Mills Chairman Pens Exit Scenario—Analysts Pan It
Oct 4, 2006 12:00 PM
After Mills Corp. announced that it was getting rid of its ill-fated Xanadu Meadowlands project in late August, in a $2 billion financing deal with Colony Capital Acquisitions, REIT analysts sighed with relief. Many expected the deal to improve Mills’ flagging fortunes and make the company more attractive to potential buyers.
But if Mills has proven anything over the past year, it’s that it has a tendency to offer up more plot reversals than a telenovella. On Sept. 20, the company postponed the closing of the Colony Capital transaction, as well as the sale of three international properties to its Canadian partner Ivanhoe Cambridge, citing “complex issues” inherent in the deals.
This week, the company’s CEO Laurence (Larry) C. Siegel—the man who has presided over Mills for 11 years and was expected to exit when the new owners materialized—announced plans to relinquish the CEO title, but remain as non-executive chairman of the board until the deal with Colony Capital is completed. When the deal takes place, Siegel indicated that he plans to work for the joint venture with Colony Capital. He will resign his post as non-executive chairman of Mills, but will remain on the firm’s board as a non-employee director until his term runs out in 2008.
If Colony goes ahead with its previously announced plans to invest $500 million of equity and $1.5 billion in loans in Xanadu Meadowlands, Mills will become a minor partner in the venture.
Mr. Siegel declined to comment, referring calls to the company’s public relations department, which did not return calls from Retail Traffic.
As part of the move, Siegel, 53, has written an attractive exit scenario for himself. According to a Securities and Exchange Commission filing by Mills on Oct. 2, Siegel will receive a $2.5 million severance package, a $10.5 million payment if there is a change of control at Mills on or before Dec. 31, 2007 and $50,000 to cover the lawyer’s bills he incurred in negotiating his retirement agreement. He will also be able to vest 10,952 shares of restricted Mills stock. In addition, Siegel will continue to provide consulting services to the Mills Corp., for $5,000 a day, until the end of this year.
