A new buyer for Westland Development?
by Christie Chisholm, Weekly Alibi, March 30, 2006
All stories have an end. But for the Atrisco Land Grant, the climax is still building.
Occupying tens of thousands of acres on the southwest cusp of our city, the future of the 300-year-old land grant is intimately tied to the future of Albuquerque.
In 1967, 57,000 acres of this hereditary land was converted into Westland Development, Inc., a for-profit corporation with the goal of planning and leasing the lands to further the economic and social development of Atrisco heirs. In August of last year, Westland announced plans to sell the land to an unnamed buyer, who was later revealed to be ANM Holdings, a Delaware-based company that was incorporated nearly a month after the announcement.
Since the Alibi last reported on this story [See: Feature, “A Place by the Water,” Dec. 15-21, 2005], there have been several major developments, not the least of which is the arrival of a new potential buyer, the Las Vegas-based Sedora Holdings, a company belonging to one of the largest developers in the Southwest.
A Little Background
Because Westland originated as the Atrisco Land Grant, all of the shareholders of the company, of which there are more than 6,000, are Atrisco heirs. However, there are many more heirs than there are shareholders, as many were disenfranchised in the late '60s during the grant's conversion. It is estimated that there are about 25,000-30,000 heirs today.
One of the bylaws of Westland's articles of incorporation states that shares cannot be sold or transferred to non-heirs, which would make the proposed sale of Westland illegal. However, the bylaws also state that a two-thirds majority of shareholders can approve changing the bylaws to allow for the sale of shares to outside buyers, and therefore sell the company.
Westland is supposed to hold a vote on its proposed sale at its next annual shareholders meeting, which was originally scheduled for November 2005. The meeting was pushed back and has yet to take place, with no definite date in sight.
Since Westland announced its plans to sell [See: Newscity, “Land Swap,” Sept. 1-7], there has been a flurry of activity around the potential sale, and while some shareholders say they are in support of the takeover, many Atrisco heirs and shareholders have voiced strong opposition to it as well. Demonstrations, community outreach and organization have been strong among heirs, as they have tried to place barriers between Westland and the sale, such as lawsuits brought against the company by heirs and a request for an investigation on insider trading.
A New Buyer
Previously, the proposed buyer for Westland was ANM Holdings, a new company offering Westland $200 per share for a grand total of $166 million for the company (shares are currently worth $20-$25 at market value). Westland agreed to “no shop” and “no talk” provisions with ANM, meaning they weren't allowed to look around for other offers. Westland and ANM also agreed on a $5 million termination fee that would be paid by either company if they backed out of their agreement.
But early this year, two more companies came to Westland with offers. At the end of negotiations, Sedora Holdings came out on top, with an offer to Westland for $255 per share and an additional $1 million per year for 100 years intended for cultural preservation, which would be given to a yet-to-be-designated advisory board who would determine how to spend the funds. The advisory board would be set up by Sedora, but Westland's current board of directors would have the option of joining. The deal would also include the preservation of the land grant's graveyards. Sedora also loaned Westland $5 million for their termination fee with ANM, and now has their own $5 million termination fee with the company, which adds up to a $10 million severance fee if the agreement falls through.
According to Thad Turk, an independent attorney representing Westland, if the shareholders do not approve the sale, the termination fee with Sedora will be waved. Turk says the shareholder's meeting has not been scheduled yet, but Westland hopes it will take place sometime during the first week of May, although it could be delayed. He says the meeting's date will be determined by how the long it takes the Securities and Exchange Commission to review and approve the deal.
According to Kim Moss, spokesperson with DW Turner in Albuquerque, who is the press contact for Sedora, Sedora learned about the Westland opportunity shortly after the beginning of the year and made an offer in early February. Moss was unable to give any specific information regarding Sedora's plans for the land, but she says Sedora will carry on Westland's master plan.
Yet Sedora President Jim Rhodes' past may be indicative of what he plans to do with the land. Rhodes is the founder and president of Rhodes Homes, one of the largest residential development companies in Nevada. As such, he has nearly 30 years of experience in the Las Vegas construction industry. He has a long history of building massive projects, such as Rhodes Ranch, a master-planned golf course community with 9,000 upscale homes. According to theArizona Republic, Rhodes is also looking to build 110,000 homes on more than 20,000 acres in northwest Arizona's Mohave County in the near future. Rhodes was unavailable for comment for this story.
