SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO/A
(RULE 14D-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 3)
TRANSCONTINENTAL REALTY INVESTORS, INC. (Issuer)
(Name of Subject Company)
TRANSCONTINENTAL REALTY ACQUISITION CORPORATION (Offeror)
(Name of Filing Person)
AMERICAN REALTY INVESTORS, INC. (Offeror)
(Name of Filing Person)
COMMON STOCK, PAR VALUE .01 PER SHARE
(Title of Class of Securities)
893617-20-9
(CUSIP Number of Class of Securities)
ROBERT A. WALDMAN
1800 VALLEY VIEW LANE, SUITE 300
DALLAS, TEXAS 75234
(469) 522-4200
(469) 522-4360 (FAX)
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With copies to:
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STEVEN C. METZGER, ESQ. JEFFREY M. SONE, ESQ.
PRAGER METZGER & KROEMER, PLLC JACKSON WALKER L.L.P.
2626 COLE AVENUE, SUITE 900 901 MAIN STREET, SUITE 6000
DALLAS, TEXAS 75204 DALLAS, TEXAS 75202
(214) 969-7600 (214) 953-6000
(214) 523-3838 (FAX) (214) 953-5822(FAX)
(Name, Address, and Telephone Numbers of Person Authorized to Receive
Notices and Communications on Behalf of the Persons Filing Statement)
Calculation of Filing Fee
Transaction valuation* Amount of filing fee
---------------------- --------------------
$71,370,128.00 $6,567.00**
*For purposes of calculating the fee only. This amount assumes the
purchase of 4,078,293 shares of Transcontinental Realty Investors, Inc. for
$17.50 per share. The amount of the filing fee, calculated in accordance with
Section 14(g)(1)(B)(3) and Rule 0-11.
**Filing fee was paid with the Schedule TO filed November 15, 2002.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
[ ] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to
which the statement relates
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[X] going private transaction subject to Rule 13e-3
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting
the results of the tender offer: [ ]
RULE 14D-1 TENDER OFFER STATEMENT
Introduction
This Amendment No. 3 amends and supplements the Tender Offer Statement
on Schedule TO originally filed on November 15, 2002, as amended (the "Schedule
TO") by American Realty Investors, Inc. ("ARL") and Transcontinental Realty
Acquisition Corporation, a wholly-owned subsidiary of ARL ("TCI Acquisition
Sub"). This Schedule TO includes the Schedule 13E-3 Transaction Statement of ARL
and TCI Acquisition Sub.
This Tender Offer Statement relates to the offer by TCI Acquisition Sub
to purchase any and all of the issued and outstanding shares of common stock of
Transcontinental Realty Investors, Inc., ("TCI") for $17.50 net per share in
cash upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated November 15, 2002 and filed as Exhibit (a)(1) to the Schedule
TO. The information set forth in the Offer to Purchase and the Letter of
Transmittal (filed as Exhibit (a)(2) to the Schedule TO), including all
schedules, exhibits and annexes thereto, is hereby expressly incorporated herein
by reference in response to all items of information required to be included in,
or covered by, this Tender Offer Statement on Schedule TO and all items of
information required to be included in, or covered by, the Schedule 13E-3
Transaction Statement. The responses to each item in this Tender Offer Statement
are qualified in their entirety by the information contained in the Offer to
Purchase and the exhibits, as amended, hereto.
ITEM 1. SUMMARY TERM SHEET.
Item 1 of the Schedule TO is hereby amended as follows:
TCI Acquisition Sub is extending the expiration date of its offer to
purchase any and all of the issued and outstanding shares of common
stock of TCI. The original expiration date for the tender offer was
12:00 Midnight December 13, 2002. As extended, the tender offer will
now expire at 12:00 p.m. New York City time, on Friday, December 20,
2002. TCI stockholders have until the newly-extended expiration date to
decide whether to tender their TCI shares in the offer. As of 3:00 P.M.
New York City time on Friday, December 13, 2002, approximately 990,309
shares of Transcontinental Realty Investors common stock, or
approximately 12.4% of the outstanding shares, had been tendered and
not withdrawn pursuant to the tender offer.
ITEM 4. TERMS OF THE TRANSACTION.
Item 4 of the Schedule TO is hereby amended as follows:
See Item 1 of this Tender Offer Statement.
