UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): December 5, 2016
CNL LIFESTYLE PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
| Maryland | 000-51288 | 20-0183627 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
450 South Orange Ave.
Orlando, Florida 32801
(Address of Principal Executive Offices; Zip Code)
Registrant’s telephone number, including area code: (407) 650-1000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events.
Mini-Tender Offer for Company Shares
CNL Lifestyle Properties, Inc. (the “Company”) recently learned of a mini-tender offer, by CMG Partners, LLC, to purchase up to 4,000,000 shares of the Company’s issued and outstanding shares of common stock at a price of $1.31 per share in cash (the “Offer”). Filed herewith as Exhibit 99.1, and incorporated herein by reference, is a copy of the Company’s communication to its stockholders regarding the Offer and the board of directors’ decision, on December 5, 2016, to recommend that stockholders reject the Offer (the “Letter to Stockholders”). As with other recent mini-tender offers, the Letter to Stockholders will be posted on the Company’s website at www.cnllifesytleriet.com, and will not be mailed. In addition, the Company sent a correspondence to financial advisors and broker dealers that sold shares of the Company’s common stock in the Company’s public offerings, notifying them of the Company’s position regarding the CMG mini-tender offer. A copy of the Company’s correspondence to financial advisors and broker dealers is filed herewith as Exhibit 99.2 and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| 99.1 | Letter to Stockholders dated December 5, 2016. | |
| 99.2 | Letter to Financial Advisors dated December 5, 2016. |
Cautionary Note Regarding Forward-Looking Statements
The information above contains “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to the safe harbor created by Section 21E of the Exchange Act. Forward-looking statements are statements that do not relate strictly to historical or current facts, but reflect management’s current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of the Company’s business and its performance, the economy, and other future conditions and forecasts of future events, and circumstances. Forward-looking statements are typically identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “continues,” “pro forma,” “may,” “will,” “seeks,” “should” and “could,” and words and terms of similar substance. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual results could differ materially from those set forth in the forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to, the ability of the Company to obtain the requisite stockholder approval to consummate the proposed Sale and the Plan of Dissolution, the satisfaction or waiver of other conditions in the Sale Agreement; the outcome of legal proceedings that may be instituted against the Company and others related to the Sale Agreement; the ability of third parties to fulfill their obligations relating to the proposed transactions; the risk that the Sale or the other transactions contemplated by the Sale Agreement may not be completed in the time frame expected by the parties or at all; the ability of the Company to implement its operating strategy; changes in economic cycles; the impact of changes in accounting rules; the impact of regulations requiring periodic valuation of the Company on a per share basis; inaccuracies of the Company’s accounting estimates; unknown liabilities of acquired properties or liabilities caused by property managers or operators; risks associated with the Company’s tax structuring; failure to maintain the Company’s REIT qualification; and the Company’s inability to protect its intellectual property and the value of its brand.
Given these uncertainties, the Company cautions you not to place undue reliance on such statements. For further information regarding risks and uncertainties associated with the Company’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s documents filed from time to time with the SEC, including, but not limited to, the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained from the Company’s website at http://www.cnllifestylereit.com/. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events.
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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.
| Date: December 5, 2016 | CNL LIFESTYLE PROPERTIES, INC. a Maryland Corporation | |||||
| By: | /s/ Tammy J. Tipton | |||||
| Tammy J. Tipton Chief Financial Officer and Treasurer | ||||||
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EXHIBIT INDEX
| Exhibit No. |
Exhibit Description | |
| 99.1 | Letter to the Company’s Stockholders dated December 5, 2016. | |
| 99.2 | Letter to Financial Advisors dated December 5, 2016. | |
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Exhibit 99.1
December 5, 2016
Dear Fellow Stockholder:
On November 18, 2016, CMG Partners, LLC launched an unsolicited mini-tender offer to purchase up to 4,000,000 shares of CNL Lifestyle Properties common stock at a price of $1.31 per share in cash.
Our board of directors recommends that stockholders reject the offer. We are not affiliated with CMG or their offer. We believe the CMG offer price is significantly less than the potential value of your shares that we have publicly disclosed recently.
We think that the offer is an opportunistic attempt by CMG to purchase shares at a low price and make a profit, and as a result, deprive our stockholders who sell their shares, of the potential opportunity to realize a full current value for their investment. In CMG’s own words —“Our offer price was determined by applying an approximate 39% discount to the mid-point of CNL’s estimated range of future values ($2.17)”, and “Whether or not CNL’s estimate of future value proves to be accurate, we believe that the company’s shares are worth more than our offer price.” Furthermore, CMG did not obtain current appraisals of any properties in our portfolio to demonstrate fair market value.
This offer, known as a “mini-tender”, is structured to avoid the filing, disclosure and procedural requirements adopted by the Securities and Exchange Commission (SEC) for the protection of investors. The SEC has cautioned investors about these types of offers, noting that important protections do not apply to mini-tender offers. The SEC’s Investor Tips regarding mini-tender offers and some of the risks that they pose may be found on the SEC’s website at sec.gov/investor/pubs/minitend.htm.
