HHDS Highlands REIT Inc (CE)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE TO

 

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment. No. 2)

 

 

HIGHLANDS REIT, INC.

(Name of Subject Company (Issuer) and Filing Person (Offeror))

 

Common Stock, $0.01 par value per share

(Title of Class of Securities)

 

43110A 104

(CUSIP Number of Class of Securities)

 

Robert J. Lange

Executive Vice President, Chief Operating Officer

and General Counsel

1 South Dearborn Street, 20^th Floor

Chicago, Illinois 60603

(312) 583-7990

(Name, address, and telephone number of person authorized to receive notices and communications on behalf of filing persons)

 

With copies to:

Evan Hudson

Alston & Bird LLP

90 Park Avenue

New York, New York 10016

(212) 210-9400

 

¨	Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

 

Check the appropriate boxes below to designate any transactions to which the statement relates:

 

	¨	third-party tender offer subject to Rule 14d-1.
	x	issuer tender offer subject to Rule 13e-4.
	¨	going-private transaction subject to Rule 13e-3.
	¨	amendment to Schedule 13D under Rule 13d-2.

 

Check the following box if the filing is a final amendment reporting the results of the tender offer: ¨

 

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

 

	¨	Rule 13e-4(i) (Cross-Border Issuer Tender Offer).
	¨	Rule 14d-1(d) (Cross-Border Third-Party Tender Offer).

 

 

INTRODUCTION

 

This Amendment No. 2 (“Amendment No. 2”) amends and supplements the Tender Offer Statement on Schedule TO (together with any subsequent amendments and supplements thereto, the “Schedule TO”) filed with the Securities and Exchange Commission (the “SEC”) by Highlands REIT, Inc., a Maryland corporation (the “Company”) on October 24, 2023, as amended on November 8, 2023. The Company’s offer is being made upon the terms and subject to the conditions set forth in the Offer to Purchase, dated October 24, 2023, as amended on November 8 and 20, 2023 (the “Offer to Purchase”), and in the related Letter of Transmittal, as amended on November 20, 2023 (the “Letter of Transmittal”) and Important Instructions and Information, which, together with any amendments or supplements thereto, constitute the “Offer.” The Schedule TO is intended to satisfy the reporting requirements of Rule 13e-4(c)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

The purpose of this Amendment No. 2 is to amend the Offer to (1) decrease the price range at which the Company will purchase the Company’s common stock, par value $0.01 per share (the “Shares”) pursuant to the Offer to a range of not greater than $0.14 nor less than $0.12 per Share and (2) increase the dollar amount being sought in the Offer from up to $20 million to up to $25 million in value of Shares. The Company has also extended the expiration date of the Offer to 11:59 p.m., New York City time, on Wednesday, December 6, 2023.

 

Only those items amended are reported in this Amendment No. 2. Except as amended hereby to the extent specifically provided herein, the information contained in the Schedule TO, the Offer to Purchase, the Summary Advertisement in the New York Times (the “Summary Advertisement”) and the other exhibits to the Schedule TO remains unchanged and are hereby expressly incorporated into this Amendment No. 2 by reference. You should read Amendment No. 2 together with the Schedule TO, as amended by Amendment No. 1 to the Schedule TO, the Offer to Purchase and the Letter of Transmittal.

 

 

Amendments to the Offer to Purchase and Items 1 through 9 and Item 11 of the Schedule TO

 

Changes to the Offer

 

This Amendment No. 2 is being filed to amend the Offer as follows:

 

 

·

All references in the Offer to Purchase and in the related Offer documents to the aggregate dollar amount sought in the Offer now mean an aggregate dollar amount of up to $25.0 million in value of Shares;

·

All references in the Offer to Purchase and in the related Offer documents to the price range for the Offer or the price at which the Company is offering to purchase Shares now mean a price of not greater than $0.14 nor less than $0.12 per Share (previously not greater than $0.17 nor less than $0.12 per Share);

·

All references to the “Expiration Date” in the Offer to Purchase and in the related Offer documents now mean 11:59 p.m., New York City time, on Wednesday, December 6, 2023 (previously, the Offer was scheduled to expire on Tuesday, November 21, 2023);

