EXHIBIT 99.2
G & L REALTY CORP.
September 7, 2001
VIA FACSIMILE (000) 000-0000
----------------------------
Xx. Xxxx Xxxxxxx
Xx. Xxxxx Xxxxxxxxx
Xx. Xxx Xxxxx
Xx. Xxxx Xxxxxxxx
x/x Xxxxx X. Xxxxxxxx, Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxxx & Xxxxxx, LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Re: Offer to Purchase G & L Realty Corp.
------------------------------------
Gentlemen:
The Special Committee (the "Committee") of the Board of Directors of G &
L Realty Corp. (the "Company") is in receipt of your proposal, dated June 5,
2001, as amended by your letters dated June 22, 2001, July 6, 2001, July 30,
2001, August 21, 2001 and September 5, 2001 (the "WGFK Proposal").
Since the WGFK Proposal does not contemplate a merger, and since the
Company has no power to cause its stockholders to transfer their shares to you,
the Committee has interpreted your proposal as one to make a tender offer for
a minimum of 45% of the Company's outstanding shares of common stock conditioned
upon a termination of the Agreement and Plan of Merger, dated as of May 10, 2001
(the "Merger Agreement"), between the Company and G & L Acquisition, LLC (the
"Acquiror").
In reviewing your proposal, the Committee considered a number of things
including the following:
. The WGFK Proposal is not in the form of an offer capable of acceptance
by the Committee, as evidenced by a proposed agreement executed by you
which incorporates all of the material terms of the proposed
transaction, the execution of which by the Company would constitute a
binding contract. Accordingly, to proceed to negotiations with you would
require that the Committee terminate the Merger Agreement in advance of
the existence of any legally binding commitment on you part to deliver
the $2.5 million good faith deposit needed to reimburse the Company for
the costs which would be incurred upon the
Xx. Xxxx Xxxxxxx, et al.
September 7, 2001
Page 2
termination of the Merger Agreement. As we have previously advised you,
the Committee is not prepared to proceed with you unless the Company has
in hand both (a) the $2.5 million good faith deposit and (b) a currently
enforceable contractual right to use those funds to satisfy the
Company's obligations to the Acquiror upon a termination of the Merger
Agreement.
. The WGFK Proposal includes no objective criteria for determining the
purchase price adjustments that would be applicable in the case of a
transaction in which due diligence was performed. In the absence of
objective criteria, the Committee has had to consider the WGFK Proposal
as a proposal at $15.50.
. Based on expert advice, the Committee is of the view that it is more
likely than not that you would be unable to acquire 45% of the
outstanding shares of the Company's common stock (calculated inclusive
of your current holdings), in a tender offer opposed by Messrs.
Xxxxxxxx and Xxxxxxxx. Furthermore, Messrs. Xxxxxxxx and Xxxxxxxx have
advised the Committee that they would in fact oppose a tender offer by
you at the price indicated in the WGFK Proposal. Accordingly, in light
of the holdings of Messrs. Xxxxxxxx and Xxxxxxxx, the only form of a
tender offer made (a) at an appropriate price, (b) on an any and all
basis or subject to a minimum threshold which the Committee determines
is more likely than not to be satisfied and (c) given the fact that the
Merger Agreement may soon be subject to termination unless a meeting of
stockholders is convened, with absolutely no contingencies. In other
words, the Committee would recommend a transaction which would afford
all stockholders who want to exit their position in the Company the
guaranteed right to do so at the agreed upon price.
. The Committee believes that there is a material risk that, if the
benefits to the Company's non-affiliated common stockholders afforded
under the Merger Agreement were to be forfeited and if the minimum
tender condition specified in the WGFK Proposal were not satisfied, the
Company's common stock would trade at a significant discount to the
price specified in the Merger Agreement. In this regard, it is noted
that Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc., financial
advisor to the Committee, has advised the Committee that, in its view,
the range of values of the Company's common stock is between $5.00 and
$10.00 per share.
. Despite our numerous requests over the past several months, you have yet
to provide us with any business plan or indication of your intentions
with respect to the future management or operation of the Company. The
Committee is not prepared to recommend a potential change of control
transaction without first
Xx. Xxxx Xxxxxxx, et al.
September 7, 2001
Page 3
reviewing the business plan presented by the potential acquiror of such
a control position.
. If it is your desire to conduct a tender offer, you do not need the
approval or consent of the Committee. Accordingly, there is no reason to
risk the transaction contemplated by the Merger Agreement, when you have
the unilateral power to implement your proposal.
. The Committee is concerned that the continued lapse of time will give
rise to the right of the Acquiror to terminate the Merger Agreement,
leaving the Company's stockholders without an opportunity to participate
in any transaction.
In light of the above considerations, the Committee has determined that
it is not in a position to recommend the WGFK Proposal to the Board of Directors
of the Company. Furthermore, the Committee determined at its meeting today that
the transaction contemplated by the Merger Agreement remains fair and reasonable
to and in the best interests of the Company and its unaffiliated common
stockholders and affirmed its recommendation that the Company consummate the
transaction contemplated by the Merger Agreement.
Thank you for your ongoing interest.
Very truly yours,
THE SPECIAL COMMITTEE OF THE
BOARD OF DIRECTORS OF G & L
REALTY CORP.
By: /s/ S. Xxxxx Xxxxxxxx
-------------------------
S. Xxxxx Xxxxxxxx, Chairman
