NEW YORK, June 19, 2013 /PRNewswire/ -- Corvex Management LP ("Corvex") and Related Fund Management, LLC ("Related"), whose separately managed investment funds collectively own approximately 9.6% of the outstanding common shares of CommonWealth REIT (NYSE: CWH), today issued the following statement regarding misleading statements made by CommonWealth and its representatives regarding the effects of the removal of the entire Board of trustees on CommonWealth's outstanding debt obligations:
"As we have previously disclosed, a successful removal of the entire CommonWealth Board, which is the only path to effect meaningful change, will constitute a 'change of control' under CommonWealth's revolving credit agreement and term loan agreement. However, such change of control will not be an event of default that automatically accelerates the payment of the $630 million in debt outstanding under both facilities. In fact, for an acceleration to occur, the holders of more than 50% of the outstanding obligations under the respective facility would have to affirmatively elect to accelerate repayment of the obligations. We note that the obligations are held by a broad group of sophisticated financial institutions that in our view would have absolutely no incentive to accelerate the payment of outstanding obligations in light of CommonWealth's continuing solvency and low credit risk.
"We would have expected that CommonWealth's Board, in accordance with its fiduciary duties, engage with us and CommonWealth's lenders in a discussion to secure appropriate advance waivers or appropriate refinancing, in the event shareholders elect to remove the entire Board of trustees. But to the contrary, it has come to our attention that CommonWealth's management and their advisors are using the 'poison puts' that they themselves included in their credit documents as the centerpiece of a scare tactic campaign to intimidate shareholders into not supporting our consent solicitation out of fear that doing so could result in the acceleration of CommonWealth's obligations under their revolver and term loan agreement. This desperate rhetoric may be the result of the broad support our consent solicitation is receiving from shareholders. CommonWealth's argument boils down to the proposition that, following removal of the board, RMR and the remaining CommonWealth officers would purposely cause the acceleration of the company's outstanding obligations rather than take a replacement credit facility made available to CommonWealth until such a new board of trustees is duly elected by shareholders. The proposition is absurd, and a clear indication of the extent to which the Portnoys and the current Board will go to entrench themselves regardless of the economic consequences to shareholders.
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