{"id":1004108878,"date":"2014-12-04T14:05:32","date_gmt":"2014-12-04T22:05:32","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004108878"},"modified":"2022-12-01T22:25:06","modified_gmt":"2022-12-02T06:25:06","slug":"arcp-to-pay-rcs-60m-to-settle-lawsuit-over-canceled-cole-capital-sale","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/arcp-to-pay-rcs-60m-to-settle-lawsuit-over-canceled-cole-capital-sale\/","title":{"rendered":"RCS to Pay ARCP $60M to Settle Lawsuit over Canceled Cole Capital Sale"},"content":{"rendered":"

By Gail Kalinoski, Contributing Editor<\/i><\/p>\n

\"Michael<\/a>

Michael Weil, RCS<\/p><\/div>\n

With both sides saying they want to focus on their businesses not litigation, RCS Capital Corp. has agreed to pay American Realty Capital Properties $60 million to settle a lawsuit over the canceled $700 million Cole Capital Partners L.L.C. deal.<\/p>\n

The agreement, which calls for RCS Capital to pay ARCP a negotiated break-up fee of $42.7 million in cash and a $15.3 million, two-year promissory note, comes about three weeks after ARCP filed a lawsuit in the Court of Chancery in Delaware over the terminated deal. On Nov. 4, RCS pulled out of an agreement to acquire Cole Capital Partners and Cole Capital Advisors, Inc. from an affiliate of its sister company, ARCP<\/a>. The lawsuit ARCP filed against RCS alleged a breach of the purchase agreement. ARCP said it had received a termination notice of the deal from RCS \u201cin the middle of the night,\u201d adding that it believed RCS had no right and \u201cabsolutely no basis\u201d for canceling the deal that was expected to close in early November.<\/p>\n

Both companies were founded by Nicholas Schorsch, who serves as chairman of ARCP, the largest single-tenant net-lease firm in the world, and executive chairman of RCS, an investment firm that includes broker-dealers who sell real estate products including non-traded REITs.<\/p>\n

\u201cWe are confident that this settlement is in the best interests of RCS Capital stakeholders. We believe the negotiation of a fixed-cost settlement clearly outweighs the potential expense and distraction of a drawn-out litigation process, enabling us to focus on the execution of our proven business strategy,\u201d Michael Weil, RCS CEO, said in a release from his company.<\/p>\n

ARCP CEO David Kay described the settlement as a \u201cpositive outcome that serves the best interests of ARCP shareholders and our broader business, including our investment in Cole Capital.\u201d<\/p>\n

\u201cOur immediate plan is to stabilize Cole Capital, which we continue to believe is a valuable business, as we focus on creating long-term value and strengthening ARCP\u2019s position as the leading company in the net-lease REIT industry,\u201d Kay added in an ARCP release.<\/p>\n

As part of the settlement announced Thursday, ARCP and RCS agreed to \u201cterminate, unwind or otherwise discontinue all agreements, arrangements and understandings between the two companies and any of their respective subsidiaries,\u201d according to the ARCP release.<\/p>\n

Meanwhile, the independent members of ARCP\u2019s Board of Directors and ARCP have engaged Morgan Stanley & Co. L.LC. and Citigroup Global Markets Inc. to assist in the negotiation of the RCS settlement and \u201cother strategic matters.\u201d The release noted that included \u201cevaluating long-term alternatives for Cole Capital, in order to maximize the value of that business to ARCP.\u201d Cole Capital was acquired as part of the $11.2 billion merger between ARCP and its former rival Cole Real Estate Investments Inc. announced a year ago.<\/p>\n

RCS has been looking to distance itself from ARCP, which has been rocked by a $23 million accounting scandal disclosed Oct. 29 that caused the REIT\u2019s CFO and top accounting executive to resign after ARCP admitted there were errors in the financial statements as recently as this year\u2019s second quarter. Moody\u2019s Investors Services and Standard & Poor\u2019s Ratings Services put ARCP\u2019s rating under review and word spread of possible investigations by the U.S. Securities and Exchange Commission and the FBI and the U.S. Attorney\u2019s Office in New York.<\/p>\n

Although they are separate companies with separate accounting systems, the news sent shares of both ARCP and RCS, which trades as RCAP, plunging. Bloomberg reported RCS stock had lost more value than ARCP, down 51 percent from Oct. 29 as of Wednesday. News of the lawsuit settlement pushed RCAP back up Thursday by about 8 percent about 3:30 p.m. EST.<\/p>\n

RCS also began losing business relationships as some broker-dealers suspended selling agreements for non-traded REITs associated with Schorsch-related businesses.<\/p>\n

On Thursday, Weill said some firms had changed their positions.<\/p>\n

\u201cWe continue to see progress across our entire industry-leading platform, including the reinstatement of a number of selling agreements within our wholesale business,\u201d he said in the RCS release.<\/p>\n","protected":false},"excerpt":{"rendered":"

With both sides saying they want to focus on their businesses not litigation, RCS Capital Corp. has agreed to pay American Realty Capital Properties $60 million to settle a lawsuit over the canceled $700 million Cole Capital Partners deal.<\/p>\n","protected":false},"author":1068,"featured_media":1004104835,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21742],"tags":[],"class_list":["post-1004108878","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest"],"acf":[],"yoast_head":"\nRCS to Pay ARCP $60M to Settle Lawsuit over Canceled Cole Capital Sale - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/arcp-to-pay-rcs-60m-to-settle-lawsuit-over-canceled-cole-capital-sale\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"RCS to Pay ARCP $60M to Settle Lawsuit over Canceled Cole Capital Sale\" \/>\n<meta property=\"og:description\" content=\"With both sides saying they want to focus on their businesses not litigation, RCS Capital Corp. has agreed to pay American Realty Capital Properties $60 million to settle a lawsuit over the canceled $700 million Cole Capital Partners deal.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/arcp-to-pay-rcs-60m-to-settle-lawsuit-over-canceled-cole-capital-sale\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2014-12-04T22:05:32+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-02T06:25:06+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/10\/MichaelWeil.png\" \/>\n\t<meta property=\"og:image:width\" content=\"358\" \/>\n\t<meta property=\"og:image:height\" content=\"336\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Gail Kalinoski\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/arcp-to-pay-rcs-60m-to-settle-lawsuit-over-canceled-cole-capital-sale\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/arcp-to-pay-rcs-60m-to-settle-lawsuit-over-canceled-cole-capital-sale\/\",\"name\":\"RCS to Pay ARCP $60M to Settle Lawsuit over Canceled Cole Capital Sale - 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