Gadsden Growth Properties, Inc. entered into a stock purchase agreement to acquire FC Global Realty Incorporated in a reverse merger transaction.
March 15, 2019
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Gadsden Growth Properties, Inc. entered into a stock purchase agreement to acquire FC Global Realty Incorporated (OTCPK:FCRE) in a reverse merger transaction on March 13, 2019. Under the terms, FC Global will issue 708.49 million common shares, 0.89 million shares of FC Global’s newly designated 7% Series A Cumulative Convertible Perpetual Preferred Stock, 11.89 million shares of FC Global’s newly designated Series B Non-Voting Convertible Preferred Stock and 2.5 million FC Global’s 10% Series C Cumulative Convertible Preferred Stock. The agreement provides that 278 million shares will that will be issued to Gadsden will be subject to forfeiture based on the reconciliation and adjustment of the net asset value of Gadsden’s assets and Gadsden’s proposed real estate investments that have not closed as of the closing date of the Stock Purchase Agreement. Gadsden will transfer and assign to FC Global all of the Class A limited partnership interests in Gadsden Growth Properties, L.P. and all of the general partnership interests in Gadsden Growth Properties. Gadsden will be considered the acquiring entity for accounting purposes in accordance with generally accepted accounting principles in the United States of America. Gadsden is required to pay a termination fee of $0.20 million if the agreement is terminated under specific circumstances and FC Global will be required to pay fee of $0.25 million in case of termination under different circumstances.
The transaction is subject to customary closing conditions including the approval of the transaction by the vote from holders of two thirds Gadsden's outstanding shares, Gadsden’s 7% Series A Cumulative Convertible Perpetual Preferred Stock and Gadsden’s 10% Series C Cumulative Convertible Perpetual Preferred Stock, FC Global shall have, on a consolidated basis, not less than $0.80 million of unrestricted cash. The Board of Directors of FC Global and the Board of Directors of Gadsden have each approved the Stock Transaction and FC Global shall have received a letter of resignation from each member of its Board of Directors, other than the directors who are to be members of the Board after the Stock Transaction. Closing of the Stock Transaction is expected to occur within two weeks.
Richard Morris of Allegaert Berger & Vogel LLP acted as legal advisor to Gadsden. Louis A. Bevilacqua of Bevilacqua PLLC acted as legal advisor to FC Global.
Gadsden Properties, Inc., formerly FC Global Realty Inc., is a real estate investment company. The Company seeks to invest in a diversified portfolio of commercial and residential real estate properties and other real estate investments located both throughout the United States and in various international locales. Its business segment includes hospitality-oriented development opportunities; and mixed-use urban infill master plan development opportunities in secondary markets. The Company seeks to acquire investments in a variety of real estate projects, including residential developments, commercial properties such as gas station sites, and hotels and resort communities. The Company focuses on global hospitality in its international asset base and focuses hospitality, urban infill and mixed-use projects in its domestic asset base.