NorthStar Asset Mgmt, Colony Capital, NorthStar Agree to New Governance Structure, Amend Merger Terms

NorthStar Asset Management Group (NSAM), Colony Capital (CLNY) and NorthStar Realty Finance (NRF) said Monday they have amended the terms of their proposed merger and governance structure, giving shareholders more power over the appointment of the board.

The three companies plan to merge in an all-stock transaction to form Colony NorthStar. The new accord provides for two new independent directors — Jon Fosheim and Douglas Crocker — to be appointed to the board, which overall will be reduced in size to 10 directors from 13 previously.

All directors will stand for election annually and will be elected by a majority vote. Stockholders with 25% of the company will be permitted to call special shareholder meetings. Previously shareholders were required to hold a majority before calling an EGM.

Directors can be replaced with a majority vote and stockholder approval will be needed to increase the number of shares available for issuance. Directors will be required to maintain stock ownership equal to four times their annual cash retainer.

NorthStar also said it will pay its pre-closing stockholders a special cash dividend of $228 million, or $1.16 per share, an increase of $100 million above the $128 million special cash dividend NSAM was permitted to pay under the original merger agreement. This special dividend will be in addition to NSAM’s regularly scheduled dividend of $0.10 per share payable in November.

Following the amendments, MSD Capital L.P. and MSD Partners L.P. and certain of their respective affiliates, which together own approximately 10.2% of NSAM’s outstanding shares, have agreed to back the transaction at a shareholder meeting.

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