ITEM 12. EXHIBITS
Item 12 of the Schedule TO is hereby amended as follows:
Exhibit Number Description
(a)(1) Offer to Purchase, dated November 15,
2002(1)
(a)(2) Letter of Transmittal, dated November 15,
2002(1)
(a)(3) Notice of Guaranteed Delivery(1)
(a)(4) Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees,
dated November 15, 2002 (1)
(a)(5) Form of Letter to Clients for Use by
Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees(1)
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form
W-9(1)
(a)(7) Summary Advertisement, dated November 15,
2002(1)
(a)(8) Press Release issued by American Realty
Advisors on November 8, 2002(2)
(a)(9) Press Release issued by American Realty
Investors, Inc. on November 21, 2002(3)
(a)(10) Press Release issued by American Realty
Investors, Inc. on December 13, 2002(4)
(b) Not applicable
(c) Not Applicable
(d) Not Applicable
(f) Not Applicable
(g) Not Applicable
(h) Not Applicable
99.1 ARL/IORI/TCI Merger: Board Presentation --
Executive Summary, January 31, 2002,
prepared by Houlihan Lokey Howard & Zukin(5)
99.2 ARL/IORI/TCI Merger: Exhibits to Board
Presentation, January 2002, prepared by
Houlihan Lokey Howard & Zukin(5)
99.3 Discounted Cash Flow Analysis - Detail
prepared by Houlihan Lokey Howard & Zukin(5)
99.4 Opinion of Houlihan Lokey Howard & Zukin
(TCI)(6)
99.5 Opinion of Houlihan Lokey Howard & Zukin
(Income Opportunity Realty Investors,
Inc.)(7)
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(1) Previously filed as an exhibit to the Schedule TO on November 15, 2002 by
the filing persons named in this Schedule TO and is incorporated herein by
reference.
(2) Previously filed as an exhibit to the Schedule TO-C on November 8, 2002 by
the filing persons named in this Schedule TO and is incorporated herein by
reference.
(3) Previously filed as an exhibit to the Schedule TO Amendment No. 1 on
November 22, 2002 by the filing persons named in this Schedule TO and is
incorporated herein by reference.
(4) Filed herewith.
(5) Previously filed as an exhibit to the Schedule 13E-3 Amendment No. 1 filed
by American Realty Investors, Inc. on August 30, 2002 and is incorporated herein
by reference.
(6) Previously filed on August 30, 2002 as Appendix E to the Proxy
Statement/Prospectus contained in the Form S-4 filed by American Realty
Investors, Inc. and is incorporated herein by reference.
(7) Previously filed on August 30, 2002 as Appendix F to the Proxy
Statement/Prospectus contained in the Form S-4 filed by American Realty
Investors, Inc. and is incorporated herein by reference.
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Item 1. Summary Term Sheet is hereby amended as follows:
See Item 1 of this Tender Offer Statement.
Items 4. Terms of the Transaction is hereby amended as follows:
See Item 1 of this Tender Offer Statement.
Item 8. Fairness of the Transaction is hereby amended as follows:
The following is added after the bullet point on page 24 of the Offer
to Purchase:
o The ARL board did not consider the liquidation value or the
going concern value of TCI in reaching its fairness
determination because it did not have available to it a
current liquidation analysis of TCI, or any analysis of the
going concern value thereof beyond the value assigned by the
ongoing market for TCI's shares. Further, the ARL board did
not believe that liquidation of TCI was a realistic
alternative.
o Because the ARL board had already given consideration to the
historical market prices of TCI's stock, it did not give
further consideration to its affiliates' open market purchases
of such stock in connection with its fairness determination.
The ARL board did note that the purchase of TCI common stock
from Gotham Partners in April 2001 was material to the
negotiations that led to the Settlement Agreement. See
"Special Factors - Background of the Offer."
o The ARL board was not aware of any firm offers made by any
unaffiliated person during the past two years for the merger
or consolidation of TCI with any other company, the sale or
other transfer of all or any substantial part of the assets of
TCI or a purchase of TCI's stock that would enable the holder
to exercise control of TCI and, therefore, did not consider
any such offers in its fairness determination.
o The offer does not require the approval of TCI stockholders.
