W2007 Grace Acquisition I, Inc. Preferred Shareholder Settlement

CASE NAME:  Johnson, et al. v. W2007 Grace Acquisition I, Inc., et al.
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: Catherine Pratsinakis and Kimberly Donaldson Smith

This Class Action was brought on behalf of all current and former holders of W2007 Grace 8.75% Series B Cumulative Preferred Stock (OTCBB: WGCBP) and W2007 Grace 9.00% Series C Cumulative Preferred Stock (OTCBB: WGCCP) (collectively, “Preferred Stock”) against defendants W2007 Grace Acquisition I, Inc. (“W2007 Grace”), its Board of Directors and various Goldman Sachs affiliates.  The Named Lead Plaintiffs alleged that Defendants had breached W2007 Grace’s Charter, various fiduciary duties and/or violated the Tennessee Code by engaging in certain related-party transactions, by deciding to withhold dividends and financial information, and/or engaging in insider trading when they acquired a nearly 59% interest in W2007 Grace’s Preferred Stock.

On August 22, 2014, after months of intense motion practice and discovery, Named Plaintiffs achieved a significant settlement valued at over $72 million on behalf of the current and former holders of Preferred Stock (the “Settlement”) described in detail in the Stipulation of Settlement dated October 8, 2015 and the Settlement Notice, both of which are attached below. Following the final approval hearing held on September 11, 2015, the Court issued an Order and Judgment on December 4, 2015 (the “Final Approval Order”) granting final approval of the Settlement as fair, reasonable and in the best interest of members of the Holder Class and Seller Class and certifying the Holder and Seller Classes for settlement purposes.

The Holder Class

We are pleased to announce that the Company consummated the Settlement Merger on January 15, 2016 (the “Effective Date”).  Per the Settlement Agreement, eligible investors who held Preferred Stock as of August 22, 2014 (excluding Defendants and their affiliates) and continue to hold through January 15, 2016, will receive $26 per share plus any residual from the Net Seller Class Settlement Fund on a pro rata basis. The Holder Class Settlement represents a total recovery of at least $62 million. The Company’s Exchange Agent, Computershare N.A., mailed the Letters of Transmittal to registered holders on or around January 22, 2016. If you own the Preferred Stock through a brokerage account, then your brokerage firm may be the “registered holder”. If this is the case, the Letter of Transmittal will not be directed to you, but to your brokerage firm. The Letter must be filled out and returned to the Exchange Agent with the physical stock certificates attached. If the physical certificates are lost or destroyed, then please follow the instructions in the Letter of Transmittal. There is no deadline for returning the Letter of Transmittal, but a delay in returning the Letter will delay receipt of the Settlement Merger consideration. If you would like to see a copy of a generic Letter of Transmittal, you may request one from Catherine Pratsinakis at  cp@chimicles.com.However, please note that you or your broker must return the actual Letter of Transmittal received by either you or your broker because it contains specific information and a unique code needed to process the request.  If you return a generic Letter of Transmittal, the Exchange Agent will reject it. If you or your broker do not receive your Letter of Transmittal by February 5, 2016, or the Letter was lost or destroyed, the registered holder may request a copy from the Exchange Agent at (855)396-2084.

The Seller Class

The Seller Class is comprised of all investors who sold Preferred Stock anytime between October 25, 2007 through and including October 8, 2014, and suffered a loss. The Seller Class does not include Defendants and their affiliates or persons who sold shares to Defendant PFD Holdings, LLC (“PFD”) in a private transaction. Defendants will pay $6 million into the Seller Class Settlement Fund which will be distributed to eligible members of the Seller Class who are entitled to a distribution pursuant to the Plan of Allocation, net of certain costs. The deadline to submit a Seller Class Proof of Claim Form has passed and was on September 18, 2015. The Claims Administrator has completed processing all Claims and has made its final determinations. On April 29, 2016, Plaintiffs filed their Unopposed Motion for Distribution of the Net Seller Class Settlement Fund (available below), which the Court granted by Order dated June 6, 2016 (available below). We anticipate that the checks to the eligible Seller Class members will be sent out by July 15, 2016.  As previously reported, the total Recognized Loss of all Authorized Claimants is $6,752,673.15, which is greater than the gross Seller Class Settlement Fund of $6,000,000. Therefore, the full amount of the Net Seller Class Settlement Fund will be distributed pro rata to the Seller Class Authorized Claimants in accordance with the Plan of Allocation. Please note that if all Seller Class Authorized Claimants cash their distribution checks, there will be no Residual to members of the Holder Class. If you need to update your mailing address, please contact the Claims Administrator at (877) 386-1776.

Question(s) about your Seller Class Proof of Claim Form? Contact the Claims Administrator at (877) 386-1776.

Question(s) about the Settlement? See Frequently-Asked Questions below, or contact Catherine Pratsinakis at (610) 649-1497.

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Attorneys for this case:

Kimberly Donaldson Smith