Law and Trading
Atrisco heir and Westland stockholder Rep. Miguel Garcia requested an investigation of Westland for insider trading last fall. It was completed about a month ago. According to Bruce Kohl, director of the Securities Division, no evidence of insider trading was found. There were allegations that Westland management had bought shares from stockholders immediately preceding the announcement to sell, with knowledge that shares might soon be selling for much more than their current value. Kohl says that although some instances of shares transfers were found preceding the sale, they were all among family members, and were consistent with company policies. He says no issues of corporate management or governance were investigated.
However, such issues are being addressed in three lawsuits against the Westland Board of Directors. Nicholas Koluncich is the attorney representing the plaintiffs, who are all Atrisco heirs, in all three cases. He says the lawsuits aim at stopping the sale completely, and include a “prayer for release,” which requests that the judge order Westland to create a cultural heritage committee to help preserve the land grant.
“[Westland's land] is the future of Albuquerque,” says Koluncich. “As far as banging out another Westside, I'm not sure if it's in the shareholders' best interest; it's definitely not in the city's best interest.”
Other Atrisco heirs are also poised to take legal action against Westland. The Concerned Heirs of Atrisco, a grassroots outreach organization aimed at stopping the sale, recently hired a law firm in order to obtain company records. Jerome Padilla, one of the Concerned Heirs, says he requested to see Westland's records last September. Don Justin Jones y Lobato, another heir and shareholder from California working with the group, says he requested to see the company records in January. Neither shareholder received responses from Westland, despite the fact that New Mexico law states that as shareholders they be allowed to view them.
The Concerned Heirs, after hiring the law firm of Freedman, Boyd, Daniels, Hollander & Goldberg about a month ago, filed for discovery with Westland, requesting to view the records. Westland has agreed and the Concerned Heirs are scheduled to begin looking through the records sometime this week.
Turk says that although state law requires that shareholders have a right to examine the company's records, Westland is not required to make copies for shareholders. In terms of the lawsuits filed against Westland, Turk seems almost in favor of it. “In regards to people trying to keep Westland from selling [through lawsuits], this is what they should be doing, if they want to,” he says. “It puts it out in the pubic eye.”
Many heirs are still unhappy with the prospect of selling the land, despite Sedora's higher offer. They say that when it comes to their land, money isn't the point. “Those who would sell [the land] say we can't get value out of it ourselves,” says Justin Jones y Lobato. “But that [mentality] doesn't give a true vote of faith to our capabilities.”
Padilla agrees. “Why would people think they could do a better job running it [than us], giving us a million dollars a year to pacify us? We have intelligent folks that can help develop the future.”
Justin Jones y Lobato is also worried about the kind of projects on the land that would come from the new buyer. “What's going to be the impact on the zoning [of the land] if the new company comes in? They have to maximize for short-term return [since they're putting so much money into buying the land],” he says. “But we could take longer to develop the land well.”
Turk's response to heirs who are opposed to the sale is that it is ultimately their decision as to whether the sale will go through, not the Westland Board of Directors'. “Heritage is involved [in this sale]; will that overcome money? It will for some,” he says. “But I've seen board members struggling with the prospect of losing contact with the land. Some will make a lot of money [from the sale], but I think they would give it up if they knew most of the shareholders didn't want it.” Turk says the board decided to bring the sale to the shareholders because they felt it was their obligation to allow the shareholders to decide for themselves whether or not to sell.
Heirs who are against the sale have begun organizing beyond the Concerned Heirs of Atrisco. According to James Aranda, an heir and shareholder who has been on the forefront of opposition to Westland's sale and helped to form the Concerned Heirs, groups opposed to the sale have started all over the country, in places where larger amounts of heirs reside—such as Arizona, Nevada, New Orleans, Florida and California. And many heirs are creating a vision for the future. Aranda and others are working on a plan to convert part of Westland back into a land grant. A bill went through this last 30-day Legislative Session that would have made such a change possible, but died at the last minute. According to Aranda, the bill had a lot of momentum and will likely be reintroduced next year in the 60-day session.
Depending on what happens when the sale finally does come to a vote, such a bill might not make a difference for the Atrisco heirs. But many are still hopeful. “Let me quote Winston Churchill,” says Justin Jones y Lobato, when discussing the situation. “’Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.'”