Two New York investors have filed a lawsuit against CommonWealth Real Estate Investment Trust after the company announced that that it was moving forward with its planned stock offering and debt repurchase despite their objections. Together, they own more than 10 percent of trust.
The CommonWealth announced Monday that it started a tender offer to buy up to $450 million of some senior notes due in 2014, 2015 and 2016. It also announced a public offering of up to approximately 31.1 million shares, with the proceeds being used to buy back the notes.
The Boston Business Journal reports shares in CommonWealth REIT surged 48 percent on Tuesday after New York investors Corvex Management ordered the Newton, Mass.-based REIT to cancel plans for a stock sale.
CommonWealth REIT responded Wednesday in a statement by saying "its board of trustees has determined that the best interests of CommonWealth will be served by CommonWealth continuing the common share offering and debt tender offer previously announced." The company said they don't endorse or confirm the documents filed by Corvex and Related with the U.S. Securities and Exchange Commission on Tuesday seeking to acquire CommonWealth's shares.
CommonWealth REIT said Wednesday that it decided to move forward with the planned stock offering and debt repurchase after its board considered Corvex and Related Fund's position.
Meanwhile, Standard & Poor's Ratings Services said that it was putting CommonWealth on watch for a possible downgrade.