DALLAS, Oct. 23, 2001 (PRIMEZONE) -- American Realty Investors, Inc. (NYSE:ARL) announced Tuesday that the company has entered into a preliminary agreement with the plaintiffs' legal counsel in a derivative action dispute which provides for ARL to acquire all of the outstanding common shares of Transcontinental Realty Investors, Inc. (NYSE:TCI) and Income Opportunity Realty Investors, Inc. (AMEX:IOT) not currently owned by ARL.
Under the terms of the proposed agreement:
-- ARL will offer each non-affiliated Transcontinental Realty and Income Opportunity stockholder a cash payment for their TCI and IOT common shares. Such stockholders will have the option to exchange their shares for ARL preferred stock in lieu of receiving the cash payment.
-- ARL will pay $17.50 per TCI share and $19 per IOT share for the stock held by non-affiliated stockholders. The maximum potential cash payment 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.
-- ARL preferred stock will be exchanged for TCI or IOT shares held by any ARL affiliate.
For TCI and IOT stockholders who elect to receive ARL preferred stock:
-- One share of ARL Series G preferred stock will be issued in exchange for each TCI common share.
-- The ARL Series G preferred shares will have a liquidation value of $20 per share and will be convertible into ARL common stock during a six-month period commencing on the first anniversary of the effective date of the transaction.
-- One share of ARL Series H preferred stock will be issued in exchange for each IOT common share.
-- The ARL Series H preferred shares will have a liquidation value of $21.50 per share and will be convertible into ARL common stock during a six-month period commencing on the first anniversary of the effective date of the transaction.
-- Both ARL Series G and Series H preferred shares will bear a 10% per annum dividend.
It is anticipated that the proposed acquisition of shares would occur in early second quarter 2002. Upon completion of the transaction, TCI and IOT become wholly owned subsidiaries of ARL, public trading of all TCI and IOT common stock ceases and all pending disputes in the derivative action, which began as a class and derivative action and was settled in 1990, are permanently settled.
The October 22, 2001, per share closing prices for TCI common stock were $12 and for IOT common stock was $14.76.
Currently, ARL and its affiliates own approximately 64.5% of Transcontinental Realty's outstanding shares and approximately 59.9% of Income Opportunity's 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 June 30, 2001, ARL reported gross assets of $799.8 million, of which $72.3 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 June 30, 2001, TCI reported gross assets of $690.0 million. Income Opportunity Realty Investors is a real estate investment trust that invests in real estate. As of June 30, 2001, IOT reported gross assets of $97.1 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 preliminarily 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 the federal court and any relevant regulatory agencies, to review of appropriate disclosure documents by the Securities and Exchange Commission and any state authorities and, (3) ratification of 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.