-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TbxlZweE0jdA7QWhozesBUE6HA/DxPnn7Z80wP1OQNaXXr3hYyJ+RUi0Xtc3yK5k V3TIzmYY90/BwD7Eo/fuzA== 0000912057-01-529587.txt : 20010821 0000912057-01-529587.hdr.sgml : 20010821 ACCESSION NUMBER: 0000912057-01-529587 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20010820 GROUP MEMBERS: PGLP, INC GROUP MEMBERS: PRIME FINANCE,INC GROUP MEMBERS: PRIME FINANCING LIMITED PARTNERSHIP GROUP MEMBERS: PRIME GROUP II. L.P. GROUP MEMBERS: PRIME GROUP LIMITED PARTNERSHIP GROUP MEMBERS: PRIME GROUP V,L.P. GROUP MEMBERS: PRIME GROUP VI,L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PRIME RETAIL INC/BD/ CENTRAL INDEX KEY: 0000911708 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 382559212 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43463 FILM NUMBER: 1719122 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST STREET 2: 1900 FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4102340782 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET STREET 2: 1900 FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RESCHKE MICHAEL W CENTRAL INDEX KEY: 0001046205 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 77 W WACKER DR STREET 2: SUITE 3900 CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3029171500 MAIL ADDRESS: STREET 1: 77 W WACKER DR STREET 2: SUITE 3900 CITY: CHICAGO STATE: IL ZIP: 60601 SC 13D/A 1 a2056846zsc13da.txt SCHEDULE 13D/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 5) -------------------- PRIME RETAIL, INC. (Name of Issuer) Common Stock, par value $0.01 per share (Title of Class of Securities) 741570105 (CUSIP Number) Michael W. Reschke 77 West Wacker Drive Suite 4200 Chicago, IL 60601 (312) 917-1500 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) With a copy to: Michael E. Kernan, Esq. Jenner & Block, LLC One IBM Plaza Chicago, IL 60611 (312) 222-9350 August 7, 2001 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP No. 741570105 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Michael W. Reschke - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP, (a) (b) |X| - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - -------------------------------------------------------------------------------- NUMBER OF SHARES 7. SOLE VOTING POWER -535,971 BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH - -------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 7,595,929 - -------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 535,971 - -------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 7,595,929 - -------------------------------------------------------------------------------- -2- - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Individually beneficially owns 199,548 shares of Common Stock, $0.01 par value per share, of the Issuer ("Common Stock"), 9,552 shares of Series B Preferred Stock, $0.01 par value per share, of the Issuer ("Preferred Stock"), which is immediately convertible into 11,424 shares of Common Stock, and certain options to purchase 324,999 shares of Common Stock, which options have already vested or will vest within 60 days. May be deemed to share beneficial ownership of: (i) 251,300 shares of Common Stock directly owned by Prime Group Limited Partnership, an Illinois limited partnership ("PGLP"); (ii) 5,557,000 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock at any time (or, at Issuer's election, cash of equivalent value), directly owned by Prime Financing Limited Partnership, an Illinois limited partnership ("PFLP"); (iii) 961,085 Common Units directly owned by Prime Group II, L.P., an Illinois limited partnership ("PG-II"); (iv) 721,912 Common Units directly owned by Prime Group V, L.P., an Illinois limited partnership ("PG-V"); and (v) 104,632 Common Units directly owned by Prime Group VI, L.P., an Illinois limited partnership ("PG-VI") by virtue of his position as managing general partner of PGLP and his ability to control PGLP, Inc. ("PGLPI"), Prime Finance, Inc. ("Prime Finance"), PFLP, PG-II, PG-V and PG-VI. PGLPI is the managing general partner of PG-II, PG-V and PG-VI. Prime Finance is the managing general partner of PFLP. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Individually beneficially owns 199,548 shares of Common Stock, 9,552 shares of Preferred Stock and certain options to purchase 324,999 shares of Common Stock which, assuming conversion of the Preferred Stock and exercise of all vested options, constitute approximately 1.2% of the outstanding shares of Common Stock. May be deemed to share beneficial ownership of the approximately: (i) 251,300 shares of Common Stock directly owned by PGLP which constitute approximately 0.6% of the outstanding shares of Common Stock; (ii) 5,557,000 Common Units directly owned by PFLP which, assuming exchange of the Common Units, constitute approximately 11.3% of the outstanding shares of Common Stock; (iii) 961,085 Common Units directly owned by PG-II which, assuming exchange of the Common Units, constitute approximately 2.2% of the outstanding shares of Common Stock; (iv) 721,912 Common Units directly owned by PG-V which, assuming exchange of the Common Units, constitute approximately 1.6% of the outstanding shares of Common Stock; and (v) 104,632 Common Units directly owned by PG-VI which, assuming exchange of the Common Units, constitute approximately 0.2% of the outstanding shares of Common Stock by virtue of his position as managing general partner of PGLP and his ability to control PGLPI, Prime Finance, PFLP, PG-II, PG-V and PG-VI. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - IN - -------------------------------------------------------------------------------- -3- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP No. 741570105 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON PGLP, Inc. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS Not Applicable - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 0 - -------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 1,787,629 - -------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 1,787,629 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON May be deemed to share beneficial ownership of: (i) 961,085 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock, $0.01 par value per share, of the Issuer ("Common Stock") at any time (or, at the Issuer's election, cash of equivalent value), owned by Prime Group II, L.P., an Illinois limited partnership ("PG-II"); (ii) 721,912 Common Units owned by Prime Group V, L.P., an Illinois limited partnership ("PG-V"); and (iii) 104,632 Common Units owned by Prime Group VI, L.P., an Illinois limited partnership ("PG-VI"), by virtue of its position as managing general partner of each of PG-II, PG-V and PG-VI. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- -4- - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) May be deemed to share beneficial ownership of: (i) 961,085 Common Units owned by PG-II which, assuming exchange of the Common Units, constitute approximately 2.2% of the outstanding shares of Common Stock; (ii) 721,912 Common Units owned by PG-V which, assuming exchange of the Common Units, constitute approximately 1.6% of the outstanding shares of Common Stock; and (iii) 104,632 Common Units owned by PG-VI which, assuming exchange of the Common Units, constitute approximately 0.2% of the outstanding shares of Common Stock, by virtue of its position as managing general partner of each of PG-II, PG-V and PG-VI. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - CO - -------------------------------------------------------------------------------- -5- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP No. 741570105 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Finance, Inc. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS Not Applicable - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 0 - -------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 5,557,000 - -------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 5,557,000 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON May be deemed to share beneficial ownership of 5,557,000 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock, $0.01 par value per share, of the Issuer, at any time (or, at the Issuer's election, cash of equivalent value), directly owned by Prime Financing Limited Partnership, an Illinois limited partnership, by virtue of its position as managing general partner of Prime Financing Limited Partnership. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) May be deemed to share beneficial ownership of 5,557,000 Common Units owned by Prime Financing Limited Partnership, which constitute approximately 11.3% equity interest in the Issuer, assuming exchange of the Common Units, by virtue of its position as managing general partner of Prime Financing Limited Partnership. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - CO - -------------------------------------------------------------------------------- -6- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP No. 741570105 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Group Limited Partnership - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 251,300 - -------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - -------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 251,300 - -------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 251,300 shares of Common Stock, par value $0.01 per share, of the Issuer ("Common Stock") - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Approximately 0.6% equity interest in the Issuer - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - -------------------------------------------------------------------------------- -7- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP No. 741570105 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Financing Limited Partnership - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 5,557,000 - -------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - -------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER -5,557,000 - -------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,557,000 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock of the Issuer, $0.01 par value per share ("Common Stock"), at any time or, at the Issuer's election, cash of equivalent value. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Approximately 11.3% equity interest in the Issuer, assuming exchange of the Common Units. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - -------------------------------------------------------------------------------- -8- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP No. 741570105 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Group II, L.P. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 961,085 - -------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - -------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 961,085 - -------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 961,085 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock of the Issuer, $0.01 par value per share, at any time or, at the Issuer's election, cash of equivalent value. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Approximately 2.2% equity interest in the Issuer, assuming exchange of the Common Units. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - -------------------------------------------------------------------------------- -9- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP No. 741570105 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Group V, L.P. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 721,912 - -------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - -------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 721,912 - -------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 721,912 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock of the Issuer, $0.01 par value per share, at any time or, at the Issuer's election, cash of equivalent value. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Approximately 1.6% equity interest in the Issuer, assuming exchange of the Common Units. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - -------------------------------------------------------------------------------- -10- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP No. 741570105 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Group VI, L.P. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 104,632 - -------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - -------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 104,632 - -------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 104,632 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock of the Issuer, $0.01 par value per share, at any time or, at the Issuer's election, cash of equivalent value. - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Approximately 0.2% equity interest in the Issuer, assuming exchange of the Common Units. - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - -------------------------------------------------------------------------------- -11- This Amendment No. 5 is filed to reflect the letter proposal, dated as of August 7, 2001, delivered to the board of directors of Prime Retail, Inc. from Michael W. Reschke described in Item 4. Item 1. Security and Issuer. This Amendment No. 5 to Schedule 13D relates to shares of Common Stock, par value $0.01 per share ("Common Stock"), of Prime Retail, Inc., a Maryland corporation (the "Company"). The principal executive offices of the Company are located at 100 East Pratt Street, Nineteenth Floor, Baltimore, Maryland 21202. Item 2. Identity and Background. (a) and (f). This Amendment No. 5 to Schedule 13D is filed by each of Michael W. Reschke, an individual and a citizen of the United States of America ("Reschke"); PGLP, Inc., an Illinois corporation ("PGLPI"); Prime Finance, Inc., an Illinois corporation ("Prime Finance"); Prime Group Limited Partnership, an Illinois limited partnership ("PGLP"); Prime Financing Limited Partnership, an Illinois limited partnership ("PFLP"); Prime Group II, L.P., an Illinois limited partnership ("PG-II"); Prime Group V, L.P., an Illinois limited partnership ("PG-V"); and Prime Group VI, L.P., an Illinois limited partnership ("PG-VI"). Reschke (i) is the managing general partner of PGLP; (ii) owns an approximate 50.75% equity interest in PGLPI, which is the managing general partner of PG-II, PG-V and PG-VI; and (iii) owns an approximate 50.75% equity interest in Prime International, Inc., which owns all of the issued and outstanding stock of Prime Finance, which is the managing general partner of PFLP. (b)(i) The business address of each of Reschke, PGLPI, Prime Finance, PGLP, PFLP, PG-II, PG-V and PG-VI is: c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, Illinois 60601 (ii) The business address of each person listed in paragraph (c)(iii) of this Item 2 is: c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, Illinois 60601 (c)(i) Reschke is the President and a member of the Board of Directors of PGLPI and Prime Finance and the Chairman of the Board of Trustees and a member of the Board of Trustees of Prime Group Realty Trust, a publicly traded real estate investment trust ("PGRT"). Reschke is also a member of the Board of Directors of the Company, a publicly traded corporation that qualifies for treatment as a real estate investment trust engaged in the ownership, development and management of factory outlet centers, and Horizon Group Properties, Inc., a publicly traded corporation that qualifies for treatment as a real estate investment trust engaged in the ownership, development and management of factory outlet centers. The principal business of PGLPI is the ownership, development and management of, and investment in, directly or indirectly, real estate. The principal business of PGRT is the acquisition, development, finance, construction, leasing, marketing, renovation and property management of office and industrial properties. -12- (ii) The principal business of each of PGLPI, Prime Finance, PGLP, PFLP, PG-II, PG-V and PG-VI is the ownership, development and management of, and investment in, directly or indirectly, real estate. (iii) The following table sets forth the name and the principal occupation or employment of each director and executive officer (except Reschke (see paragraph (c)(i) of this Item 2)) of PGLPI and Prime Finance: Name Present Principal Occupation or Employment - ---- ------------------------------------------ Robert J. Rudnik (A)(B) ..... Vice President and Secretary of PGLPI and Prime Finance; Executive Vice President, General Counsel and Secretary of Brookdale Living Communities, Inc. Gary J. Skoien .............. Vice President of PGLPI and Prime Finance; President, Chief Executive Officer and Chairman of the Board of Horizon Group Properties, Inc. Warren H. John (B) .......... Vice President and Assistant Secretary of PGLPI Mark K. Cynkar .............. Vice President of PGLPI and Prime Finance Paul A. Roehri .............. Vice President of PGLPI - -------------- (A) Director of Prime Finance (B) Director of PGLPI All of the executive officers and directors of PGLPI and Prime Finance are citizens of the United States of America. (d) and (e) During the last five years, none of Reschke nor any of the executive officers of PGLPI or Prime Finance (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. On April 27, 1999, 66,376 Common Units were distributed by Prime Group IV, L.P., an Illinois limited partnership ("PG-IV") to PGLP, and then transferred from PGLP to PG-V as a contribution to the capital of PG-V. On January 6, 2000, 31,080 and 45,464 Common Units were transferred by PG-IV and PG-V to PG-II, respectively. -13- Item 4. Purpose of Transaction. Reschke and PGLP own shares of Common Stock and PFLP, PG-II, PG-V and PG-VI own Common Units