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REIT urged to allow bids: Retirement Residences: Former CEO Kuhl makes play to reclaim control
Garry Marr; with files from Boyd Erman
Former Retirement Residences chief executive George Kuhl wants his company back and is ready to rally support to oust the board if it does not agree to a fair bidding process.
The real estate investment trust has been operating under a veil of silence since it first said in January it had received an unsolicited expression of interest to buy the operator of nursing homes with a current market value of about $900-million. It did not name the potential buyer but many believe it was Chartwell Seniors Housing REIT.
Mr. Kuhl, who stepped down as co-chief executive in 2004, on Tuesday sent a stinging letter to the board of trustees of Retirement Residences Real Estate Investment Trust, suggesting the board's actions could impair shareholder value.
Retirement Residences won't even say whether it has hired investment bankers, though sources say the REIT is being advised by CIBC. The REIT also said it has formed a special committee of the board but refused to say who is on that committee.
"Retirement REIT has not advised its stakeholders either of the response and actions that the board of trustees has taken nor the process that the board of trustees has implemented," said Mr. Kuhl, who revealed yesterday he is part of a group that is ready to make a cash offer at a premium to the trading price.
The special committee said in a release it has "been actively engaged in considering this approach and other strategic alternatives."
"All expressions of interest received to date are preliminary in nature and non-binding," the committee said.
Mr. Kuhl's letter, made public yesterday, did little to stir Retirement Residences' units, which closed down 4 cents to $9.81.
Mr. Kuhl is one of the REIT's major unitholders and controls 5.5% of the company, about the same amount held by his former co-chief executive Barry Reichmann, son of legendary developer Paul Reichmann. Mr. Reichmann stepped down as co-CEO at the same time as Mr. Kuhl.
Since leaving the company, Mr. Kuhl has created a new enterprise called All Seniors Care Living Centres. He started the company with two properties he acquired after parting ways with Barry Reichmann on their joint development company, CPD Ltd. In the past, the pair had developed properties to sell to the REIT.
Yesterday Mr. Kuhl did not return calls, referring requests to All Seniors chief financial officer Michael Fraser.
"We put in on Jan. 23 an expression of interest with a range of prices," Mr. Fraser said. "We are backed by a huge equity player and they have asked not to be named right now."
"We don't want to be left out of the party," Mr. Fraser added.
Mr. Kuhl, who says he has the support of several significant unitholders, said it is Retirement Residences' duty to conduct a competitive process so it can deliver maximum value to unitholders.
"We are most concerned that the failure of the board of trustees to act promptly and positively to disclose publicly a process that is open and credible," he said.
The head of the board's special committee, Dr. Calvin Stiller, did not respond to several attempts to contact him. Retirement Residences hasn't publicly disclosed he's heading up the committee.
Mr. Fraser said his camp is ready for a proxy battle to replace the board, which Barry Reichmann still sits on.
Mr. Reichmann could not be reached for comment yesterday.
RETIREMENT RESIDENCES
Ticker: RRR-u/TSX
Close: $9.81,down4 cents
Volume: 598,143
(c) 2006 National Post . All Rights Reserved.
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