ST. JAMES, N.Y., Dec. 20, 2013 /PRNewswire/ -- Gyrodyne Company of
America, Inc. (NASDAQ: GYRO) ("Gyrodyne") today announced
that its board of directors has determined the final details of its
previously declared special dividend in the amount of $98,685,000, or $66.56 per share of the Company's common stock,
which is payable on December 30, 2013
to shareholders of record as of November 1,
2013. As required by NASDAQ rules governing special
dividends of this magnitude, the ex-dividend date will be set one
business day following the payment date.
In the special dividend, shareholders of record as of
November 1, 2013 will receive
$68,000,000, or $45.86 per share, in cash, and interests in a
newly formed New York limited
liability company, Gyrodyne Special Distribution, LLC ("GSD"),
which interests, collectively, will represent a 100% economic
interest in all of Gyrodyne's properties: Flowerfield, Port Jefferson, Cortlandt and Fairfax, which will be subject to an aggregate
of approximately $14,000,000 in
mortgages payable to a subsidiary of Gyrodyne. Gyrodyne will
retain a non-economic interest in GSD and will be its managing
member. The interests in GSD will not be transferable except in
extremely limited circumstances.
Gyrodyne's board of directors, after consideration of a
management presentation regarding the fair market value of the
properties to be held by GSD, has determined that the GSD interests
to be distributed are valued in the aggregate (representing the
value of the properties to be held by GSD, less the mortgages
payable) at $30,685,000 ($20.70 per share) or more. Thus, all
distributions of REIT income for 2012 required to be made under
applicable laws will have been made by means of such special
dividend. No assurance can be given that shareholders will
receive the actual value of the GSD interests or the component
underlying properties as estimated by the Gyrodyne board. For
financial statement purposes, the financial statements of both
Gyrodyne and GSD will reflect the historical book values of the
underlying assets.
The transfer of the properties by Gyrodyne to GSD will result in
the recognition of approximately $28.4
million of capital gain income by Gyrodyne. Giving
effect to offsetting deductions, Gyrodyne expects to have
approximately $17 million in REIT
income for 2013. In order to satisfy applicable REIT
distribution requirements, Gyrodyne has declared an additional
dividend, payable to Gyrodyne shareholders as of December 31, 2013. Such dividend, which
will be payable on January 31, 2014,
will be in the form of notes ("Dividend Notes") aggregating
$16,150,000 ($10.89 per share) in principal amount unless the
board otherwise determines to pay all or part of such dividend in
cash and subject to any applicable law, rule or regulation.
The principal terms of such Dividend Notes are attached as Annex A
to this press release.
As previously announced, on September 12,
2013, Gyrodyne's board of directors adopted a plan of
liquidation within the meaning of the Internal Revenue Code.
Gyrodyne is pursuing the plan of liquidation and has filed
preliminary materials with the Securities and Exchange Commission,
which preliminary materials remain subject to a review process with
the Securities and Exchange Commission and are not available in
definitive form for mailing to shareholders at this time.
Gyrodyne currently anticipates that definitive materials, which
will seek a vote of its shareholders to authorize a merger
transaction whereby both Gyrodyne and GSD will merge into Gyrodyne
LLC, a limited liability company, will be available for
consideration by shareholders early in 2014 and a shareholders
meeting to consider the merger will be held in the first half of
2014. A vote of two-thirds of the outstanding shares of
Gyrodyne will be required to authorize the merger. Gyrodyne,
as managing member of Gyrodyne Special Distribution, LLC and
Gyrodyne LLC, already has approved the merger transaction and will
have the sole discretion to approve any subsequent amendments or
modifications to such transaction on behalf of such entities.
Such merger, which will effect the completion of the plan of
liquidation for purposes of the Internal Revenue Code, will result
in holders of Gyrodyne Inc. common stock receiving approximately
15.2% of the common shares of Gyrodyne LLC in the aggregate,
holders of the Dividend Notes receiving approximately 29.2% of the
common shares of Gyrodyne LLC in the aggregate, and holders of
common shares of GSD receiving approximately 55.6% of the common
shares of Gyrodyne LLC in the aggregate, subject to adjustment in
the discretion of the Gyrodyne board of directors.