and currently hold such securities for investment purposes. Reschke intends to encourage management of the Company to take steps to enhance shareholder value. Reschke will continue to evaluate his ownership and voting position in the Company, taking into consideration a variety of factors including, without limitation, the market price of the Company's securities, the Company's business and prospects, other developments concerning the Company and general economic conditions. On December 22, 2000, the Company closed a refinancing of its assets and the sale of four of its outlet centers through a series of transactions that provided the Company with an aggregate of $174 million of net proceeds. The loans were provided by affiliates of Fortress Investment Fund LLC in a transaction that was reported by the Company on Form 8-K filed January 8, 2001 (as amended January 25, 2001) (the "Fortress Financing"). The Fortress Financing is secured by essentially all the Company's assets. Reschke believes that the holders of preferred stock of the Company will not receive any dividends for two or more years, and that the holders of common stock of the Company would not receive any dividends for the foreseeable future. As a result, Reschke intends to consider and discuss various strategic alternatives to the Company's current capital structure, individually and with other third parties that may be interested, from time to time. Such alternatives may include, but are not limited to, recapitalizations (debt or equity), asset acquisitions or divestitures, the Company's sale of newly-issued securities (debt or equity), acquiring additional shares of Common Stock or other securities of the Company in the open market, through a tender offer or in privately negotiated transactions, or other actions. On August 7, 2001, Reschke submitted to the Company's board of directors a proposal to restructure the equity of the Company (the "Recapitalization Proposal"). The primary goals of the Recapitalization Proposal would be to: (a) retire the existing Fortress Financing; (b) redeem all the outstanding Series A and Series B Preferred Stock of the Company, including all accrued by unpaid dividends; and (c) commence the payment of a reasonable dividend on all of the Company's equity securities. The Company would fund the recapitalization through the issuance of three new publicly registered securities, including a convertible debenture, a convertible preferred issue and an accrued dividend note. The Recapitalization Proposal provides each of the holders of the Preferred Stock with the option to either redeem its shares for cash or to receive a new preferred security with annual dividends, and reinstates for each of the holders of the Common Stock a common dividend. The Recapitalization Proposal also includes pro forma operating statements and balance sheets. Reschke believes that the Recapitalization Proposal is the best alternative for the Company and would be approved by both the holders of Preferred Stock and Common Stock. Reschke also believes that the Recapitalization Proposal would significantly enhance the value of the shares of Preferred Stock and Common Stock and present no negative tax implications for these security holders. A copy of the Recapitalization Proposal is filed as Exhibit XX hereto. Except as stated above and described on Exhibit XX, none of Reschke, PGLPI, Prime Finance, PGLP, PFLP, PG-II, PG-V or PG-VI has any current plans or proposals which relate to or would result in the types of transactions set forth in paragraphs (a) through (j) of the instructions for this Item 4. Item 5. Interest in Securities of the Issuer. (a) Reschke beneficially owns 199,548 shares of Common Stock, 9,552 shares of Preferred Stock, which are immediately convertible into 11,424 shares of Common Stock, and certain options to purchase 324,999 shares of Common Stock which, assuming conversion of the Preferred Stock and exercise of all vested options, constitute approximately 1.2% of the total outstanding shares of Common Stock. PGLP beneficially owns 251,300 shares of Common Stock which constitute approximately 0.6% of the outstanding shares of Common Stock. PFLP beneficially owns 5,557,000 Common Units which, assuming exchange of the Common Units, constitute approximately 11.3% of the outstanding shares of Common Stock. PG-II beneficially owns 961,085 Common Units which, assuming exchange of the Common Units, constitute approximately 2.2% of the outstanding shares of Common Stock. PG-V beneficially owns 721,912 Common Units which, assuming exchange of the Common Units, constitute approximately 1.6% of the outstanding shares of Common Stock. PG-VI beneficially owns 104,632 Common Units which, assuming exchange of the Common Units, constitute approximately 0.2% of the outstanding shares of Common Stock. By virtue of his position as managing general partner of PGLP and his ability to control PGLPI, Prime Finance, PFLP, PG-II, PG-V and PG-VI, Reschke may be deemed to share beneficial ownership of the 251,300 shares of Common Stock directly owned by PGLP and the 5,557,000, 961,085, 721,912 and 104,632 Common Units owned by PFLP, PG-II, PG-V and PG-VI, respectively. Prime Finance may be deemed to share beneficial ownership of the 5,557,000 Common Units directly owned by PFLP because Prime Finance is the managing general partner of PFLP. PGLPI may be deemed to share beneficial ownership of the 961,085, 721,912 and 104,632 Common Units directly owned by PG-II, PG-V and PG-VI, respectively, because PGLPI is the managing general partner of each of PG-II, PG-V and PG-VI. (b) Reschke has the sole power to direct the vote and disposition of 199,548 shares of Common Stock and 9,552 shares of Preferred Stock, which are immediately convertible into 11,424 shares of Common Stock, directly owned by Reschke. PGLP has the sole power to direct the vote and disposition of the 251,300 shares of Common Stock directly owned by PGLP. PFLP has the sole