W2007 Grace Acquisition I, Inc. Preferred Shareholder Litigation

COURT: United States District Court, Western District of Tennessee
CASE NUMBER: 2:13-cv-2777
JUDGE: Hon. Samuel H. Mays
CLASS PERIOD: 10/25/2007 through and including 10/08/2014
CASE CONTACTS:  Kimberly Donaldson Smith

This is a class action on behalf of all current and former holders of W2007 Grace 8.75% Series B Cumulative Preferred Stock and W2007 Grace 9.00% Series C Cumulative Preferred Stock (collectively, the “Preferred Stockholders”) against defendants W2007 Grace Acquisition I, Inc. (“W2007 Grace”), its Board of Directors and various Goldman Sachs affiliates for breaching the W2007 Grace’s Charter and various fiduciary duties in the mistreatment and oppression of Preferred Stockholders. Defendants withheld information and dividends, making it difficult for shareholders to sell their Preferred Stock or to operate in an efficient market. Defendants also engaged in a series of related party transactions that ensured that the Company and its assets were benefiting Goldman Sachs and its affiliates.  Defendants also breached the Charter by causing a sister company to violate the Charter by purchasing 58.8% of the outstanding Preferred Stock.


Named Plaintiffs, as representatives of the Class, have settled with all Defendants in the Action.  The Claims Administrator commenced dissemination of the Notice of Proposed Final Settlement of Class Action (the “Notice”) on May 21, 2015.  The Notice describes the history of the action, the claims and the terms of the $6.0 million Seller Class Settlement Fund.

With respect to the Holder Class, W2007 Grace disseminated a Proxy Statement (see below) and held a special shareholder meeting on July 14, 2015 to consider and vote on an amendment to the Amended and Restated Charter and a merger proposal whereby W2007 Grace would be merged with and into another entity established for the purposes of such merger and all Series B Preferred Stock and Series C Preferred Stock (except for the Excluded Shares, defined below) would be converted into the right to receive $26.00 per share (the “Merger”). The majority of holders of both affiliated and unaffiliated Preferred Stock voted to approve the merger by an overwhelming majority.  The aggregate value of the merger consideration is $62 million which will be paid to holders of Preferred Stock who are unaffiliated with any Defendant, subject to the Court’s final approval of the Settlement.

With respect to the Seller Class, W2007 Grace shall establish a Seller Class Settlement Fund consisting of $6 million in cash. The Net Seller Class Settlement Fund shall be distributed to the eligible Seller Class members pursuant to the Plan of Allocation discussed at Question 15 of the Notice. The Holder Class does not include: Defendants and their affiliates; persons who validly exercise dissenters’ rights in the Merger; and persons who validly exclude themselves from the Holder Class. The Seller Class does not include Defendants and their affiliates; persons who sold shares to Defendant PFD Holdings, LLC (“PFD”) in private transactions; and persons who validly excluded themselves from the Seller Class.

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