As you may recall, just last month we announced the signing of a definitive agreement to sell our remaining ski and attractions assets to two well-capitalized entities, EPR Properties (NYSE: EPR) and Ski Resort Holdings LLC (an affiliate of Och-Ziff Capital Management Group), for $830 million, which will consist of $183 million cash and approximately $647 million of EPR common stock. We are working to complete the sale in the second quarter of 2017; however, we cannot predict the exact timing of its completion or whether the transaction closes at all.
In connection with the transactions contemplated by the sale agreement, our board of directors unanimously approved a plan of liquidation and dissolution for the company, which is subject to, among other things, approval of the plan of dissolution by our stockholders. Including the $0.50 per share special liquidating distribution recently paid, we currently estimate that stockholders will receive, upon liquidation and dissolution, an amount within an estimated range of $2.60 and $2.75 per share in cash and EPR common shares.
We recognize that due to the suspension of our stock redemption plan, the lack of a trading market for our shares, and the uncertainty as to the timing of future distributions, stockholders may decide to accept the mini-tender offer based on, among other things, their individual liquidity needs. We acknowledge that each stockholder must evaluate whether to tender their shares based on all the information available, including our recent public filings. We also believe that in making a decision, each stockholder should keep in mind that our board of directors can provide no assurance with respect to future distributions or the value of our shares, which can change periodiodically, or future liquidity timing for stockholders.
PLEASE CONSULT WITH YOUR FINANCIAL AND TAX ADVISORS BEFORE MAKING ANY DECISIONS AFFECTING YOUR INVESTMENT.
If you are interested in selling your shares, there may be other options available to you. However, because trading on the secondary market is limited, if you desire immediate liquidity, accepting a mini-tender offer may be the quickest way of achieving liquidity.
If you have any questions regarding the offer or other recent events mentioned in this letter, please contact your financial advisor, or call CNL Client Services at 866-650-0650, option 3.
Sincerely,
| James M. Seneff, Jr. | Stephen H. Mauldin | |
| Chairman of the Board | Chief Executive Officer & President |
Additional Information about the Proposed Transactions and Where to Find It
We plan to file with the SEC a preliminary proxy statement for the proposed transactions, which will be a part of a registration statement on Form S-4 filed by EPR in connection with the proposed transactions and include EPR’s preliminary prospectus. A definitive proxy statement will be mailed to the company’s stockholders. THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, EPR, THE PROPOSED SALE OF THE PROPERTIES, THE PLAN OF DISSOLUTION, AND RELATED MATTERS. BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE TRANSACTIONS, STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY MATERIALS CAREFULLY WHEN THEY ARE AVAILABLE. The registration statement, the proxy statement/prospectus and other documents, when filed with the SEC, can be obtained free of charge through the website maintained by the SEC at sec.gov, at the company’s website at cnllifestylereit.com under the tab “Investor Relations” and then “SEC Filings” and on EPR’s website at eprkc.com under the tab “Investor Center” and then “SEC Filings.”
Participants in the Solicitation
The company and its directors and executive officers and EPR and its trustees and executive officers and other members of their respective management and employees may be deemed participants in the solicitation of proxies from the company’s stockholders in connection with the proposed transactions. Information regarding the special interests of these directors, trustees and executive officers in the proposed transactions will be included in the definitive proxy statement/prospectus referred to above. Additional information regarding the company’s directors and executive officers is also included in the company’s Annual Report on Form 10-K for the fiscal year ended
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December 31, 2015, which was filed with the SEC on March 28, 2016. Additional information regarding EPR’s trustees and executive officers is also included in EPR’s proxy statement for its 2016 Annual Meeting of Shareholders, which was filed with the SEC on April 1, 2016, and in Form 4s of EPR’s trustees and executive officers filed with the SEC. The filed documents are available free of charge at the SEC’s website at sec.gov and from the company and EPR by contacting them as described above. Other information about the participants in the proxy solicitation will be contained in the proxy statement/prospectus.
Cautionary Note Regarding Forward-Looking Statements
Forward-looking statements are based on current expectations and may be identified by words such as “believes,” “anticipates,” “expects,” “may,” “could” and terms of similar substance, and speak only as of the date made. Actual results could differ materially due to risks and uncertainties that are beyond the company’s ability to control or accurately predict, including the amount and timing of anticipated future distributions, estimated per share net asset value of the company’s stock and/or other matters. The company’s forward-looking statements are not guarantees of future performance. Stockholders and financial advisors should not place undue reliance on forward-looking statements.
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Exhibit 99.2
FA Email
Subject: CNL Lifestyle Properties Responds to Third-Party Mini-Tender Offer
FOR BROKER-DEALER AND RIA USE ONLY.
Dear Financial Advisor:
On Nov. 18, 2016, CMG Partners, LLC, launched an unsolicited mini-tender offer to purchase up to 4,000,000 shares of CNL Lifestyle Properties’ common stock. CMG’s offer is for $1.31 per share and has an expiration date of Dec. 23, 2016.
