Investor sues to force Mills' annual meeting

Plugged In

November 09, 2006|By Bloomberg News

NEW YORK -- A top investor in Mills Corp., the developer behind the stalled $2 billion New Jersey mall project known as Meadowlands Xanadu, sued to force the company to hold its annual meeting and again warned it not to pursue a sale.

The Delaware suit was filed by Gazit-Globe Ltd., Israel's largest real estate investment company, which recently increased its stake in Mills to 9.7 percent.

Gazit-Globe said in a regulatory filing that it wants the meeting because management has ignored Gazit's proposal to invest as much as $1.2 billion in the company. Gazit also plans to propose a new slate of directors.

Mills, a shopping-mall owner with headquarters in Chevy Chase, Md., is the subject of a Securities and Exchange Commission accounting probe.

The company announced last summer that it was out of money for the proposed 104-acre Meadowlands shopping and entertainment complex - in part because the price-tag has soared 54 percent. But the company said in August that it had reached preliminary agreement for financing that would end its participation.

"After weeks of procrastination, vague promises and lack of any productive outcome, we have been left with no choice but to take our concerns directly to the stockholders," Gazit Chairman Chaim Katzman said in a letter to Mills Chief Executive Officer Mark S. Ordan.

The Israeli developer asked the Delaware Chancery Court, in a complaint filed yesterday, to order Mills to hold an annual meeting by Dec. 15. Mills last held an annual meeting in June 2005 and is required by its bylaws to conduct one each year in May, Gazit said in the lawsuit.

If a company doesn't hold a meeting within 13 months, a Chancery Court judge "may summarily order a meeting," court papers said.

Ordan, reached by telephone, said he had no immediate comment on the suit.

Shares of Mills, whose holdings include Arundel Mills, rose 18 cents to close at $18.69 yesterday on the New York Stock Exchange. The stock is down 56 percent this year.

On Aug. 22, Colony Capital Acquisitions LLC, of Los Angles, reached a preliminary agreement with the developer to invest $500 million in the Xanadu project and arrange for construction loans that would end Mills' financial participation.

"We're working incredibly hard to get it done," Ordan said in an interview last month. He took over Oct. 1 from Laurence C. Siegel, who led Mills for 11 years and remains as chairman.

Mills has invested $380 million in Meadowlands Xanadu, its biggest project. At 600,000 square feet, it will be bigger than Mall of America in Minnesota, the largest U.S. mall.

To cut debt, Mills has sold properties this year for $981 million.

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