Each stockholder will determine whether to tender or not and
the offer is not dependent upon a vote of stockholders. No
Stockholder will be complied to sell in the Offer. In the
event there is a follow-on merger after the expiration of the
offer, ARL intends to seek the approval of at least a majority
of unaffiliated TCI stockholders. The ARL board believes the
offer is procedurally fair despite the absence of approval of
at least a majority of stockholders because the terms of the
offer were negotiated by Settlement Counsel representing the
TCI stockholders as part of the Settlement Agreement and
because no stockholder is required to accept the offer. See
"Special Factors - Overview of the Lawsuit and Settlement
Agreement that Led to this Tender Offer."
o The TCI board did not retain an unaffiliated representative to
act solely on behalf of the unaffiliated stockholders for
purposes of negotiating the terms of the offer or preparing a
report concerning fairness. The ARL board believes the offer
is procedurally fair despite the absence of such a
representative because the terms of
the offer were negotiated by Settlement Counsel
representing the TCI stockholders as part of the Settlement
Agreement and because TCI has a board of directors that
reviewed and approved the Settlement Agreement. See "Special
Factors - Overview of the Lawsuit and Settlement Agreement
that Led to this Tender Offer."
o The ARL board was aware that BCM may receive fees, currently
estimated to be $1,939,000, in connection with the sale of any
property that may be sold and loans that may be obtained to
finance the purchase of shares in the offer. The ARL board did
not consider this fact material when making its determination
of fairness because the price was determined in arms-length
negotiations with Settlement Counsel representing the IOT
stockholders as part of the negotiations that led to the
Settlement Agreement. See "Special Factors - Overview of the
Lawsuit and Settlement Agreement that Led to this Tender
Offer."
The words "procedural and substantive" are added before the word
"fairness" in the first sentence of the last paragraph on page 24 of
the Offer to Purchase.
The words "procedurally and substantively" are added before the word
"fairness" in the last sentence of the last paragraph on page 24 of the
Offer to Purchase.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information is set forth in this statement is true, complete and
correct.
AMERICAN REALTY INVESTORS, INC.
Date: December 13, 2002 By: /s/ Ronald E. Kimbrough
--------------------------------------
Printed Name: Ronald E. Kimbrough
Title: Executive Vice President and Chief
Financial Officer
TRANSCONTINENTAL REALTY
ACQUISITION CORPORATION
Date: December 13, 2002 By: /s/ Ronald E. Kimbrough
--------------------------------------
Printed Name: Ronald E. Kimbrough
Title: Director and President
INDEX TO EXHIBITS
Exhibit Number Description
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(a)(1) Offer to Purchase, dated November 15,
2002(1)
(a)(2) Letter of Transmittal, dated November 15,
2002(1)
(a)(3) Notice of Guaranteed Delivery(1)
(a)(4) Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees,
dated November 15, 2002 (1)
(a)(5) Form of Letter to Clients for Use by
Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees(1)
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form
W-9(1)
(a)(7) Summary Advertisement, dated November 15,
2002(1)
(a)(8) Press Release issued by American Realty
Advisors on November 8, 2002(2)
(a)(9) Press Release issued by American Realty
Investors, Inc. on November 21, 2002(3)
(a)(10) Press Release issued by American Realty
Investors, Inc. on December 13, 2002(4)
(b) Not applicable
(c) Not Applicable
(d) Not Applicable
(f) Not Applicable
(g) Not Applicable
(h) Not Applicable
99.1 ARL/IORI/TCI Merger: Board Presentation --
Executive Summary, January 31, 2002,
prepared by Houlihan Lokey Howard & Zukin(5)
99.2 ARL/IORI/TCI Merger: Exhibits to Board
Presentation, January 2002, prepared by
Houlihan Lokey Howard & Zukin(5)
99.3 Discounted Cash Flow Analysis - Detail
prepared by Houlihan Lokey Howard & Zukin(5)
99.4 Opinion of Houlihan Lokey Howard & Zukin
(TCI)(6)
99.5 Opinion of Houlihan Lokey Howard & Zukin
(Income Opportunity Realty Investors,
Inc.)(7)
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(1) Previously filed as an exhibit to the Schedule TO on November 15, 2002 by
the filing persons named in this Schedule TO and is incorporated herein by
reference.
(2) Previously filed as an exhibit to the Schedule TO-C on November 8, 2002 by
the filing persons named in this Schedule TO and is incorporated herein by
reference.
(3) Previously filed as an exhibit to the Schedule TO Amendment No. 1 on
November 22, 2002 by the filing persons named in this Schedule TO and is
incorporated herein by reference.
(4) Filed herewith.
(5) Previously filed as an exhibit to the Schedule 13E-3 Amendment No. 1 filed
by American Realty Investors, Inc. on August 30, 2002 and is incorporated herein
by reference.
(6) Previously filed on August 30, 2002 as Appendix E to the Proxy
Statement/Prospectus contained in the Form S-4 filed by American Realty
Investors, Inc. and is incorporated herein by reference.
(7) Previously filed on August 30, 2002 as Appendix F to the Proxy
Statement/Prospectus contained in the Form S-4 filed by American Realty
Investors, Inc. and is incorporated herein by reference.