Developers Diversified Realty (DDR) Agrees to Sell 30M Shares to Otto Family
Developers Diversified Realty (NYSE: DDR) today announced that it has entered into a binding purchase agreement with Mr. Alexander Otto for the sale to Mr. Otto and certain members of his family of 30 million of the Company's common shares and warrants entitling the Otto Family to purchase an additional 10 million of the Company's common shares. When completed, the share purchase will increase the Otto Family's ownership from 6 million shares to 36 million shares, which is in excess of 20% of the common shares outstanding, making the family the Company's largest individual shareholder. An affiliate of the Otto Family also has provided the Company with a commitment to make a five-year, fixed rate, secured mortgage loan to the Company in an amount of $60 million. The Company intends to use proceeds from these strategic investments to reduce leverage and enhance liquidity.
The shares will be purchased in two tranches at a price of $3.50 per share for the first 15 million shares at the first closing and $4.00 per share for the second 15 million shares at the second closing. The Otto Family will be entitled to any dividends declared from the date of the purchase agreement. The share purchase prices represent a premium of approximately 33% and 52%, respectively, to the closing market price of the Company's shares on Friday, February 20, 2009.
The Otto Family will also be issued five-year warrants for the purchase of up to 10 million shares at a price of $6.00 per share, reflecting a premium of approximately 128% to the closing market price of the Company's shares on Friday, February 20, 2009. Warrants for 5 million shares will be issued upon each of the two closings.
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