NEW YORK (The Deal) -- Corvex Management and Related Fund Management said Monday, Nov. 25, they were restarting a solicitation process to replace trustees of office property investor CommonWealth REIT (CWH).
The battle between the funds, which together hold 9.6% of CommonWealth, and the management of the REIT dates back to a failed effort by the shareholder activists to block an equity issuance in early 2013 that Corvex and Related perceived as dilutive. An effort since to replace the board of the company by written consent has gone through fits and starts. An arbitration panel recently ruled that the consent solicitation was technically invalid, but outlined a path to resume the effort.
On Monday, Corvex and Related said they intend to pursue a new solicitation and planned to file a preliminary consent solicitation statement with the Securities and Exchange Commission to remove the entire board of trustees.
CommonWealth announced Monday that it set a date for its next annual meeting for June 13, 2014 and established a window to nominate directors for between Feb. 21 and March 24.Corvex and Related also asked Commonwealth for a shareholder list in order to communicate with the REIT's shareholders about their intention to establish a dissident slate of directors to put forward at the upcoming meeting. Previously, the funds had support of 70% of the shareholder base. The activist investors have complained that CommonWealth's board and the REIT's outside management, REIT Management & Research LLC, are are too inter-related and that high fees and decisions made to keep the fee structure intact have lead to underperformance of the company's shares. In September, CommonWealth restructured the fee agreement with its management company RMR. Corvex and Related had previously floated an offer of as much as $27 per share for CommonWealth in February, which was later cut back to $24.50. Commonwealth shares traded up Monday 17 cents, or 0.7%, at $24.34. -- Written by Scott Stuart