·

All references in the Offer to Purchase and in the related Offer documents to the maximum price or maximum Purchase Price in the Offer (previously $0.17 per Share) now mean a maximum price or maximum Purchase Price of $0.14 per Share;

·

All references in the Offer to Purchase to the approximate number of Shares to be purchased under the Offer, if the Offer is fully subscribed and the Purchase Price is determined to be $0.12, now mean 208,333,333 (and such number of Shares represents approximately 23.4% of the total number of Shares outstanding as of October 23, 2023);

·

All references in the Offer to Purchase to the approximate number of Shares to be purchased under the Offer, if the Offer is fully subscribed and the Purchase Price is determined to be $0.14, now mean 178,571,429 (and such number of Shares represents approximately 20% of the total number of Shares outstanding as of October 23, 2023);

 

 

 

·

All references in the Offer to Purchase to the approximate increase in the dollar value of the Offer if the Company exercises its right to purchase up to an additional 2% of the outstanding shares, assuming a Purchase Price at the high end of the range, now mean $2,488,080 (previously $3.0 million);

·

All references in the Offer to Purchase and in the related Offer documents to the Letter of Transmittal are revised to be the Amended Letter of Transmittal.

 

Additional Amendments to the Offer to Purchase (Exhibit (a)(1)(A) to the Schedule TO) 

 

The Offer to Purchase is hereby restated and supplemented as follows:

  

The Offer - Section 6 - Conditions of the Offer

 

On page 21, the last sub-bullet is restated as follows: “any general suspension of trading in securities on any U.S. national securities exchange or in the over-the-counter market;”

 

The Offer – Section 14 – Certain Information About the Company

 

On page 28, the second bullet under “Incorporation by Reference” is restated as follows: “Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023, and September 30, 2023;”

 

On page 28, the third bullet under “Incorporation by Reference” is restated as follows: “Our Current Reports on Form 8-K filed with the SEC on January 6, 2023, April 14, 2023, June 9, 2023, July 12, 2023, September 26, 2023, and October 24, 2023; and” 

 

Item 12. Exhibits.

 

Item 12 of the Schedule TO is hereby amended and supplemented by adding the following exhibits to the exhibit index:

 

	(a)(1)(H)	Amended Letter of Transmittal
	(a)(1)(I)	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees, dated November 20, 2023

(a)(1)(J)

Form of Letter to Clients, dated November 20, 2023

(a)(5)(B)

Letter to Stockholders from the President and Chief Executive Officer of the Company, dated November 20, 2023

 

 

SIGNATURE

 

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: November 20, 2023	Highlands REIT, Inc.
	By:	/s/ Robert J. Lange
		Robert J. Lange
		Executive Vice President, Chief Operating Officer and General Counsel

 

 

EXHIBIT INDEX

 

(a)(1)(A)**		Offer to Purchase, dated October 24, 2023
(a)(1)(B)**		Letter of Transmittal
(a)(1)(C)**		Important Instructions and Information, dated October 24, 2023
(a)(1)(D)**		Odd Lot Certification Form
(a)(1)(E)**		Form of Withdrawal Letter
(a)(1)(F)**		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees, dated October 24, 2023
(a)(1)(G)**		Form of Letter to Clients, dated October 24, 2023
(a)(1)(H)*		Amended Letter of Transmittal
(a)(1)(I)*		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees, dated November 20, 2023
(a)(1)(J)*		Form of Letter to Clients, dated November 20, 2023
(a)(5)(A)**		Summary Advertisement in New York Times, dated October 24, 2023
(a)(5)(B)*		Letter to Stockholders from the President and Chief Executive Officer of the Company, dated November 20, 2023
(d)(1)		Highlands REIT, Inc. 2016 Incentive Award Plan (incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q, as filed by the Company with the SEC on May 10, 2016)
(d)(2)		First Amendment to Highlands REIT, Inc. 2016 Incentive Award Plan, dated May 10, 2016 (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q, as filed by the Company with the SEC on May 10, 2016)
(d)(3)		Second Amendment to Highlands REIT, Inc. 2016 Incentive Award Plan, dated August 12, 2021 (incorporated by reference to Exhibit 4.3 to the Company’s Form S-8 Registration Statement, as filed by the Company with the SEC on August 12, 2021)
(d)(4)		Highlands REIT, Inc. Retention Bonus Plan, dated August 9, 2016 (incorporated by reference to Exhibit 10.10 to the Company’s Form 10-Q, as filed by the Company with the SEC on August 12, 2016)
(d)(5)		Highlands REIT, Inc. Director Compensation Program (incorporated by reference to Exhibit 10.9 to the Company’s Form 10-12G/A, as filed by the Company with the SEC on April 8, 2016)
(d)(6)		Amended and Restated Employment Agreement, dated November 7, 2018, by and between Highlands REIT, Inc. and Richard Vance (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 8, 2018)
(d)(7)		Amended and Restated Employment Agreement, dated November 7, 2018, by and between Highlands REIT, Inc. and Robert J. Lange (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 8, 2018)