power to direct the vote and disposition of the 5,557,000 Common Units owned by PFLP. Each of PG-II, PG-V and PG-VI has the sole power to direct the vote and disposition of the 961,085, 721,912 and 104,632 Common Units directly owned by PG-II, PG-V and PG-VI, respectively. By virtue of his position as managing general partner of PGLP and his ability to control PGLPI, Prime Finance, PFLP, PG-II, PG-V and PG-VI, Reschke may be deemed to share the power to direct the vote and disposition of the 251,300 shares of Common Stock directly owned by PGLP and the 5,557,000, 961,085, 721,912 and 104,632 Common Units directly owned by PFLP, PG-II, PG-V and PG-VI, respectively. Prime Finance may be deemed to share the power to direct the vote and disposition of the 5,557,000 Common Units directly owned by PFLP because Prime Finance is the managing general partner of PFLP. PGLPI may be deemed to share the power to direct the vote and disposition of the 961,085, 721,912 and 104,632 Common Units directly owned by PG-II, PG-V and PG-VI, respectively, because PGLPI is the managing general partner of each of PG-II, PG-V and PG-VI. -14- (c) None of Reschke, PGLP, PFLP, PG-II, PG-V or PG-VI, nor, to the best of their knowledge, any of the executive officers or directors of PGLPI or Prime Finance, has effected any transaction in securities of the Company during the past 60 days. (d) Other than the following, no person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, securities held by Reschke, PGLP, PFLP, PG-II, PG-V or PG-VI, except for Reschke, PGLP, PFLP, PG-II, PG-V, PG-VI, PGLPI or Prime Finance: (1) Kemper Investors Life Insurance Company ("Kemper"), pursuant to a Pledge and Security Agreement [Lake Travis], dated as of March 22, 1994, by and between PG-II and Kemper (the "Original Kemper Pledge Agreement"), as amended by the First Amendment to Pledge and Security Agreement [Lake Travis], dated as of August 31, 1994, by and between PG-II and Kemper (the "First Amendment"), the Second Amendment to Pledge and Security Agreement [Lake Travis], dated as of June 12, 1995, by and between PG-II and Kemper (the "Second Amendment"), the Third Amendment to Pledge and Security Agreement [Lake Travis], dated as of February 19, 1997, by and between PG-II and Kemper (the "Third Amendment"), the Fourth Amendment to Pledge and Security Agreement [Lake Travis], dated as of April 9, 1997, by and between PG-II and Kemper (the "Fourth Amendment"), the Fifth Amendment to Pledge and Security Agreement [Lake Travis], dated as of April 7, 1998, by and between PG-II and Kemper (the "Fifth Amendment"), the Sixth Amendment to Pledge and Security Agreement [Lake Travis], dated as of June 15, 1998, by and between PG-II and Kemper, the Seventh Amendment to Pledge and Security Agreement [Lake Travis], dated as of September 30, 1998, by and between PG-II and Kemper (the "Seventh Amendment"), the Eighth Amendment to Pledge and Security Agreement [Lake Travis], dated as of December 31, 1998, by and between PG-II and Kemper, the Ninth Amendment to Pledge and Security Agreement [Lake Travis],dated as of March 31, 1999, by and between PG-II and Kemper, the Tenth Amendment to Pledge and Security Agreement [Lake Travis], dated as of September 1, 1999, by and between PG-II and Kemper, the Eleventh Amendment to Pledge and Security Agreement [Lake Travis], dated as of December 20, 1999, by and between PG-II and Kemper (the "Eleventh Amendment"), and the Twelfth Amendment to Pledge and Security Agreement [Lake Travis], dated as of May 7, 2000, by and between PG-II and Kemper (as amended, the "Kemper Pledge Agreement"); (2) Lumbermens Mutual Casualty Company ("LMCC"), pursuant to a Pledge and Security Agreement [150 N. Riverside] dated as of March 22, 1994 made by KILICO Realty Corporation and Kemper to LMCC, as amended by the First Amendment to Pledge and Security Agreement [150 N. Riverside] effective as of September 1, 1995 by and between PG-V and LMCC (the "First Amendment to LMCC Pledge Agreement") (as amended, the "LMCC Pledge Agreement"); (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. -15- Pursuant to the Kemper Pledge Agreement, PG-II pledged 690,276 Common Units to secure certain obligations of PG-II under the Limited Recourse Guaranty [Lake Travis] made as of March 22, 1994 in favor of Kemper (the "Original Kemper Guaranty"), as amended by the First Amendment to Limited Recourse Guaranty [Lake Travis], dated as of August 31, 1994, by and between PG-II and Kemper (the "First Amendment to Kemper Guaranty") (as amended, the "Kemper Guaranty"), issued by PG-II with respect to credit support issued by Kemper to an affiliate of PG-II. Pursuant to the Second Amendment, PG-II's pledge was increased to 785,852 Common Units in order to secure certain obligations of PG-II under the Kemper Guaranty. Pursuant to the Third Amendment, Kemper released 40,227 Common Units resulting in a total pledge by PG-II of 745,625 Common Units in order to secure certain obligations of PG-II under the Kemper Guaranty. Pursuant to the Fourth Amendment, PG-II's pledge was increased to 845,625 Common Units in order to secure certain obligations of PG-II under the Kemper Guaranty. Pursuant to the Fifth Amendment, Kemper released 106,292 Common Units resulting in a total pledge by PG-II of 739,333 Common Units in order to secure certain obligations of PG-II under the Kemper Guaranty. Pursuant to the Seventh Amendment, PG-II's pledge was increased to 884,541 Common Units in order to secure certain obligations of PG-II under the Kemper Guaranty. Pursuant to the Eleventh Amendment, PG-II's pledge was increased to 961,085 Common Units in order to secure certain obligations of PG-II under the Kemper Guaranty. Pursuant to the LMCC Pledge Agreement, PG-V has currently pledged to LMCC 598,346 Common Units as security for the obligations of PG-V to LMCC under the Limited Recourse Guaranty [150 N. Riverside] made March 22, 1994 by KILICO Realty Corporation and Kemper in favor of