Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

v3.22.1
Subsequent Events
3 Months Ended
Mar. 31, 2022
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
On April 24, 2022, PSB and the OP entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sequoia Parent LP, a Delaware limited partnership (“Parent”), Sequoia Merger Sub I LLC, a Maryland limited liability company (“Merger Sub I”), and Sequoia Merger Sub II LLC, a Maryland limited liability company (“Merger Sub II,” together with Parent and Merger Sub I, the “Parent Parties”), whereby affiliates of Blackstone Inc. (“Blackstone”) will acquire all outstanding shares of PSB common stock for $187.50 per share in cash. Pursuant to the Merger Agreement, Merger Sub II will merge with and into the OP (the “Partnership Merger”), and, immediately following the Partnership Merger, Merger Sub I will merge with and into PSB (the “Company Merger” and, together with the Partnership Merger, the “Mergers”). Upon completion of the Partnership Merger, the Partnership will survive and the separate existence of Merger Sub II will cease. Upon completion of the Company Merger, PSB will survive and the separate existence of Merger Sub I will cease. Prior to the closing of the Mergers, the OP will be converted from a California limited partnership into a Maryland limited partnership.
Subject to the terms and conditions set forth in the Merger Agreement, each share of the Company’s common stock and each common unit of partnership interest of the OP, respectively, will be converted into the right to receive an amount in cash equal to $187.50, without interest. Each share of PSB’s outstanding preferred stock (and each depositary share representing an interest therein) will be unaffected and will remain outstanding in accordance with their respective terms.
From the date of the Merger Agreement through the closing, the Company may declare and pay regular, quarterly cash distributions to holders of its common stock and to holders of common units of partnership interest of the OP, in an amount of up to $1.05 per share or unit, including a pro rata distribution in respect of any stub period. Additionally, the Company is permitted to declare and pay regular quarterly dividends on its shares of preferred stock. Subject to the terms of the Merger Agreement, immediately prior to the effective time of the Partnership Merger, the Company will also pay a closing cash dividend (the “Closing Cash Dividend”) to holders of record of Company common stock as of the close of business on the business day immediately prior to the closing date in an aggregate amount no greater than the cash available for distribution, which Closing Cash Dividend will be designated, to the maximum extent permitted by applicable law, as a “capital gains dividend” under the Code. The per share merger consideration will be reduced by the per share amount of such Closing Cash Dividend.
The consummation of the Mergers is subject to certain customary closing conditions, including, among others, approval of the Company Merger by holders of a majority of the outstanding shares of Company common stock. A termination fee equal to $110 million may be payable by PSB if the Merger Agreement is terminated by the Company prior to June 4, 2022, as more fully described in the Merger Agreement. A fee of up to $220 million may be payable by PSB if the Merger Agreement is terminated in certain other specified circumstances, as more fully described in the Merger Agreement. A fee of $735 million may be payable by an affiliate of Blackstone upon termination of the transaction, as more fully described in the Merger Agreement.
In connection with the transaction, the Company, Blackstone and PS entered into a support agreement, pursuant to which PS agreed, among other things, that at any meeting of the stockholders of the Company or partners of the OP, vote its common equity interests in the Company and the OP in favor of adopting the Merger Agreement and approving the Mergers and the transactions contemplated thereby. The support agreement will automatically terminate in certain cases, including upon the termination of the Merger Agreement in accordance with its terms. As of April 21, 2022, PS held approximately 25.9% of the issued and outstanding shares of common stock of the Company and 20.9% of the issued and outstanding common units of partnership interest of the OP.