 

 

(d)(8)		Amended and Restated Employment Agreement, dated November 7, 2018, by and between Highlands REIT, Inc. and Paul Melkus (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 8, 2018)
(d)(9)		Offer Letter, dated June 6, 2019, by and between Highlands REIT, Inc. and Kimberly A. Karas (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 12, 2019)

  

(d)(10)		Change in Control and Severance Agreement, dated as of July 8, 2019, by and between Highlands REIT, Inc. and Kimberly A. Karas (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 12, 2019)
(d)(11)		Separation Agreement and General Release, dated November 4, 2020, by and between Highlands REIT, Inc. and Paul A. Melkus (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 4, 2020)
(d)(12)		Amended and Restated Employment Agreement, dated April 12, 2023, by and between Highlands REIT, Inc. and Richard Vance (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 14, 2023)
(d)(13)		Amended and Restated Employment Agreement, dated April 12, 2023, by and between Highlands REIT, Inc. and Robert J. Lange (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 14, 2023)
107**		Calculation of Filing Fee Table

 

*Filed herewith.

** Filed previously.

 

 

 

Exhibit (a)(1)(H)

 

 

Exhibit (a)(1)(I)

 

REvised Offer to Purchase for Cash by

Highlands REIT, Inc.

of

Up to $25 million in Value of Shares of its Common Stock

At a Purchase Price of Not Greater Than $0.14 Nor Less Than $0.12 Per Share

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON DECEMBER 6, 2023, UNLESS THE OFFER IS EXTENDED OR WITHDRAWN (SUCH TIME AND DATE, AS THEY MAY BE EXTENDED, THE “EXPIRATION DATE”).

 

November 20, 2023

 

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

 

Highlands REIT, Inc., a Maryland corporation (the “Company”) has amended its offer to purchase shares of its common stock.

 

The Company is now offering to purchase for cash up to $25 million in value of its shares of common stock, par value $0.01 per share (the “Common Stock”), at a price specified by the tendering stockholders of not greater than $0.14 nor less than $0.12 per share of Common Stock, net to the seller in cash, less any applicable withholding taxes and without interest, on the terms and subject to the conditions described in the Offer to Purchase, dated October 24, 2023, as amended on November 8, 2023 and November 20, 2023 (the “Offer to Purchase”), and the related Amended Letter of Transmittal and Important Instructions and Information (which, together with any amendments and supplements thereto, we collectively refer to as the “Offer Documents” and which collectively constitute the “Offer”). Please furnish copies of the Offer Documents to those of your clients for whom you hold shares of Common Stock registered in your name or in the name of your nominee.

 

THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL AND IMPORTANT INSTRUCTIONS AND INFORMATION CONTAIN IMPORTANT INFORMATION AND SHOULD BE CAREFULLY READ IN THEIR ENTIRETY BEFORE A DECISION IS MADE WITH RESPECT TO THE OFFER. YOUR CLIENTS MAY TENDER ALL OR A PORTION OF THEIR SHARES OF COMMON STOCK. YOUR CLIENTS ALSO MAY CHOOSE NOT TO TENDER ANY OF THEIR SHARES OF COMMON STOCK.