LMCC (the "Original LMCC Guaranty"), as amended by the First Amendment to Limited Recourse Guaranty [150 N. Riverside] effective as of September 1, 1995 by and between PG-V and LMCC (the "First Amendment to LMCC Guaranty") (as amended, the "LMCC Guaranty"), to secure the repayment of a loan note by LMCC to an affiliate of PG-V. The Original Kemper Pledge Agreement, the First Amendment, the Second -16- Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Seventh Amendment, the Eleventh Amendment, the Original Kemper Guaranty, the First Amendment to Kemper Guaranty, the LMCC Pledge Agreement, the First Amendment to LMCC Pledge Agreement, the Original LMCC Guaranty, and the First Amendment to LMCC Guaranty are attached hereto as Exhibits I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, respectively, and incorporated herein by reference. Item 7. Material to be Filed as Exhibits. Exhibit I Pledge and Security Agreement [Lake Travis] dated as of March 22, 1994 by and between PG-II and Kemper* Exhibit II First Amendment to Pledge and Security Agreement [Lake Travis] dated as of August 31, 1994 by and between PG-II and Kemper* Exhibit III Second Amendment to Pledge and Security Agreement [Lake Travis] dated as of June 12, 1995 by and between PG-II and Kemper* Exhibit IV Third Amendment to Pledge and Security Agreement [Lake Travis] dated as of February 19, 1997 by and between PG-II and Kemper* Exhibit V Fourth Amendment to Pledge and Security Agreement [Lake Travis] dated as of April 9, 1997 by and between PG-II and Kemper* Exhibit VI Fifth Amendment to Pledge and Security Agreement [Lake Travis] dated as of April 7, 1998 by and between PG-II and Kemper* Exhibit VII Seventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of September 30, 1998 by and between PG-II and Kemper* Exhibit VIII Eleventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of December 20, 1999 by and between PG-II and Kemper* Exhibit IX Limited Recourse Guaranty [Lake Travis] made by PG-II as of March 22, 1994 in favor of Kemper* Exhibit X First Amendment to Limited Recourse Guaranty dated as of August 31, 1994 by and between PG-II and Kemper* Exhibit XI Pledge and Security Agreement [150 N. Riverside] dated as of March 22, 1994 made by KILICO Realty Corporation and Kemper to LMCC* Exhibit XII First Amendment to Pledge and Security Agreement [150 N. Riverside] effective as of September 1, 1995 by and between PG-V and LMCC* Exhibit XIII Limited Recourse Guaranty [150 N. Riverside] made as of March 22, 1994 by KILICO Realty Corporation and Kemper in favor of LMCC* Exhibit XIV First Amendment to Limited Recourse Guaranty [150 N. Riverside] effective September 1, 1995 by and between PG-V and LMCC* -17- Exhibit XV Letter Proposal of The Prime Group, Inc., to Company, dated as of September 20, 2000* Exhibit XVI Letter Proposal of The Prime Group, Inc., to Company, dated as of October 27, 2000* Exhibit XVII Agreement to Form Joint Venture to Acquire Preferred & Common Equity Securities, dated as of November 2, 2000* Exhibit XVIII Joint Filing Statement, dated as of November 7, 2000 by and among Reschke, PGLPI, The Prime Group, Inc., Prime Finance, PGLP, PFLP, PG-II, PG-V and PG-VI* Exhibit XIX Letter, dated as of May 16, 2001, terminating Agreement to Form Joint Venture* Exhibit XX Letter Proposal of Reschke to Company, dated as of August 7, 2001 ----------- *Previously filed -18- SIGNATURE After reasonable inquiry and to the best of his or its knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 5 to Schedule 13D is true, complete and correct. /s/ Michael W. Reschke ----------------------------------- Michael W. Reschke Dated: August 20, 2001 SIGNATURE After reasonable inquiry and to the best of his or its knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 5 to Schedule 13D is true, complete and correct. PGLP, INC. By: /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: President Dated: August 20, 2001 SIGNATURE After reasonable inquiry and to the best of his or its knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 5 to Schedule 13D is true, complete and correct. PRIME FINANCE, INC. By: /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: President Dated: August 20, 2001 SIGNATURE After reasonable inquiry and to the best of his or its knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 5 to Schedule 13D is true, complete and correct. PRIME GROUP LIMITED PARTNERSHIP By: /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: Managing General Partner Dated: August 20, 2001 SIGNATURE After reasonable inquiry and to the best of his or its knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 5 to Schedule 13D is true, complete and correct. PRIME FINANCING LIMITED PARTNERSHIP By: Prime Finance, Inc., its managing general partner By: /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: President Dated: August 20, 2001 SIGNATURE After reasonable inquiry and to the best of his or its knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 5 to Schedule 13D is true, complete and correct. PRIME GROUP II, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: President Dated: August 20, 2001 SIGNATURE After reasonable inquiry and to the best of his or its knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 5 to Schedule 13D is true, complete and correct. PRIME GROUP V, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: President Dated: August 20, 2001 SIGNATURE After reasonable inquiry and to the best of his or its knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 5 to Schedule 13D is true, complete and correct. PRIME GROUP VI, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: President Dated: August 20, 2001 EXHIBIT INDEX Exhibit No. Document ----------- -------- Exhibit I Pledge and Security Agreement [Lake Travis] dated as of March 22, 1994 by and between PG-II and Kemper* Exhibit II First Amendment to Pledge and Security Agreement [Lake Travis] dated as of August 31, 1994 by and between