AmeriVest, in an earlier SEC filing, says that it expects shareholders to receive between $4.20 per share to $4.80 per share after the liquidation if it is approved by shareholders. That's not enough, given this hot commercial real estate market, according Jones. He also doesn't like the notion that it could take two years to sell the properties.
"While we continue to believe that a plan of liquidation is in the best interest of shareholders, we are disappointed with both the estimated projected distributions and the timetable over which it is expected to occur," Jones writes in his letter. "For the liquidating distributions to be as low as $4.20 per share, one of two things must happen. Either capitalization rates on the remaining properties will be disappointing versus both current market rates and prior sales, or expenses will be unacceptably high. With the property sales being conducted by a reputable broker, we trust that we will achieve market cap-rates."
Jones goes on to say that in addition to high closing costs--which Knight denies is the case--he is concerned about high levels of corporate overhead. Knight also objects to that claim, saying AmeriVest is running an extremely tight operation. Jones also questioned the costs of winding down AmeriVest. Jones says "part of his frustration" is that the company keeps saying various costs are not material and don't need to be reported, but he contends when they are added up, they become material. "I know it is not your way to disclose information," he said at one point.
Jones says he would like assurance that no special payments are made to employees or directors as the company is liquidated. "Liquidating AMV should be a simple process and there certainly is not a success to be celebrated here with success bonuses," Jones writes. "We think it is imperative that all costs be meticulously controlled during the liquidation but have not seen evidence that this will be the case."
Jones also thinks that the remaining buildings should be sold more quickly than anticipated by management. Knight, on the other hand, says that the projections are conservative, but realistic. "They are what can reasonably be achieved," he says.
Jones also asked that an independent shareholder be appointed to the board to help oversee the liquidation. "An independent owner, with no stake in the management of the company or its past decisions, would clearly be the best advocate of maximizing the present value of distributions to the shareholders," Jones writes in the SEC document.
"With the stock down nearly 40% in the last 12 months, it would be prudent for the board to have an independent observer watch over the winding up of the remaining assets to give shareholders additional assurance that it is done as quickly and efficiently as possible. North Star Partners would be happy to serve in that role or would be open to discussing with other large shareholders who they might feel is appropriate."
Knight tells GlobeSt.com he only had time to glance at the letter, but he is sure the board will consider Jones' request.
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