 

As promptly as practicable after the Expiration Date, assuming the conditions to the Offer have been satisfied or waived, the Company will determine a single price per share of Common Stock (the “Purchase Price”), which will be not greater than $0.14 nor less than $0.12 per share of Common Stock, that the Company will pay, subject to “odd lot” priority and proration, for shares of Common Stock properly tendered in the Offer and not properly withdrawn, and accepted for payment, taking into account the number of shares of Common Stock tendered pursuant to the Offer and the prices specified by the tendering stockholders. The Purchase Price will be the lowest price per share of Common Stock (in increments of $0.01) of not greater than $0.14 nor less than $0.12 per share, at which shares of Common Stock have been properly tendered or have been deemed to be tendered in the Offer, that will enable the Company to purchase the maximum number of shares of Common Stock properly tendered in the Offer and not properly withdrawn having an aggregate purchase price not exceeding $25 million (or such lesser number if less than $25 million in value of shares of Common Stock are properly tendered after giving effect to any shares of Common Stock properly withdrawn). The same price will be paid for all tendered Shares accepted for purchase. The Company will not accept shares of Common Stock subject to conditional tenders, such as acceptance of all or none of the shares of Common Stock tendered by any tendering stockholder. The Company is not offering to purchase, and will not accept, any fractional shares in the Offer.

 

All shares of Common Stock purchased in the Offer will be purchased at the same Purchase Price regardless of whether the stockholder tendered at a lower price. However, because of the “odd lot” priority and proration provisions described in the Offer to Purchase, it is possible that not all the shares of Common Stock tendered at or below the Purchase Price will be purchased if shares of Common Stock having an aggregate value in excess of $25 million are properly tendered and not properly withdrawn. Only shares of Common Stock properly tendered at prices at or below the Purchase Price, and not properly withdrawn, will be eligible to be purchased. Shares of Common Stock tendered but not purchased pursuant to the Offer will be returned promptly following the Expiration Date. 

 

 

Upon the terms and subject to the conditions of the Offer, if the number of shares of Common Stock properly tendered at or below the Purchase Price and not properly withdrawn prior to the Expiration Date would result in an aggregate purchase price of more than $25 million, the Company will purchase shares of Common Stock: first, from all holders of “odd lots” of fewer than 100 shares of Common Stock who properly tender all their shares of Common Stock at or below the Purchase Price and do not properly withdraw them prior to the Expiration Date and second, from all other stockholders who properly tender shares of Common Stock at or below the Purchase Price and do not properly withdraw them prior to the Expiration Date, on a pro rata basis, with appropriate adjustments to avoid the purchase of fractional shares of Common Stock, until the Company has purchased shares of Common Stock resulting in an aggregate purchase price of $25 million. See Section 1—Price; Number of Shares; Expiration Date; Proration, Section 2—Procedures for Tendering Shares and Section 4—Withdrawal Rights of the Offer to Purchase.

 

The conditions of the Offer are described in Section 6—Conditions of the Offer of the Offer to Purchase.

 

Your prompt action is requested. We urge you to contact your clients as promptly as possible. Please note that the Offer and withdrawal rights will expire at 11:59 p.m., New York City Time, on December 6, 2023, unless the Offer is extended or withdrawn. Under no circumstances will the Company pay interest on the Purchase Price, even if there is any delay in making payment.

 

If you intend to tender shares of Common Stock on behalf of your clients pursuant to the Offer, a Letter of Transmittal, properly completed and duly executed (or a manually signed photocopy of this Letter of Transmittal), including any required signature guarantees and any other documents required by the Letter of Transmittal must be received by the Depositary at its address set forth on the back cover of the Offer to Purchase.

