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Real estate company plans to buy Prime Retail Inc.

July 09, 2003|by JULIE E. GREENE

julieg@herald-mail.com

The proposed sale of Prime Retail Inc. to a New Jersey-based real estate company is good news for Prime Outlets at Hagerstown, the general manager of the local outlet center said Tuesday.

"We see it as a very strong, positive move," General Manager Bill Lynn said. "It just puts us in a much better position to be more competitive in the market."

The privately held real estate company, The Lightstone Group, has enough cash flow to expand and improve the outlet center, Lynn said. Lynn said he did not yet know whether Lightstone officials want to expand the outlet center south of Hagerstown. The center has 107 stores.

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Prime Retail didn't have a lot of cash available to improve its properties, Lynn said.

Baltimore-based Prime Retail has faced financial difficulties in recent years. In December, Prime Retail officials said the company had paid off a $90 million mezzanine loan early. The company had taken that three-year loan from Fortress Investment Fund in December 2000 to help stave off bankruptcy.

Prime Retail has not issued dividends since the fourth quarter of 1999.

In January 2002, Prime Retail sold 70 percent of the local outlet center to a partnership of Prime Retail and Estein & Associates USA Ltd.

Prime Outlets at Hagerstown opened in August 1998.

Steven Sless, corporate spokesman for Prime Retail, said the local outlet center's name will not change.

The shopping center attracted an estimated 4.3 million people in 2001, Marketing Director Liza Gonzales has said.

The sale of Prime Retail to Prime Outlets Acquisition Company, an affiliate of The Lightstone Group, has a total value of approximately $638 million, according to a corporate news release from Prime Retail. That includes $523 million of debt the buyer is expected to assume, the statement says.

The Lightstone group, with headquarters in Lakewood, N.J., owns/manages office, industrial, retail and residential properties in 16 states and Puerto Rico, the release states.

David Lichtenstein, president of The Lightstone Group, could not be reached for comment Tuesday.

The sale is expected to be finalized by the end of the year, Prime Retail said.

Under the merger agreement with Lightstone, Prime Retail shareholders and unit holders would get a total of $115 million, according to the release.

Owners of Prime's Series A preferred stock will get $16.25 per share. Holders of Series B preferred stock will get $8.66 per share and holders of common stock will get 18 cents per share, the release states.

The holders of at least 66 2/3 percent each of the Series A preferred stock and the Series B preferred stock as well as the holders of a majority of the common stock must approve the sale and merger agreement, the release states.

The sale is based on certain conditions being met.

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