Gyrodyne intends to report the distribution of the interests in
GSD and the $45.86 per share in cash,
as well as the distribution of Dividend Notes, as a return of
capital to shareholders of Gyrodyne up to each shareholder's basis
in its shares, and any excess as capital gains. For purposes
of the foregoing, Gyrodyne assumes that the plan of liquidation
will be effected within two years from the date of its adoption,
September 12, 2013.
About Gyrodyne Company of America, Inc.
Gyrodyne, a real estate investment trust, manages a diversified
portfolio of real estate properties comprising office, industrial
and service-oriented properties primarily in the New York metropolitan area. Gyrodyne owns a 68
acre site approximately 50 miles east of New York City on the north shore of
Long Island, which includes
industrial and office buildings and undeveloped property which is
the subject of development plans. Gyrodyne also owns medical office
buildings in Port Jefferson Station, New
York, Cortlandt Manor, New
York and Fairfax, Virginia.
Gyrodyne is also a limited partner in the Callery Judge Grove,
L.P., which owns a 3,700 plus acre property in Palm Beach County, Florida, also the subject
of development plans. Gyrodyne's common stock is traded on the
NASDAQ Stock Market under the symbol GYRO. Additional information
about Gyrodyne may be found on its web site at
www.gyrodyne.com.
Forward-Looking Statement Safe Harbor
The statements made in this press release that are not
historical facts constitute "forward-looking information" within
the meaning of the Private Securities Litigation Reform Act of
1995, and Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, both as amended, which can
be identified by the use of forward-looking terminology such as
"may," "will," "anticipates," "expects," "projects," "estimates,"
"believes," "seeks," "could," "should," or "continue," the negative
thereof, other variations or comparable terminology as well as
statements regarding the evaluation of strategic alternatives.
Important factors, including certain risks and uncertainties, with
respect to such forward-looking statements that could cause actual
results to differ materially from those reflected in such
forward-looking statements include, but are not limited to, risks
and uncertainties relating to the process of exploring strategic
alternatives, risks associated with Gyrodyne's ability to implement
the tax liquidation, plan of liquidation or the plan of merger, the
risk that the proceeds from the sale of Gyrodyne's assets may be
substantially below Gyrodyne's estimates, the risk that the
proceeds from the sale of our assets may not be sufficient to
satisfy Gyrodyne's obligations to its current and future creditors,
the risk of shareholder litigation against the tax litigation, the
plan of liquidation or the plan of merger and other unforeseeable
expenses related to the proposed liquidation, the tax treatment of
condemnation proceeds, the effect of economic and business
conditions, including risks inherent in the real estate markets of
Suffolk and Westchester Counties in New York, Palm Beach
County in Florida and
Fairfax County in Virginia, risks and uncertainties relating to
developing Gyrodyne's undeveloped property in St. James, New York and other risks detailed
from time to time in Gyrodyne's SEC reports.
Important Information for Investors and Shareholders
This communication does not constitute a solicitation of any
vote or approval. The implementing transaction related to the plan
of liquidation will be submitted to Gyrodyne's shareholders for
their consideration. In connection with the proposed transaction,
Gyrodyne will file a proxy statement with the SEC. GYRODYNE
SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND RELATED
DOCUMENTS CAREFULLY (WHEN THEY BECOME AVAILABLE) AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. The proxy statement and other documents containing
other important information about Gyrodyne filed or furnished to
the SEC (when they become available) may be read and copied at the
SEC's public reference room located at 100 F Street, N.E.,
Washington, D.C. 20549.
Information on the operation of the Public Reference Rooms may be
obtained by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a website, www.sec.gov, from which any electronic filings
made by Gyrodyne may be obtained without charge. In addition,
investors and shareholders may obtain copies of the documents filed
with or furnished to the SEC upon oral or written request without
charge. Requests may be made in writing by regular mail by
contacting Gyrodyne at the following address: One Flowerfield,
Suite 24, St. James, NY 11780,
Attention: Investor Relations. The proxy statement also will be
available on the Company's web site located at
www.gyrodyne.com.
Gyrodyne and its directors, executive officers and employees and
other persons may be deemed to be participants in the solicitation
of proxies in respect of the transaction. Information regarding
Gyrodyne's directors and executive officers and their ownership of
Gyrodyne common stock is available in Gyrodyne's proxy statement
for its 2013 meeting of stockholders, as filed with the SEC on
Schedule 14A on November 27, 2013.
