SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JUNE 20, 2004
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CHELSEA PROPERTY GROUP, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 1-12328 22-3251332
(State or other jurisdiction (Commission (IRS Employer ID
of incorporation) File Number) Number)
103 EISENHOWER PARKWAY, ROSELAND, NEW JERSEY 07068
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973) 228-6111
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(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS
On June 21, 2004, Chelsea Property Group, Inc. ("Chelsea") and Simon
Property Group, Inc. ("Simon") announced that they had entered into a definitive
Agreement and Plan of Merger (the "Merger Agreement"), dated as of June 20,
2004, by and among Simon, Simon Property Group, L.P. ("SPG LP"), Simon
Acquisition I, LLC ("Merger Sub"), Simon Acquisition II, LLC ("L.P. Merger
Sub"), Chelsea and CPG Partners, L.P. ("CPG LP"), which provides for, among
other things, the acquisition of Chelsea by Simon.
Pursuant to the Merger Agreement, Merger Sub shall merge with and into
Chelsea, with Chelsea as the surviving corporation (the "REIT Merger"). As a
result of the REIT Merger, each share (other than shares owned by Simon, Chelsea
or their respective wholly owned subsidiaries) of common stock, par value par
value $.01 per share, of Chelsea ("Chelsea Common Stock") shall be converted
into the right to receive (i) $36.00 in cash (the "Base Cash Consideration"
which may be adjusted pursuant to the proviso of the next sentence), (ii) a
fraction of a fully paid and nonassessable share of common stock, par value
$0.0001 per share, of Simon ("Simon Common Stock") equal to the Common Exchange
Ratio (as defined below and which Common Exchange Ratio is subject to adjustment
as set forth below), and (iii) a fraction of a fully paid and nonassessable
share of 6% preferred stock of Simon (the "Simon 6% Preferred Stock") equal to
the Preferred Exchange Ratio (as defined below). The shares of Simon 6%
Preferred Stock have a liquidation preference of $50 per share, have no maturity
date, are convertible at the option of the holder into Simon Common Stock upon,
among other things, the achievement of certain price targets for the Simon
Common Stock, and are redeemable at the option of Simon after five years from
the date of issuance upon the achievement of certain price targets for the Simon
Common Stock.
As used herein, the "Common Exchange Ratio" means 0.2936 and the "Preferred
Exchange Ratio" means 0.3000, each appropriately adjusted for any stock splits,
reverse stock splits, stock dividends, recapitalizations or other similar
transactions; provided, however, that (i) in the event that the average of ten
randomly selected closing prices of Simon Common Stock on the New York Stock
Exchange (the "NYSE") during the period of the 30 most recent trading days
ending on the fifth business day prior to the Closing Date (the "Closing Date
Market Price") is greater than $58.75 (the "Upper Limit Price"), then the Common
Exchange Ratio shall be adjusted to equal 0.2936 multiplied by a fraction, the
numerator of which is the Upper Limit Price, and the denominator of which is the
Closing Date Market Price, and (ii) in the event that the Closing Date Market
Price is less than $43.43 (the "Lower Limit Price"), then the Base Cash
Consideration shall be increased by an amount equal to the product of (x) an
amount equal to (1) 0.2936 multiplied by a fraction, the numerator of which is
the Lower Limit Price, and the denominator of which is the Closing Date Market
Price less (2) the Common Exchange Ratio multiplied by (y) the Closing Date
Market Price, rounded to the nearest cent. In addition, in connection with the
REIT Merger, each share (other than shares owned by Simon, Chelsea or their
respective wholly owned subsidiaries) of 8-3/8% Series A Cumulative Redeemable
Preferred Stock of Chelsea issued and outstanding immediately prior to the
effective time of the REIT Merger shall be converted into the right to receive
one fully paid and nonassessable share of Simon 8-3/8% cumulative redeemable
preferred stock.
Pursuant to the Merger Agreement, L.P. Merger Sub shall merge with and into
CPG LP, with CPG LP as the surviving partnership (the "OP Merger"). As a result
of the OP Merger, each common unit (other than units owned by Simon, Chelsea or
their respective wholly owned subsidiaries) of CPG LP ("CPG LP Common Units")
shall be converted into the right to receive (i) a fraction of a SPG LP common
interest ("SPG LP Common Interest") equal to the Common Interest Exchange Ratio
(as defined below) and (ii) a fraction of a SPG LP preferred interest ("SPG LP
Preferred Interest" and, together with the SPG LP Common Interests", the "SPG LP
Interests") equal to the Preferred Interest Exchange Ratio (as defined below)
(collectively, the "OP Merger Consideration"). The SPG LP Preferred Interests
shall have substantially the same economic terms as the Simon 6% Preferred
Stock, except that they shall be (i) convertible at the option of the holder
into SPG LP Common Units on substantially the same terms as the Simon 6%
Preferred Stock shall be convertible into Simon Common Stock and (ii)
exchangeable at the option of the holder for Simon 6% Preferred Stock.