 

Although the Company’s Board of Directors has authorized the Offer, none of the Company, any member of the Company’s Board of Directors, the Paying Agent, the Depositary, the Information Agent (each as defined in the Offer to Purchase) or any of their respective affiliates has made, or is making, any recommendation to your clients as to whether they should tender or refrain from tendering their shares of Common Stock or as to the price or prices at which they may choose to tender their shares of Common Stock. Your clients must make their own decisions as to whether to tender their shares of Common Stock, how many shares of Common Stock to tender and the price or prices at which their shares of Common Stock should be tendered. In doing so, your clients should read carefully the information in, or incorporated by reference into, the Offer to Purchase and the related Letter of Transmittal and Important Instructions and Information. Your clients are urged to discuss their decisions with their tax advisors, financial advisors or you.

 

The Company will not pay any fees or commissions to brokers, dealers or other persons for soliciting tenders of shares of Common Stock pursuant to the Offer (see Section 18—Miscellaneous of the Offer to Purchase).

 

If you have any questions regarding the Offer, please contact Georgeson LLC, the Information Agent for the Offer, at the telephone number set forth below.

 

The Paying Agent and Depositary for the Offer is:

 

Computershare Trust Company, N.A.

 

The Information Agent for the Offer is:

 

Georgeson LLC

Toll-Free: (800) 905-7281

 

Nothing contained in this letter or in the Offer Documents shall render you or any other person the agent of the Company, the Paying Agent, the Depositary, the Information Agent or any affiliate of any of them or authorize you or any other person to give any information or use any document or make any statement on behalf of any of them with respect to the Offer other than the Offer Documents and the statements contained therein.

 

 

 

Exhibit (a)(1)(J)

 

REVISED Offer to Purchase for Cash by

Highlands REIT, Inc.

of

Up to $25 million in Value of Shares of its Common Stock

At a Purchase Price of Not Greater Than $0.14 Nor Less Than $0.12 Per Share

 

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT

11:59 P.M., NEW YORK CITY TIME, DECEMBER 6, 2023

(THE “EXPIRATION DATE”), UNLESS THE OFFER IS EXTENDED OR WITHDRAWN

 

THIS OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING

TENDERED, BUT IS SUBJECT TO OTHER CONDITIONS AS OUTLINED IN THE OFFER

TO PURCHASE AND IN THE LETTER OF TRANSMITTAL.

 

November 20, 2023

 

To Our Clients:

 

Enclosed for your consideration is the Offer to Purchase, dated October 24, 2023, as amended, of Highlands REIT, Inc., a Maryland corporation (the “Company”), and a related Letter of Transmittal. Together these documents constitute the “Offer.”

 

The Company is now offering to purchase up to $25 million in shares of its outstanding common stock (the “Shares”), upon the terms and subject to the conditions set forth in the Offer.

 

We are the registered holder of Shares held for your account. In order to tender your Shares, you must either submit an instruction to tender your Shares via your stockholder portal, subject to the approval of your broker, dealer, commercial bank, trust company, custodian or other nominee (any such entity, your “Custodian”), or cause the Letter of Transmittal to be physically delivered, including the signatures of your Custodian, including their medallion guarantee stamp, signifying approval of the submission. Such stockholders are urged to consult such Custodian as soon as possible if they wish to tender Shares.

 

Your attention is called to the following:

 

(1)	You may tender your Shares at prices not greater than $0.14 nor less than $0.12 per Share, as indicated in the attached instruction form, to you in cash, less any applicable withholding taxes and without interest.
(2)	The Offer is not conditioned upon any minimum number of Shares being tendered.
(3)	Upon the terms and subject to the conditions of the Offer, including proration and “odd lot” provisions, the Company will purchase all Shares validly tendered (and not withdrawn) on or prior to the Expiration Date, provided that the total number of Shares tendered does not exceed $25 million.
(4)	Tendering stockholders will not be obligated to pay stock transfer taxes on the purchase of Shares by the Company pursuant to the Offer, except in the instances described in Section 5, “Purchase and Payment for Tendered Shares,” of the Offer to Purchase.

