Brook Furniture Rental Announces Bid For Cort Business Services Corporation

Furniture World Magazine

Brook Furniture Rental, Inc., a privately held furniture rental company based in Arlington Heights, Ill., announced that, as reported by CORT Business Services Corporation (NYSE: CBZ) in its Form S-4 Registration Statement filed with the Securities and Exchange Commission last Friday, Brook made an offer on April 14, 1999 to purchase CORT for $28 a share in cash. Brook's all cash offer was supported by committed equity from a private equity firm and debt financing from a nationally recognized financial institution. Since that time, Brook has unsuccessfully sought to engage in discussions on the offer with CORT's independent directors. On May 12, 1999, Brook received a letter from Charles Egan, chairman of the board of CORT, which stated that Brook's offer faced "significant opposition expressed by the company's management and major stockholders." CORT's S-4 indicated that this stockholder opposition principally includes Citicorp Venture Capital (Citicorp); members of the company's management team and stockholders affiliated with Bruckmann, Rosser, Sherrill & Co. Inc. (BRS). These stockholders comprise the investor group that entered into a merger agreement with CORT on March 25, 1999. Under the agreement, a company formed by the investor group would acquire CORT for $24 a share in cash and $2.50 a share in liquidation value of a new series of preferred stock. On March 29, 1999, Citicorp filed a Schedule 13D with the Securities and Exchange Commission to disclose Citicorp's mandatory conversion on March 25, 1999, of voting stock into an equal number of shares of non-voting Class B stock, which reduced Citicorp's voting percentage to approximately 16 percent. This conversion was made pursuant to a March 30, 1993, agreement with the Small Business Administration (SBA), requiring a reduction of Citicorp's ownership of voting Common Stock by April 1, 1999. In response to Brook's offer for CORT, Citicorp undertook to convert its non-voting shares back into voting shares, in an attempt to re-attain an approximately 44 percent voting position in CORT. Citicorp's conversion back into voting shares was supported by its counsel's opinion that such conversion was permissible under SBA regulations applicable to small business investment companies. This opinion is contrary to legal advice Brook has received. CORT has indicated in its S-4 filing that its decision to reject Brook's proposal is based principally on CORT's conclusion that it is unlikely any transaction with Brook could be consummated in the face of the significant opposition expressed by the stockholders who are participants in the Citicorp, BRS transaction. Robert W. Crawford, CEO and founder of Brook Furniture Rental, stated, "Over the past twenty years, we have been successful in building a thriving rental business. Our interest in proposing a business combination with CORT is based on our belief that there are significant benefits from strategic synergies and cost savings in the proposed combination, which we have proposed to share with CORT's stockholders through the $28 all cash offer. "We believe our April 14, 1999 fully financed offer represented a superior value for CORT's stockholders. We also believe this combination will create unique opportunities for employees and customers of both companies and the communities the companies serve. We remain very interested in a business combination with CORT if the independent directors are willing to establish a dialogue with us to discuss our proposal, as is permissible under CORT's merger agreement with Citicorp and BRS." Brook Furniture Rental is a nationally recognized provider of upscale rental furnishings to the residential, commercial and convention markets. With locations in Illinois, Wisconsin, California, Nevada, Texas, Georgia, Florida and New Jersey, Brook has 21 showrooms, seven distribution centers, four clearance centers and over 400 employees.