The controversial IPO of New York's Empire State Building may be decided Monday, April 29 by Justice O. Peter Sherwood ,the New York State Supreme Court judge. Some investors are opposing the public issue as they feel the buyout of $100 per share offered to them is unfair.
The IPO plan has been a topic of dispute among investors for long now. In March 2013, shareholders in favor of the IPO had proposed to buy out the opposing investors for $100 per share. The provision means that the investors will receive $100 for every $10,000 initially invested. However, the opposing investors asserted that the proposal was "unfair", which is why the matter is being taken to court.
"It's obvious that $100 is not the fair value of a participation worth thousands of times that nominal sum," Stephen Meister, an attorney representing the opposing investors said in a March 15 filing.
According to Bloomberg, the opponents could avoid being bought out if they change sides and decide to vote for the IPO proposal within 10 days of receiving a written notice. Meister called the notice period "impermissibly short".
Meanwhile, the Malkins, owners of Malkin Holdings LLC - the company that controls the building, have accused the group of opponents of spreading rumors and misinforming other shareholders.
According to the New York Times: "Anthony Malkin described those opposed to the deal as "a small group of big holders" who offered investors "only a dead end, with all of the many downsides of the current archaic structure."
The heated battle may or may not come to an end on Monday but will definitely be a milestone, in favor or against the IPO Plan.
The IPO Plan Dispute
Malkin Holdings LLC plans to roll the building into a public Real Estate Investment Fund (REIT) called the Empire State Realty Trust Inc., which will give the REIT participants half the value of the building's appraised $2.53 billion. The other half of the value will go to the investors in Empire State Building Company LLC. The REIT will comprise of 12 properties including the Empire State Building. Of the 12 properties, seven are located in midtown Manhattan while the others are in Westchester County, Connecticut and Fairfield County.
The proposition had received large support from the building's shareholders. However, for the IPO to proceed, the plan needs 80 percent favorable votes from the 3300 unit-holders of the Empire State Building Associates LLC. A small group of investors voted against the plan, which is holding back the venture.