Other information regarding the interests of such individuals as
well as information regarding Gyrodyne's directors and officers
will be available in the proxy statement when it becomes available.
These documents can be obtained free of charge from the sources
indicated above.
Annex A
Terms of Dividend Notes
A copy of the form of such Dividend Notes will be filed with the
SEC as an exhibit to a Current Report on Form 8-K to be filed by
Gyrodyne Company of America, Inc. (the "Company"), and this summary
is qualified in its entirety by reference to such exhibit. The
Dividend Notes will bear interest from the date of issuance at 5.0%
per annum, payable semi-annually on June
15 and December 15 of each
year, commencing June 15, 2014, and
which may be payable in cash or in the form of additional Notes
("PIK Interest").
The Company may, in its sole discretion, at any time and from
time to time without premium or penalty, prepay all or any portion
of the outstanding principal amount of, or interest on, the
Dividend Notes, in cash or, at the election of the board of
directors of the Company, in kind. In connection with each
prepayment of principal under the Dividend Notes, the Company also
is obligated to pay all accrued and unpaid interest thereunder. The
Company is required to effect any optional prepayment on a pro rata
basis, provided that such restriction does not apply to, and the
Company may redeem from a holder one or more Dividend Notes with an
aggregate principal amount of $10,000
or less. The Company is permitted to repurchase Dividend Notes, in
cash or, at the election of the board of directors of the Company,
in kind, on a voluntary basis in a transaction with one or more
holders from time to time on such terms as the Company determines,
in its sole discretion, and such repurchase shall not be required
to be effected on a pro rata basis. Upon an in-kind repayment or
repurchase of the Dividend Notes, the valuation of any asset
transferred to a holder pursuant to such repayment or
repuchase shall, after consideration and review, be made by the
board of directors of the Company.
Upon the first to occur of (i) a sale or (ii) a complete
liquidation of the Company, the Company shall pay, in cash or in
kind, the outstanding principal amount of the Dividend Notes,
together with all accrued and unpaid interest on the principal
amount being repaid. In the case of a complete liquidation, the
valuation of any interest distributed in-kind in redemption of the
Dividend Notes shall, after consideration and review, be made by
the board of directors of the Company and shall be conclusively
binding on the Holders. In the case of a merger of the Company into
Gyrodyne LLC pursuant to the terms of the Merger Agreement, dated
as of October 15, 2013, as amended
and restated on December 20, 2013,
the Dividend Notes may be redeemed for limited liability interests
of Gyrodyne LLC as set forth in the Merger Agreement.
The Dividend Notes will be registered on the books of the
Company and may not be assigned or transferred, voluntarily or
involuntarily. Any attempted assignment or transfer shall be void,
except as provided in the following sentence, in which case the
Dividend Notes may be transferred only on the books of the Company.
The Company will permit transfers pursuant to the laws of
bankruptcy, inheritance, descent or distribution, or to the
successor to any holder that is a corporate or other entity or by
any nominee holder or agent or representative holding such shares
for the account of another person to the beneficial owner of such
Dividend Notes. If a transfer is requested, the Company may require
a holder, among other things, to furnish appropriate endorsements
and transfer documents, and the Company may require a holder to pay
any taxes and fees required by law. The Company need not exchange
or register the transfer of any Dividend Note or portion of a
Dividend Note selected for redemption, except for the unredeemed
portion of any Dividend Note being redeemed in part.
For so long as any of the Dividend Notes are outstanding, the
Company will be prohibited from making any payments with respect to
its capital stock, including paying dividends thereon or making
distributions in respect thereof, except (i) as specifically
permitted under the Plan of Liquidation and (ii) such distributions
as are required for the Company to qualify as, and maintain its
qualification as, a REIT or to avoid the payment of federal or
state income or excise tax.
The Dividend Notes will be subordinate to the prior payment in
full of all senior debt (whether outstanding on the date of
issuance or thereafter created, incurred, assumed or guaranteed)
(other than unasserted contingent indemnification obligations and
any unasserted contingent expense reimbursement obligations).
SOURCE Gyrodyne Company of America, Inc.