s and First Union’s statements are littered with disingenuous rhetoric, and contain a self-serving menu of moot proposals that reveal a surprising lack of knowledge about [Sizeler] and its balance sheet,” retorts Sizeler in a statement attributed to no one in particular. “The priority of Sizeler’s board and management is to build the long-term value of Sizeler to the benefit of all shareholders. The same cannot necessarily be said for First Union and Ashner, each of which in the past, directly or in collaboration with other interests with similar motivations, has been accused of pursuing transactions that put the interests of a select few above those of all equity holders. They sometimes promote these objectives by buying blocks of stock and using 13D and 13G filings with vague and incomplete descriptions of their plans. Ashner appears to be using First Union for exactly these purposes.” Concurrent with its response, Sizeler commenced a legal action against First Union over what it contends are multiple incomplete and misleading Schedule 13D filings. Sizeler’s share price on Tuesday opened at $12 per share, down $0.07 from Monday’s close, and closed at the same price. In noontime trading Wednesday, the company’s share price was off another $0.20 at $11.80. First Union’s share price closed Tuesday at $4.20, down $0.05 from Monday’s close, and is down another $0.14 cents in noontime trading Wednesday.