DALLAS, Feb. 19, 2002 (PRIMEZONE) -- American Realty Investors, Inc. (NYSE:ARL), Transcontinental Realty Investors, Inc. (NYSE:TCI) and Income Opportunity Realty Investors, Inc. (AMEX:IOT) today announced that the court has granted final approval for a proposed settlement whereby American Realty would acquire, through two separate mergers, all of the outstanding common shares of Transcontinental and Income Opportunity not already held by ARL.
U.S. District Court Judge Marilyn Hall Patel entered an order granting final approval of the proposed settlement of a derivative action entitled Olive et al v. National Income Realty Trust et al (the Olive Litigation). Upon completion of the proposed transaction, TCI and IOT will become wholly owned subsidiaries of ARL, public trading of all TCI and IOT common stock will cease and all pending disputes in the Olive Litigation, which began as a class and derivative action and was settled in 1990, will be permanently settled.
The proposed settlement provides that each unaffiliated TCI and IOT shareholder will become entitled to receive a cash payment for the common shares, or have the option of exchanging those shares for new ARL preferred stocks that will bear a 10% per annum dividend. Under the terms of the agreement:
-- ARL will offer each non-affiliated TCI stockholder a cash payment of $17.50 per TCI share, or the holder could affirmatively elect to exchange each TCI share held for one share of ARL Series G preferred stock with a liquidation value of $20 per share. Each share of the Series G preferred stock will be convertible into 2.5 shares of ARL common stock during a 75-day period that commences fifteen days after the date of the first ARL Form 10-Q filing that occurs after the closing of the merger transaction.
-- ARL will offer each non-affiliated IOT stockholder a cash payment of $19.00 per IOT share, or the holder could affirmatively elect to exchange each IOT share held for one share of ARL Series H preferred stock with a liquidation value of $21.50 per share. Each share of the Series H preferred stock will be convertible into 2.25 shares of ARL common stock during a 75-day period that commences fifteen days after the date of the first ARL Form 10-Q filing that occurs after the closing of the merger transaction.
The February 15, 2002, closing prices for the common stocks were $16.00 per share for TCI and $17.30 per share for IOT. The maximum potential cash payment for ARL to acquire all TCI and IOT shares held by non-affiliated stockholders is approximately $50 million for TCI shares and is approximately $11 million for IOT shares. It is anticipated that the proposed acquisition of shares would occur in third quarter 2002.
ARL and its affiliates currently own approximately 64.5% of Transcontinental Realty outstanding shares and approximately 59.9% of Income Opportunity outstanding shares. Basic Capital Management, Inc., a private company that serves as advisor to ARL, TCI and IOT, currently owns approximately 55.1% of the outstanding common stock of ARL. All of the companies are headquartered in BCM's Dallas offices.
American Realty Investors is a real estate investment company that holds a diverse portfolio of equity real estate located across the U.S., including office buildings, apartments, hotels, shopping centers and developed and undeveloped land. As of September 30, 2001, ARL reported gross assets of $780.3 million, of which $78 million was the carrying value of the company's current investments in TCI and IOT. Transcontinental Realty Investors is a real estate investment company that invests in real estate similar to ARL's holdings. As of September 30, 2001, TCI reported gross assets of $708.7 million. Income Opportunity Realty Investors is a real estate investment trust that invests in real estate. As of September 30, 2001, IOT reported gross assets of $92.8 million. For more information on the companies, visit their web sites at www.bcm-inc.com.
Forward-Looking Statement
Although the respective boards of directors of ARL, IOT and TCI have approved the transactions, consummation of the acquisitions will be subject to: (1) the negotiation, execution and delivery of definitive agreements; (2) the final approval of any relevant regulatory agencies, or a review of appropriate disclosure documents by the Securities and Exchange Commission and any state authorities; and (3) ratification by the stockholders of ARL, IOT and TCI.
None of the ARL convertible preferred stocks proposed to be issued in exchange for the equity securities of TCI or IOT have been registered under the Securities Act of 1933, as amended, or the securities laws of any state, and none of such securities may be offered or sold in the United States of America absent such registration or the availability of an exemption for such registration requirements. No assurance can be given that any definitive agreement relating to a proposed transaction will be reached, what the material terms of any such agreement will be, or if the transactions contemplated in any such agreement, if reached, ultimately will be consummated.
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology, such as "may," "will," "expect," "anticipate," "estimate," or "continue" or the use of the negative thereof or other variations thereon or comparable terminology. In particular, any statement expressed or implied, concerning future events is a forward-looking statement. There can be no assurance that any expectation expressed or implied herein will prove to be correct, or that any contemplated event or result will occur as anticipated. Among other factors, the uncertainties associated with due diligence review and negotiation of definitive documentation may cause actual results to differ from those anticipated.