PG-II and Kemper* Exhibit III Second Amendment to Pledge and Security Agreement [Lake Travis] dated as of June 12, 1995 by and between PG-II and Kemper* Exhibit IV Third Amendment to Pledge and Security Agreement [Lake Travis] dated as of February 19, 1997 by and between PG-II and Kemper* Exhibit V Fourth Amendment to Pledge and Security Agreement [Lake Travis] dated as of April 9, 1997 by and between PG-II and Kemper* Exhibit VI Fifth Amendment to Pledge and Security Agreement [Lake Travis] dated as of April 7, 1998 by and between PG-II and Kemper* Exhibit VII Seventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of September 30, 1998 by and between PG-II and Kemper* Exhibit VIII Eleventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of December 20, 1999 by and between PG-II and Kemper* Exhibit IX Limited Recourse Guaranty [Lake Travis] made by PG-II as of March 22, 1994 in favor of Kemper* Exhibit X First Amendment to Limited Recourse Guaranty dated as of August 31, 1994 by and between PG-II and Kemper* Exhibit XI Pledge and Security Agreement [150 N. Riverside] dated as of March 22, 1994 made by KILICO Realty Corporation and Kemper to LMCC* Exhibit XII First Amendment to Pledge and Security Agreement [150 N. Riverside] effective as of September 1, 1995 by and between PG-V and LMCC* Exhibit XIII Limited Recourse Guaranty [150 N. Riverside] made as of March 22, 1994 by KILICO Realty Corporation and Kemper in favor of LMCC* Exhibit XIV First Amendment to Limited Recourse Guaranty [150 N. Riverside] effective September 1, 1995 by and between PG-V and LMCC* Exhibit XV Letter Proposal of The Prime Group, Inc., to Company, dated as of September 20, 2000* Exhibit XVI Letter Proposal of The Prime Group, Inc., to Company, dated as of October 27, 2000* Exhibit XVII Agreement to Form Joint Venture to Acquire Preferred & Common Equity Securities, dated as of November 2, 2000* Exhibit XVIII Joint Filing Statement, dated as of November 7, 2000 by and among Reschke, PGLPI, The Prime Group, Inc., Prime Finance, PGLP, PFLP, PG-II, PG-V and PG-VI* Exhibit XIX Letter, dated as of May 16, 2001, terminating Agreement to Form Joint Venture* Exhibit XX Letter Proposal of Reschke to Company, dated as of August 7, 2001 ------------- *Previously filed EX-20 3 a2056846zex-20.txt EXHIBIT 20 Exhibit 20 Proposal to Recapitalize Prime Retail, L.P. ------------------ I. PREFERRED STOCK EXCHANGE OFFER. The first step of the recapitalization would be to redeem all of the existing Series A and Series B preferred stock for either cash or two newly-issued securities (the "Preferred Exchange Offer"). Existing Series A preferred shareholders would be offered the opportunity to exchange each Series A preferred share for either (a) $l5.00 in cash, or (b) a combination of (i) a new convertible preferred share (the "New Preferred") with a liquidation preference of $25.00, providing for the payment of a 4.0% dividend after a six month grace period, escalating to a 5.0% dividend on the second anniversary of the first dividend payment date, and convertible into six (6) PRT common shares at anytime, plus (ii) a non-interest bearing, unsecured promissory note in the principal amount of $5.00 (the "Accrued Dividend Note") that requires, starting on the second anniversary, the payment of ten quarterly installments of, at the company's election, either $.50 in cash or $.50 in PRT common stock at the then current market price (but in no event less than $2.s0 per common share). Existing Series B preferred shareholders would be offered the opportunity to exchange each Series B preferred share for either (a) $9.00 in cash, or (b) for .85 of a New Preferred Share and .85 of an Accrued Dividend Note. PRT would have no obligation to redeem for cash more than 30% of the Series A preferred and no more than 20% of the Series A preferred. In the event a greater percentage of shares are tendered for cash, then such shareholders would receive a pro rata redemption in cash and the balance in a proportionate percentage of New Preferred Stock and the Accrued Dividend Note. For example, if 60% of the Series A preferred shares are tendered for cash, then each Series A preferred share would receive $7.50 in cash and .5 of a New Preferred Share and .5 of an Accrued Dividend Note. Assuming the maximum Series A and Series B preferred shareholders elect to receive cash, and to set aside a sufficient reserve to complete certain capital improvements, PRT would need to raise the following funds:
(000's) ---------- Retire Fortress Mezzanine Debt (est. 9/l/01 bal.) $74,000 Pay Fortress Exit Fee 3,000 Redeem 30% of the Series A Preferred (@ $15.00) 10,350 Redeem 20% of the Series B Preferred (@ $9.00) 14,090 Fund Rehab Reserve 3,000 ---------- Total Capital Needs 104,440
These capital needs would be funded through a combination of asset sales and the placement of a newly issued convertible debenture. The assumed asset sales are:
Mortgage Net Cash Net Sales Price Debt & Costs Proceeds --------------- ------------ -------- Nomura Bridge Assets $ 135,000 $ 112,000 $ 23,000 Birch Run Receivable 10,700 - 10,000 Williamsburg Receivable 7,000 900 6,100 Camirillo Land 8,000 6,000 2,000 Edinburgh Outlet Center 32,500 17,500 15,000 San Marcos Land 425 25 400 ------------ ------------ ------------ Total $ 193,625 $ 136,425 $ 57,200 ------------ ------------ ------------
