SOURCE: Feldman Mall Properties, Inc.

Feldman Mall Properties, Inc.

February 09, 2012 07:30 ET

Feldman Mall Properties, Inc. to Privately Place Securities

NEW YORK, NY--(Marketwire - Feb 9, 2012) - Feldman Mall Properties, Inc. (PINKSHEETS: FMLP) (the "Company") made the following announcement:

The Company has executed a non-binding Term Sheet with a private owner of multifamily residential properties (with its affiliates (including Partners), the "Investor"), which describes a transaction whereby the Investor would contribute ownership interests in multifamily residential properties containing an aggregate 2,836 apartment units located in the South and Southwestern United States, together with related multifamily management and advisory assets, to the Company in exchange for the issuance by the Company of shares of common stock and/or units of limited partnership interests in the Company's operating partnership. The transaction is structured as a private placement in which the shares of common stock and/or OP units to be issued will not be registered under the Securities Act of 1933, as amended. Under the Term Sheet, the multifamily and other assets to be acquired by the Company have an estimated equity value of approximately $92,700,000, while the shares of common stock or OP units to be issued in the transaction are being valued at $0.12 per share or OP unit. Immediately, following the closing of the transaction, the Investor will hold approximately 98% of the combined outstanding common equity of the Company and its operating partnership, while the current shareholders of the Company will own approximately 2%.

The Term Sheet also contemplates that the Company will pay shareholders of record on the business day prior to the closing a special distribution in cash of $0.05 per share, and will issue to such shareholders non-transferrable two-year warrants to purchase 1.37 shares of common stock for each share of common stock owned by them on that date at a strike price of $0.144 per share, subject to adjustment in the event of any recapitalization, reorganization, reclassification, stock split, stock dividend or reverse stock split by the Company. Payment of the special distribution is subject to completion of the sale of the Company's Northgate parcel.

The Term Sheet provides for a 30 day exclusivity period during which the Company may not initiate, invite, solicit, entertain, negotiate, accept or discuss directly or indirectly any proposal to acquire all or any significant part of the business or properties, capital stock or capital stock equivalents of the Company. However, the Company retains the right to terminate the exclusivity period and its obligations to continue negotiations with the Investor should the Company's Board of Directors determine in good faith that the failure to so terminate will constitute a breach of the Board's fiduciary duties under applicable law. In the event of termination, the Term Sheet provides for the Company to pay a termination fee to the Investor in the amount of $1,500,000.

Upon completion of the transaction, it is contemplated the Company will continue to operate as an internally managed and advised Real Estate Investment Trust, and the management team that currently manages the contributed assets will be the management team of the Company.

The Term Sheet does not represent a binding agreement. The execution of a binding agreement required for the completion of the transaction remains subject to, among other items, completion of due diligence satisfactory to both parties; the execution of voting agreements by key shareholders of the Company; and approval of the transaction by directors and officers of the Company and by the members of the Investor. Consequently, there can be no assurance that the contemplated transaction will be completed or if completed that it will be consummated on the terms outlined in the Term Sheet.

About Feldman Mall Properties, Inc.

The Company's shares of common stock are quoted on Pink OTC Markets, a privately-owned company formerly known as Pink Sheets, which operates Pink Quote. For more information on Feldman Mall Properties Inc., visit the Company website at

Contact Information

    John F. Dougherty, Jr.
    Senior Vice President and General Counsel and Secretary
    (215) 564-8084
    1065 Avenue of the Americas, 19th Floor
    New York, NY 10018