UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported): |
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October 11, 2017 |
RAIT Financial Trust
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(Exact name of registrant as specified in its charter)
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Maryland |
1-14760 |
23-2919819 |
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_____________________ (State or other jurisdiction |
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______________ (I.R.S. Employer |
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of incorporation) |
File Number) |
Identification No.) |
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Two Logan Square, 100 N. 18 th St., 23 rd Floor, Philadelphia, Pennsylvania |
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19103 |
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_________________________________ (Address of principal executive offices) |
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___________ (Zip Code) |
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Registrant’s telephone number, including area code: |
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(215) 207-2100 |
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N/A
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Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
On October 11, 2017, RAIT Financial Trust (“ RAIT ”) received a put right notice (the “ Put Right Notice ”) from ARS VI Investor I, LP (the “ Investor ”) exercising the Investor’s right (the “ Put Right ”) to require RAIT to purchase for $20.5 million (the “ Put Redemption Price ”) all of the previously disclosed common share purchase warrants (the “ Warrants ”) and common share appreciation rights (the “ SARs ”) issued by RAIT to the Investor. On October 17, 2017, RAIT paid the Investor the Put Redemption Price.
RAIT expects the effects of RAIT’s redemption (the “ Redemption ”) pursuant to the Put Right of the Warrants and SARs on RAIT’s fourth quarter 2017 financial results will include the following, subject to final accounting determinations made in connection with the preparation of RAIT’s financial statements for this period:
• RAIT expects to recognize a gain on extinguishment of debt of approximately $5.5 million as a result of the Redemption. RAIT had classified both the Warrants and SARs as liabilities and included their combined fair value in RAIT’s liabilities. This gain would represent the excess of this fair value over the Put Redemption Price.
• RAIT expects the Redemption will positively affect RAIT’s leverage and compliance with the related financial covenants within certain of RAIT’s indebtedness by removing from RAIT’s liabilities the amounts related to the Warrants and SARs.
Upon payment of the Put Redemption Price, RAIT cancelled all of the Warrants and SARs, RAIT has no further obligations under the Warrants and SARs and no Warrants or SARs remain outstanding. The Warrants and SARs set the applicable Put Redemption Price as $1.23 per share and stated that the number of shares would not adjust from the date of the original issuance of the Warrants and SARs with respect to any exercise of the Put Right, regardless of any adjustments of such number in accordance with the adjustment provisions of the Warrants and SARs. The Warrants were originally exercisable for 9,931,000 RAIT common shares (the “ Common Shares ”) and the SARs were originally exercisable with respect to (but settled in cash) 6,735,667 Common Shares.
As previously disclosed, RAIT issued the Warrants and SARs to the Investor pursuant to a Securities Purchase Agreement (as amended, the “ Purchase Agreement ”) dated as of October 1, 2012 among RAIT, certain of its subsidiaries and the Investor. Andrew M. Silberstein serves as a Trustee on RAIT’s Board of Trustees as the Investor Board Designee (as defined in the Purchase Agreement). Mr. Silberstein is an equity owner of the investment advisor of the Investor, Almanac Realty Investors, LLC, an officer of the Investor, and holds indirect equity interests in the Investor. Pursuant to the Purchase Agreement, RAIT sold to the Investor on a private placement basis in four sales between October 2012 and March 2014 for an aggregate purchase price of $100.0 million the following securities, in the aggregate: (i) 4,000,000 Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share, of RAIT (the “ Series D Preferred Shares ”) , (ii) the Warrants and (iii) the SARs. In December 2016, RAIT repurchased and canceled 464,000 Series D preferred shares for a purchase price of $11.6 million and, in June 2017, RAIT repurchased and canceled 402,280 Series D Preferred Shares for a purchase price of $10,057,000, together with any accrued and unpaid dividends to but excluding the date of repurchase (which repurchase included the corresponding repurchase of preferred units in a RAIT subsidiary party to the Purchase Agreement). After giving effect to the Redemption, the remaining RAIT securities held by the Investor are 3,133,720 Series D Preferred Shares, which represents all of the outstanding Series D Preferred Shares as of the date hereof (and a corresponding number of outstanding preferred units of such RAIT subsidiary). For further information about RAIT’s transactions with the Investor and its affiliates, see note 9 and note 12 to the financial statements included in RAIT’s most recent quarterly report on Form 10-Q.
The above summary of the Put Right Notice does not purport to be complete and is qualified in its entirety by the Put Right Notice attached to this Current Report on Form 8-K as Exhibit 4.1 and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits .
