Certain GreenOak Transaction Matters
Certain GreenOak Transaction Matters
TFG and the Master Fund have entered into a binding agreement (the “Agreement”) with John Carrafiell, Sonny Kalsi, Fred Schmidt (collectively, the “GreenOak Founders”), Polygon Management L.P. (“Polygon Management”) , Polygon Investment Partners LP (“PIP LP”) and Polygon Investment Partners LLP (“PIP LLP”, and together with PIP LP, the “Service Providers”) to invest in and pursue a multi-jurisdictional real estate venture (the “Transaction”), GreenOak Real Estate (“GreenOak”).
Under the terms of the Transaction, the Master Fund will provide GreenOak with, among other things, a working capital loan of up to $10.0 million (the “TFG Working Capital Loan”) and a $100.0 million co-investment commitment (the “GP Co-Investment”) to fund up to a limited fixed percentage amount of any GreenOak sponsored investment program with TFG retaining the option to invest further amounts. TFG will also grant to the GreenOak Founders options with respect to approximately 3% of TFG listed shares (exercisable after five years and subject to further conditions) (such options, the “Options” and, together with the TFG Working Capital Loan and GP Co-Investment, the “TFG Transaction”) at a strike price of $5.50. TFG will receive in the TFG Transaction, among other things, a 10.0% equity interest in GreenOak and any GreenOak “carry vehicle”, in each case, not subject to dilution (the “GreenOak Interests”). As an affiliate of the sponsor, in respect of any investment amounts drawn under the GP Co-Investment, the Master Fund will pay a “management fee” equal to the lowest management fee applicable to other equity investors of comparable size in the relevant investment program (“MFN Treatment”) and a reduced “performance fee” (the “Performance Fee Reduction” and, together with the GreenOak Interests and MFN Treatment, the “TFG Consideration”) than it would have otherwise been subject or, to the extent more favorable, the lowest performance fee paid in the relevant investment program.
Under the terms of the Transaction, Polygon Management, an affiliate of the Investment Manager, will provide GreenOak with a working capital loan of up to $10.0 million on the same terms as the TFG Working Capital Loan (the “Polygon Working Capital Loan”) as well as a limited co-investment commitment and the Service Providers will enter into an agreement with GreenOak to provide operating, infrastructure and administrative services to the business (the “Infrastructure Services Agreement” and, together with the Polygon Working Capital Loan, the “Polygon Transaction”). Polygon will also provide the GreenOak Founders with an equity interest in Polygon (subject to certain forfeiture conditions). Polygon Management will, in turn, receive an equity interest in GreenOak and any GreenOak “carry vehicle”, in each case, not subject to dilution.
The material facts as to any Director’s interest in the Transaction have been disclosed to the Directors. The Board of Directors of TFG obtained an opinion, dated July 23, 2010, from a recognized investment banking firm to the effect that, as of the date of the opinion and subject to various assumptions, qualifications and limitations on the review undertaken, the TFG Consideration to be received in the TFG Transaction pursuant to the Agreement was fair, from a financial point of view, to TFG after giving effect to the TFG Transaction and the Polygon Transaction; See Here For Certain Additional Information Regarding the Opinion.
The Directors reviewed the proposed terms of the Transaction, and with the vote of all of the four Independent Directors acting with the advice of independent counsel, approved the Transaction.