JASON FRANSON/The Globe and Mail
Partners Real Estate Investment Trust is escalating its disagreement with U.S. activist investment firm Orange Capital LLC to Ontario's securities regulator.
In a complaint filed Thursday, the REIT alerted the Ontario Securities Commission to its concerns over the hedge fund's offer to buy a 10-per-cent stake in the company. The REIT said the offer is "highly coercive" and "abusive to the capital markets" as well as investors.
The two firms are locked in a disagreement over the REIT's leadership and strategic direction. New York-based Orange wants to buy a big part of the business and install a new set of directors. Meanwhile the REIT plans to delay its annual meeting and is encouraging shareholders to steer clear of the activist.
The OSC complaint notice outlines seven issues with the terms of the proposed deal, including the way the offer was made to the unitholders–the REIT said the structure of the deal would allow Orange to change or withdraw the offer at any time. The REIT also said in the letter that Orange would be able to gain control of unitholders' voting rights without actually purchasing units.
This complaint follows Orange's recent criticisms of the REIT's operations–the firm recently came between the REIT and a prospective acquisition. The initial issue stemmed from a deal for four properties struck between the REIT and Holyrood Holdings Ltd. Orange alleged that executives from the two groups were closely connected, but said this was not declared to shareholders.