As used herein, the "Common Interest Exchange Ratio" means 0.6459 and the
"Preferred Interest Exchange Ratio" means 0.6600, each appropriately adjusted
for any stock splits, reverse stock splits, stock dividends, recapitalizations
or other similar transactions; provided, however, that (i) in the event that the
Closing Date Market Price is greater than the Upper Limit Price, then the Common
Interest Exchange Ratio shall be adjusted to equal 0.6459 multiplied by a
fraction, the numerator of which is the Upper Limit Price, and the denominator
of which is the Closing Date Market Price, and (ii) in the event that the
Closing Date Market Price is less than the Lower Limit Price, then the Common
Interest Exchange Ratio shall be adjusted to equal 0.6459 multiplied by a
fraction, the numerator of which is the Lower Limit Price, and the denominator
of which is the Closing Date Market Price.
Holders of CPG LP Common Units shall have the option to elect to exchange
with SPG LP their CPG LP Common Units for the OP Merger Consideration
immediately prior to the effective time of the OP Merger. If all of the holders
of CPG LP Common Units elect to exchange their units for the OP Merger
Consideration, Simon does not currently contemplate consummating the OP Merger.
In connection with the Merger Agreement, Simon and SPG LP entered into
voting agreements, each dated as of June 20, 2004 (the "Voting Agreements"),
with certain limited partners of CPG LP (the "CPG Limited Partners") who hold
approximately 78.5% of the CPG LP Common Units and approximately .7% of the
outstanding Chelsea Common Stock. Pursuant to the Voting Agreements, the CPG
Limited Partners agreed to vote their CPG LP Common Units and their Chelsea
Common Stock in favor of the OP Merger and the REIT Merger, respectively.
Consummation of the REIT Merger is subject to various conditions,
including: (i) receipt of the approval of at least 66-2/3% of the voting power
of the outstanding shares of Chelsea Common Stock entitled to vote on the REIT
Merger; (ii) receipt of the affirmative vote or consent of the holders of a
majority of the voting power of CPG LP's limited partnership units entitled to
vote on the OP Merger; (iii) the declaration of effectiveness by the Securities
and Exchange Commission of a registration statement covering the Simon Common
Stock and Simon 6% Preferred Stock to be issued in the REIT Merger; (iv) listing
on the NYSE, subject to notice of issuance, of the shares of Simon Common Stock
and Simon 6% Preferred Stock to be issued in the REIT Merger and the shares of
Simon Common Stock to be reserved for issuance upon conversion of SPG LP
Interests issued in the OP Merger; and (v) receipt of tax opinions.
A copy of the press release issued by Simon and Chelsea on June 21, 2004,
the Merger Agreement, the Voting Agreements and the Simon 6% Preferred Stock
Term Sheet are attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.4,
respectively, and are each incorporated herein by this reference.
Item 7(c). EXHIBITS
99.1 Press Release Issued by Simon and Chelsea on June 21, 2004.
99.2 Agreement and Plan of Merger, dated as of June 20, 2004, by and among
Simon, SPG LP, Merger Sub, L.P. Merger Sub, Chelsea and CPG LP.
99.3 Form of Voting Agreement, dated as of June 20, 2004, by and among Simon,
SPG LP and certain limited partners of CPG LP.
99.4 Simon 6% Preferred Stock Term Sheet.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHELSEA PROPERTY GROUP, INC.
By: /s/ Michael J. Clarke
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Name: Michael J. Clarke
Title: Executive Vice President and
Chief Financial Officer
Dated: June 22, 2004
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
99.1 Press release dated June 21, 2004
99.2 Agreement and Plan of Merger, dated as of June 20,
2004, by and among Simon, SPG
LP, Merger Sub, L.P. Merger Sub, Chelsea and CPG LP
99.3 Form of Voting Agreement, dated as of June 21, 2004,
by and among Simon, SPG LP and certain limited partners
of CPG LP
99.4 Simon 6% Preferred Stock Term Sheet