Simultaneous with the consummation of the foregoing asset sales, PRT would secure a commitment from one or more institutions to purchase a publicly-registered convertible debenture in PRT on the following terms (the "Convertible Debenture"): AMOUNT: Up to $80.0 million. TERM: Five years with a one-year lock-out and optional redemption thereafter at 108% of par value, declining 2.0% per year thereafter. RATE: LIBOR plus 8.0% payable quarterly in arrears, increasing to LIBOR plus 10.0% after the second anniversary. COLLATERAL: Unsecured. COVENANTS: (a) Total debt to EBIDTA not to exceed 8.0x for three successive quarterly periods. (b) No new debt will be senior to the Convertible Debenture other than conventional first mortgage debt (not to exceed 70% LTV) and a $25.0 million corporate line of credit. CONVERSION RATE: After the first anniversary, convertible at par into PRT common stock at a $2.00 share price. MANDATORY PREPAYMENT: 100% of any excess mortgage proceeds from the refinancing of the Nomura Mega Deal VI loan on November 11, 2003. CONDITION TO FUNDING: The obligation of the investors to purchase the Convertible Debenture shall be conditioned on no less than 66.7% of the Series A and Series B preferred shareholders, each voting as a class, to accept the Preferred Exchange Offer. II. PERFORM OPERATING RESULTS AFTER THE RECAPITALIZATION. After the sale of assets and the completion of the Preferred Exchange Offer, the preform net cash flow of PRT would be $.52 per common share on a primary basis ($.31 per share on a diluted basis), calculated as follows: Property NOI (2001) $140,948 $120,723 Joint Venture and Other Income 4,800 4,800 Interest Income - 1,500 Less: Mortgage Interest Expense (See Exhibit A) (72,410) (55,730) Less: G&A Expense (13,000) (13,000) Net Income 60,338 57,293 Less: Principal Amortization (11,249) (10,258) Less: Tenant Finish (6,000) (5,000) Less: Base Building Cap Exp. (4,500) (3,500) Add: CAM Reimbursement 2,500 2,000 Net Operating Cash Flow $41,089 41,535 Less: Less Preferred Dividend (6,000) Less: Preferred Dividends (6,933) Net Cash Flow to Common Shareholders $28,602 Per Common Share ($54,00,000 shares) $.52 Per Diluted Share (134,965,000 shares)(1) $.31 1. The amount of fully-diluted common shares is calculated as follows: Existing Common 54,500,000 New Preferred (6,933,125 x 6.0) 41,598,750 Accrued Dividend Notes 13,866,250 Convertible Debentures 25,000,000 ------------ Fully-diluted Shares 134,965,000 ============
Assuming the company reinstates a $.30 common dividend, the common stock should trade to a 10% to 12% dividend yield, resulting in an estimated common share price in the range of $2.50 to $3.00 per share. From the perspective of an investor in the Convertible Debentures, the total return is forecast to range from 13.2% to 62.0% under the following scenarios:
EVENT IRR - -------------------------------------------------------------------------------- ------- IRR Holder is redeemed at par after five years. Holder is at 106% after two 13.2% years upon the refinancing of the 15.0% Nomura Mega VI. Holder converts on the first anniversary and sells common stock on the 22.9% fifth anniversary at $3.00 per share. Holder converts on the first anniversary and sells common stock on the 28.5% third anniversary at $3.00 per share. Holder converts on the first anniversary and sells common stock on the 62.0% first anniversary at a $3.00 share price.
From the perspective of the existing preferred shareholders, and assuming PRT common stock trades to $3.00 per share, Series A preferred shareholders who elect to receive New Preferred Stock and the Accrued Dividend Note and then convert into PRT common stock, would receive a total value of $23.00 per share. In addition, the Series A preferred shareholder's annual dividend income would increase, upon conversion, from $1.00 per share to $1.80 per share (excluding the quarterly payments on the Accrued Dividend Note). Series B preferred shareholders who elect to receive New Preferred Stock and the Accrued Dividend Note would receive a total value of $19.55 per share. In addition, the Series B preferred shareholders annual dividend income would increase, upon conversion, from $.85 per share to $1.53 per share (excluding the quarterly payments on the Accrued Dividend Note). Assuming a $3.00 common share price, PRT would have the following pro forma balance sheet after the recapitalization:
Before After Conversion Conversion ---------- ---------- (000'S) % (000'S) % --------- ----- --------- ----- Mortgage Debt $ 717,700 62.7% $ 717,700 63.9% Convertible Debentures 50,000 4.4% - - Accrued Divided Notes 34,665 3.0% - - Preferred Equity 173,328 15.1% - - Common Equity 163,500 14.3% 404,895 36.1% Total $1,144,193 100.0% $1,122,395 100.0%
Due to the significant increase in the annual dividend rate, I would expect that most holders of both the Convertible Debentures and the New Preferred would convert to PRT common stock. If some holders of the Convertible Debentures do not convert, I would expect PRT to redeem the remaining Convertible Debentures upon the refinancing of the Nomura Mega Deal VI in November of 2003. At that time, the Nomura loan balance will be approximately $340.0 million and the assets pledged to the facility will have an estimated NOI of $65.0 million. At a 1.6 to 1.0 coverage ratio with a 9.5% constant, these assets should be able to be refinanced for up to $430.0 million in first mortgage proceeds. III. MANAGEMENT AND CORPORATE GOVERNANCE. Upon the closing of the recapitalization, the board of directors of PRT would be reconstituted to include representatives from the New Preferred shareholders and the Convertible Debenture holders. IV. CONCLUSION. I believe the foregoing recapitalization solution would be in the best interest of BOTH the preferred and the common shareholders and, therefore, would have a likely chance of being approved by two-thirds of all classes of shareholders. From a preferred shareholders standpoint, it provides an option for either cash, at a substantial premium to the current market price, or a new preferred security with a reasonable expectation to realize $19.55 (Series B) to $23.00 (Series A) in value plus an annual dividend ranging from $1.53 (Series B) to $1.80 (Series A) (excluding the quarterly payments on the Accrued Dividend Note). From a common shareholders standpoint, it would maximize the potential market value and reinstate a $.30 common dividend. Moreover, there would be no negative tax implications for either shareholders and/or unitholders. -----END PRIVACY-ENHANCED MESSAGE-----