AlerisLife has amended Securities and Exchange Commission filings related to its planned acquisition by an entity controlled by one of its managing directors to try to avoid delays in the process and to minimize the “costs, risks and uncertainties” of defending itself against several related legal actions, the company said Tuesday in SEC filings.
“Purported stockholders” have sent eight “demand letters” and filed six legal complaints, maintaining that information is missing or inaccurate in some of the filings the company made to the SEC, AlerisLife said.
The Newton, MA-based senior living provider announced Feb. 3 that it would be acquired by ABP Acquisition 2 LLC for almost $44 million via a tender offer, based on the unanimous recommendation of a special board committee and approval by the full board.
ABP Acquisition 2 LLC is a wholly owned subsidiary of ABP Acquisition LLC. ABP Acquisition LLC is a wholly owned subsidiary of ABP Trust. Adam D. Portnoy, a managing director of AlerisLife and chair of the company’s board of directors, is the sole trustee and controlling shareholder, as well as an officer, of ABP Trust.
The tender offer is set to expire at midnight on Friday unless ABP extends it.
Eight demand letters were sent to law firm Ropes & Gray LLP, counsel to the special committee of the AlerisLife Board of Directors that considered the sale, between March 1 and 7 seeking information that was not included in the filed Schedule 14D-9 or for alleged misstatements in the document to be corrected, AlerisLife said in an amended tender offer statement and amended Schedule 14D-9 filed Tuesday. Additionally, six complaints were filed alleging that the original Schedule 14D-9 “contains omissions and misrepresentations that render it false and misleading,” the company reported.
Four of the six complaints were filed in the US District Court for the Southern District of New York. “The Federal Complaints seek, among other things, (i) an order enjoining consummation of the Transactions; (ii) rescission of the Transactions if they have already been consummated and rescissory damages; and (iii) an award of plaintiff’s costs, including reasonable allowance for attorneys’ and experts’ fees,” AlerisLife reported.
The other two complaints, filed in the Circuit Court for Baltimore City, “seek, among other things, (i) declaration that the actions are properly maintainable as a class action and certification that the plaintiffs are class representatives; (ii) injunctive relief preventing the consummation of the Transactions; (iii) rescissory damages or rescission in the event the Transactions are consummated; (iv) an accounting of purported damages; and (v) an award of plaintiff’s expenses and attorneys’ fees,” the company said.
AlerisLife said that the outcome of the demand letters and complaints could not be “predicted with certainty” and that additional similar complaints may be filed or demand letters received.
“If a preliminary injunction were to be granted it could delay or jeopardize the completion of the Transactions, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin the completion of such Transactions,” the company said.
AlerisLife reported that it filed the amended Schedule 14D-9, despite believing that the allegations and claims “are without merit and that supplemental disclosures are not required or necessary under applicable laws,” “to avoid the risk of the Tender Offer Litigation delaying or otherwise adversely affecting the transactions and to minimize the costs, risks and uncertainties inherent in defending the Tender Offer Litigation.”
The company said that it “denies that it has violated any laws or that the Company or any member of the Company Board breached any duties to the Company’s stockholders.”
Among other changes, the Schedule 14D-9 has been amended to clarify that:
- AlerisLife did not enter into any confidentiality agreement or standstill agreement with suitors identified in filings as Party A and Party B.
- AlerisLife, Portnoy and RMR had no prior relationship with Party B before receiving Party B’s proposal. (Portnoy also is president and CEO of RMR Group, which provides management services to AlerisLife and real estate investment trust Diversified Healthcare Trust, the portfolio of which contained 120 AlerisLife senior living communities operating under the Five Star Senior Living name as of November.)
Since the planned acquisition was announced, several law firms have published press releases seeking shareholders to provide information related to whether the AlerisLife board acted in their best interest and whether the offer of $1.31 per share of common stock is sufficient.