After careful evaluation, our board of directors recommends that stockholders reject CMG’s mini-tender offer. This recommendation was included in a response filed with the SEC on Dec. 5, 2016. A copy of that filing can be found on the SEC’s website at sec.gov, and the letter to stockholders can be found on the company’s website at cnllifestylereit.com.
Recent Events
| • | On Nov. 2, 2016, CNL Lifestyle Properties entered a definitive agreement to sell the remaining ski and attractions assets to two well-capitalized entities, EPR Properties (NYSE: EPR) and Ski Resort Holdings LLC (an affiliate of Och-Ziff Capital Management Group), for $830 million, which will consist of $183 million cash and approximately $647 million of EPR common stock. The sale, together with a special distribution of $0.50 per share declared and paid to stockholders on or around November 14, 2016, is expected to result in total liquidating distributions to stockholders of approximately $2.60 to $2.75 per share. Although the Company is working to close the transaction in the second quarter of 2017, it cannot predict the exact timing of its completion or whether the transaction closes at all. |
| • | In connection with the sale transactions the board of directors unanimously approved a plan of liquidation and dissolution whereby CNL Lifestyle Properties would be liquidated and dissolved, subject to, among other things, approval of the plan of dissolution by stockholders. |
Why Reject the Tender Offer?
The following is a summary of the board of directors’ recommendation and response to the mini-tender offer as outlined in the Form 8-K filed with the SEC:
| • | Our board of directors concluded that the offer is not in the best interests of CNL Lifestyle Properties’ stockholders. |
| • | The board of directors believes the offer is an opportunistic attempt by CMG to purchase shares at a low share price and make a profit, and as a result, deprive stockholders who sell their shares of the potential opportunity to realize the full current value of their investment. CMG did not obtain current appraisals of any properties in our portfolio to demonstrate fair market value. CMG’s letter states that its offer represents an approximate 39% discount to the $2.17 mid-point of the Company’s estimated range of remaining distributions to be received in connection with the sale and dissolution. |
The board of directors recognizes that due to the suspension of the stock redemption plan, the lack of a trading market for shares and the uncertainty as to the timing of future distributions, stockholders may decide to accept the mini-tender offer based on, among other things, their individual liquidity needs.
Please review the Form 8-K filed on Dec. 5, 2016. For additional information, please contact your sales representative directly or call CNL Client Services at 866-650-0650, option 2.
FOR BROKER-DEALER AND RIA USE ONLY.
See SEC filing or offering documents for complete details. This information is derived from the issuer’s public filings and does not replace or supersede any information provided therein.
Forward-looking statements are based on current expectations and may be identified by words such as “believes,” “anticipates,” “expects,” “may,” “could” and terms of similar substance, and speak only as of the date made. Actual results could differ materially due to risks and uncertainties that are beyond CNL Lifestyle Properties ability to control or accurately predict. Financial advisors should not place undue reliance on forward-looking statements.
Additional Information about the Proposed Transactions and Where to Find It
We plan to file with the SEC a preliminary proxy statement for the proposed transactions, which will be a part of a registration statement on Form S-4 filed by EPR in connection with the proposed transactions and include EPR’s preliminary prospectus. A definitive proxy statement will be mailed to the company’s stockholders. THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, EPR, THE PROPOSED SALE OF THE PROPERTIES, THE PLAN OF DISSOLUTION, AND RELATED MATTERS. BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE TRANSACTIONS, STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY MATERIALS CAREFULLY WHEN THEY ARE AVAILABLE. The registration statement, the proxy statement/prospectus and other documents, when filed with the SEC, can be obtained free of charge through the website maintained by the SEC at sec.gov, at the company’s website at cnllifestylereit.com under the tab “Investor Relations” and then “SEC Filings” and on EPR’s website at eprkc.com under the tab “Investor Center” and then “SEC Filings.”
Participants in the Solicitation
The company and its directors and executive officers and EPR and its trustees and executive officers and other members of their respective management and employees may be deemed participants in the solicitation of proxies from the company’s stockholders in connection with the proposed transactions. Information regarding the special interests of these directors, trustees and executive officers in the proposed transactions will be included in the definitive proxy statement/prospectus referred to above. Additional information regarding the company’s directors and executive officers is also included in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on March 28, 2016. Additional information regarding EPR’s trustees and executive officers is also included in EPR’s proxy statement for its 2016 Annual Meeting of Shareholders, which was filed with the SEC on April 1, 2016, and in Form 4s of EPR’s trustees and executive officers filed with the SEC. The filed documents are available free of charge at the SEC’s website at sec.gov and from the company and EPR by contacting them as described above. Other information about the participants in the proxy solicitation will be contained in the proxy statement/prospectus.
© 2016 CNL Intellectual Properties, Inc. All Rights Reserved. CNL® and the Squares Within Squares design trademarks are used under license from CNL Intellectual Properties, Inc.
CLP-1216-00120-001-BD