 

If you wish to have us tender any of or all your Shares, please so instruct us by completing, executing and returning to us the instruction form set forth below. An envelope to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified below. Your instructions to us should be forwarded as promptly as possible in order to permit us to submit a tender on your behalf in accordance with the terms and conditions of the Offer.

 

The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with applicable law.

 

Neither the Company nor its Board of Directors is making any recommendation to any stockholder whether to tender or refrain from tendering Shares in the Offer. Each stockholder is urged to read and evaluate the Offer and accompanying materials carefully.

 

 

INSTRUCTIONS

 

The undersigned acknowledge(s) receipt of your letter and the accompanying Offer to Purchase, dated October 24, 2023, as amended (the “Offer to Purchase”), and Amended Letter of Transmittal (the “Letter of Transmittal,” which together with the Offer to Purchase and the website established for purposes of effectuating the offer, as they may be amended and supplemented from time to time, constitute the “Offer”), in connection with the offer by Highlands REIT, Inc., a Maryland corporation (the “Company”), to purchase up to $25 million in value of its common stock, par value $0.01 per share (the “Shares”), at a price not greater than $0.14 nor less than $0.12 per Share, to the seller in cash, less any applicable withholding taxes and without interest.

 

The undersigned hereby instruct(s) you to tender to the Company the number of Shares indicated below or, if no number is specified, all Shares you hold for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer.

 

AGGREGATE NUMBER OF SHARES TO BE TENDERED: ¨ All Shares held for the undersigned; or _______________ Shares (Enter number of Shares to be tendered).

 

1.	Tendering ALL Shares at ONE price

 

TENDER PRICE: (DOLLARS PER SHARE)	$0.12	$0.13	$0.14
(check ONLY ONE box to tender ALL shares at the indicated price per share)	¨	¨	¨

 

--- OR ---

 

2.	Tendering fewer than all Shares or tendering Shares at more than one price

 

TENDER PRICE: (DOLLARS PER SHARE)	$0.12	$0.13	$0.14
(check the number of Shares per price in whole Shares only)	_____	_____	_____

 

NOTE:

If you are completing box 2, the total number of Shares tendered cannot exceed the total number of Shares you own. Enter whole Shares only. See Section 9 of the Offer to Purchase for the treatment of any fractional Shares.

 

 

PLEASE SIGN HERE

 

Dated:            , 2023

 

Name(s):
(please print)

 

Address:
City		State	Zip Code

 

Area Code and Telephone Number:

 

Employer Identification or Social Security Number:

 

 

 

Exhibit (a)(5)(B)

 

HIGHLANDS REIT, INC.

1 South Dearborn Street, 20^th Floor

Chicago, Illinois 60603

 

November 20, 2023

 

Dear Stockholder:

 

The staff of the Securities and Exchange Commission (the “SEC”) has issued a comment to the Company informing us that, in their view, the price range at which we will purchase shares of our common stock, $0.01 par value per share (the “Shares”) pursuant to our previously announced modified “Dutch Auction” tender offer (as amended, the “Offer”) should be reduced in order to comply with their interpretation of applicable regulations. You are receiving these materials because, on November 20, 2023, Highlands REIT, Inc. (the “Company,” “we,” “us” or “our”) disclosed in Amendment No. 2 to the Schedule TO, originally filed on October 24, 2023 (“Amendment No. 2”) that we amended our previously announced Offer to (1) decrease the price range, in accordance with SEC staff interpretation, at which we will purchase the Shares, to a range of not greater than $0.14 nor less than $0.12 per Share and (2) increase the dollar amount being sought in the Offer to $25 million in value of Shares. Previously, the Company had offered to purchase up to $20 million in value of Shares at a purchase price not greater than $0.17 nor less than $0.12 per Share.

 

The Offer, which was previously scheduled to expire at 11:59 p.m., New York City time, on November 21, 2023, will be extended until 11:59 p.m., New York City time, on Wednesday, December 6, 2023 (the “Expiration Date”). Except as provided for in Amendment No. 2, all other terms and conditions of the Offer remain unchanged.

 

Stockholders who have questions may call Georgeson LLC, the information agent for the Offer (the “Information Agent”), at (800) 905-7281 (toll free).

