JASON FRANSON/The Globe and Mail
U.S. activist investment firm Orange Capital LLC is pulling back its recommendation to add five new directors to the board of Partners Real Estate Investment Trust.
The two firms have been locked in a proxy fight over the strategy of the REIT, a dispute that started when Orange came between the REIT and a planned acquisition.
Recently the REIT took its complaints to the Ontario Securities Commission, voicing concerns over the hedge fund's offer to buy a 10-per-cent stake in the company. The REIT said the offer is "highly coercive" and "abusive to the capital markets" as well as investors.
Rather than back down, Orange Capital nominated five directors to the board, to be voted on at the REIT's July 15 meeting. The Ontario Superior Court of Justice allowed all nominees to be considered for election to the board. Candidates included Edward Boomer, a former CIO of the REIT, and Daniel Lewis, a co-founder of Orange.
Orange said at the time that the current board has a track record of misleading shareholders, but now it is taking its nominees out of the running. The firm declined to comment on the motives for the move, and a representative from the REIT couldn't immediately be reached.
Orange's offer to acquire a 10 per cent stake in the REIT at a price of $5 per unit is still on the table, and unitholders can take up to 5pm on June 30 to accept this bid. There is one change to the offer – the dissident said Friday that it will waive the condition that previously required sellers to allow Orange to vote the proxy for these units. This condition was dependent on the nominees standing for appointment.
The move could signal that the two sides are approaching an deal or settlement, bringing to an end a nearly two-month long public argument over the leadership and direction of the REIT.