Monogram Residential Trust,Inc. (NYSE:MORE) Files An 8-K Other EventsItem 8.01 Other Events.
As previously reported, Monogram Residential Trust, Inc. (the “Company”) has been involved in litigation in the Circuit Court for Baltimore City, Maryland (the “Circuit Court”) with affiliates of Behringer Harvard Multifamily Advisors I, LLC, the Company’s former external advisor (collectively with its affiliates, “Behringer”), over the terms of the Company’s Series A non-participating, voting, cumulative, 7.0% convertible preferred stock, par value $0.0001 per share (the “Series A Preferred Stock”). The Series A Preferred Stock was issued to Behringer in 2013 in connection with the Company’s transition to a self-managed company. As previously disclosed, the Company and Behringer disagreed on the timing of the start and end of the measurement period (as used in the Company’s Charter, the “Measurement Period”) necessary to establish the appropriate conversion terms, including the conversion rate, of the Series A Preferred Stock.
On September 30, 2016, the board of directors of the Company (the “Board”) determined that the Measurement Period for the conversion of the Series A Preferred Stock into shares of the Company’s common stock in connection with a Listing (as defined in the Charter) to Section 5.4 of the Charter would begin on January 2, 2017 and end on February 13, 2017. On the same day, the Company filed a complaint and a motion for summary judgment with the Circuit Court that such determination was legally correct and, if any ambiguity existed in the Charter, was conclusive and binding upon the Company and Behringer, as the sole holder of the Series A Preferred Stock, to Section 7.5 of the Charter. Subsequently, Behringer filed a motion seeking a contrary declaration concerning the start and end of the Measurement Period to Section 5.4 of the Charter.
On March 17, 2017, the Circuit Court issued an order (the “Order”) granting the Company’s motion for summary judgment with respect to the start and end of the Measurement Period, holding that Section 5.4 of the Charter is unambiguous. The Order states, among other things, that (i) the Measurement Period in connection with the Listing began on January 2, 2017 and ended on February 13, 2017 (the “Expiration Date”), (ii) on the Expiration Date, all shares of the Series A Preferred Stock ceased to be outstanding and (iii) assuming the conversion value of the Series A Preferred Stock was zero on such Expiration Date, all shares of the Series A Preferred Stock would be automatically deemed cancelled as of the Expiration Date without further consideration.
The Order confirms the correctness of the prior determination made by the Board with respect to the timing of the Measurement Period and the Company’s determination that, based on the trading price of the Company’s shares of common stock during such Measurement Period, all outstanding shares of Series A Preferred Stock were properly canceled and ceased to be outstanding as of February 13, 2017 without further consideration. Behringer has the right to appeal the Order and no assurances can be given with respect to the outcome of any such appeal.
For more information regarding the Series A Preferred Stock litigation, please see the Company’s Current Report on Form 8-K filed with the SEC on October 3, 2016, the Company’s Current Report on Form 8-K filed with the SEC on February 17, 2017 and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on February 28, 2017.