 

THE AMENDED OFFER

 

We are offering to purchase up to $25 million in value of Shares in the Offer. Upon the terms and subject to the conditions of the Offer, we will determine a single per Share price that we will pay for Shares properly tendered, not properly withdrawn from and accepted pursuant to the Offer, taking into account the total number of Shares tendered and the prices specified by tendering stockholders. We will select the lowest single purchase price, not greater than $0.14 nor less than $0.12 per Share, that will allow us to purchase $25 million in value of Shares, or a lower amount depending on the number of Shares properly tendered, not properly withdrawn from and accepted pursuant to the Offer (such purchase price, the “Final Purchase Price”). Subject to the terms and conditions of the Offer, if, based on the Final Purchase Price, Shares having an aggregate value of less than $25 million are properly tendered, not properly withdrawn from and accepted pursuant to the Offer, we will buy all Shares properly tendered and not properly withdrawn from the Offer. All Shares acquired in the Offer will be acquired at the Final Purchase Price, including those Shares tendered at a price lower than the Final Purchase Price. Only Shares properly tendered at prices at or below the Final Purchase Price, and not properly withdrawn, will be purchased. We may not purchase all of the Shares tendered at or below the Final Purchase Price if, based on the Final Purchase Price, Shares having an aggregate value in excess of $25 million are properly tendered, not properly withdrawn from and accepted pursuant to the Offer, because of the “odd lot” priority and proration provisions described in the Offer to Purchase, dated October 24, 2023, as amended (the “Offer to Purchase”). Shares not purchased in the Offer will be returned to the tendering stockholders promptly after the Expiration Date.

 

At the maximum Final Purchase Price of $0.14 per Share, we would purchase 178,571,429 Shares if the Offer is fully subscribed, which would represent approximately 20% of our outstanding Shares as of October 23, 2023. At the minimum Final Purchase Price of $0.12 per Share, we would purchase 208,333,333 Shares if the Offer is fully subscribed, which would represent approximately 23.4% of our outstanding Shares as of October 23, 2023.

 

THE OFFER WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 6, 2023, UNLESS FURTHER EXTENDED.

 

 

What Stockholders Need to Do Now

 

Enclosed is an Amended Letter of Transmittal. Stockholders who have already tendered Shares within the range of $0.12 to $0.14 per Share, and do not want to tender additional shares, do not need to take any further action.

 

However, all previous tenders by stockholders within the range of $0.15 to $0.17 per Share have been invalidated. Therefore, such stockholders, and any other stockholders who wish to tender their Shares in the Offer, must deliver an Amended Letter of Transmittal to Computershare Trust Company, N.A., the depositary for the Offer (the “Depositary”).

 

Tenders of Shares must be made on or prior to the expiration of the Offer and may be withdrawn at any time on or prior to 11:59 p.m., New York City Time, on December 6, 2023, the expiration of the Offer, unless further extended.

 

While our Board of Directors has authorized us to make the amended Offer, neither we nor any member of our Board of Directors, the Information Agent or the Depositary, makes any recommendation to you as to whether you should tender or refrain from tendering your Shares or as to the purchase price or purchase prices at which you may choose to tender your Shares. You must make your own decision as to whether to tender your Shares and, if so, how many Shares to tender and the purchase price or purchase prices at which you will tender them. In doing so, you should read carefully the information in the Offer to Purchase, as amended, and in the Amended Letter of Transmittal. You should discuss whether to tender your Shares with your broker or other financial or tax advisors.

 

We have been advised that none of our directors or executive officers intends to tender any Shares in the Offer. See the Offer to Purchase for more information.

 

If you have any questions regarding the Offer or need assistance in tendering your Shares, you may contact the Information Agent for the Offer at (800) 905-7281 (toll free). Requests for copies of the Offer to Purchase or additional copies of the Amended Letter of Transmittal may also be directed to the Information Agent.

 

Sincerely,

 

 

Richard Vance

President, Chief Executive Officer and Director

Enclosures

 

 

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