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Exhibit
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Description |
4.1 Put Right Notice dated October 10, 2017 from ARS VI Investor I, LP to RAIT Financial Trust.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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RAIT Financial Trust |
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October 17, 2017 |
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By: |
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/s/ Scott L.N. Davidson |
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Name: Scott L.N. Davidson |
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Title: Chief Executive Officer and President |
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Exhibit 4.1
93658691v1
ARS VI Investor I, LP
October 10, 2017
RAIT Financial Trust
Two Logan Square
100 N. 18th St., 23rd Floor
Philadelphia, Pennsylvania 19103
Attention: Chief Financial Officer
RE: Exercise of Warrant and Common Share Appreciation Right Put Rights
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement, dated as of October 1, 2012, as amended (the “Purchase Agreement”), by and among RAIT Financial Trust, a Maryland real estate investment trust (the “Company”), and its subsidiaries RAIT Partnership, L.P., Taberna Realty Finance Trust and RAIT Asset Holdings IV, LLC, and ARS VI Investor I, LP, formerly known as ARS VI Investor I, LLC (the “Investor”), as well as the agreements evidencing the Warrants and Common Share Appreciation Rights issued to the Investor thereunder. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
This notice constitutes a Put Right Notice pursuant to (and as defined in) Section 9 of the agreements evidencing the Warrants (the “Warrant Agreements”) and Section 9 of the agreements evidencing the Common Share Appreciation Rights (the “Common Share Appreciation Rights Agreements”). The Investor hereby demands that the Company purchase (i) all of the Warrants held by it at the Put Redemption Price (as defined in the Warrant Agreements) in cash by wire transfer of immediately available funds pursuant to Section 9 of the Warrant Agreements (being Warrants to purchase 9,931,000 Common Shares (collectively, the “Applicable Warrant Shares”)), and (ii) all of the Common Share Appreciation Rights held by it at the Put Redemption Price (as defined in the Common Share Appreciation Rights Agreements) in cash by wire transfer of immediately available funds pursuant to Section 9 of Common Share Appreciation Rights Agreements (being Common Share Appreciation Rights to purchase 6,735,667 Common Shares (collectively, the “Applicable Appreciation Rights Shares” and together with the Applicable Warrant Shares, the “Applicable Shares”)).
Pursuant to the definition of Put Redemption Price in the Warrant Agreements and Common Share Appreciation Rights Agreements, the aggregate Put Redemption Price payable in respect of the Warrants and the Common Share Appreciation Rights that are the subject of this Put Rights Notice is $20,500,000, being the product of (i) the number of Applicable Shares and (ii) $1.23.
The original Warrant Agreements and Common Share Appreciation Rights Agreements evidencing the Warrants and Common Share Appreciation Rights that are the subject of this Put Right Notice are enclosed herewith.
Nothing in this Put Right Notice shall limit or be deemed to limit any claims or rights that the Investor may have under, in connection with or related to the Purchase Agreement or otherwise, each of which are expressly reserved hereby.
[ Remainder of Page Intentionally Left Blank ]
ARS VI INVESTOR I, LP
By: ARS VI Investor I GP, LLC
its General Partner
By: Almanac Realty Securities VI, L.P.
its Member
By: Almanac Realty Partners VI, LLC
its General Partner
By:
/s/ Matthew W. Kaplan
Name: Matthew W. Kaplan
Title: President
Enclosures:
Common Share Purchase Warrant Certificate, Warrant No. 1, dated October 17, 2012
Common Share Purchase Warrant Certificate, Warrant No. 2, dated November 15, 2012
Common Share Purchase Warrant Certificate, Warrant No. 3, dated December 18, 2012
Common Share Purchase Warrant Certificate, Warrant No. 4, dated March 27, 2014
Common Share Appreciation Right Certificate, Right No. 1, dated October 17, 2012
Common Share Appreciation Right Certificate, Right No. 2, dated November 15, 2012
Common Share Appreciation Right Certificate, Right No. 3, dated December 18, 2012
Common Share Appreciation Right Certificate, Right No. 4, dated March 27, 2014
cc:
Scott Davidson
Chief Executive Officer
Two Logan Square
100 N. 18 th Street, 23 rd Floor
Philadelphia, PA 19103
Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103-2799
Attention: Michael H. Friedman, Esq.
Fax: (215) 981-4750
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036-8299
Attention: Arnold S. Jacobs, Esq.
Fax: (212) 969-2900