Empire State Realty Trust opponents tell appeals court of alleged IPO boondoggle

Opponents of the Empire State Realty Trust’s initial public offering have asked an appeals court to declare illegal a measure to have some investors paid $100 per unit if they refused to cooperate with the plan to go public.

Such a move would reverse Justice O. Peter Sherwood’s April ruling denying a request to declare the buyout terms unlawful under New York State corporate law.

Steven Meister, an attorney for dissenting unit holders who opposed taking the Empire State Building and other properties public, argued that his clients were coerced into voting for the IPO because they faced buyouts of only $100 for shares worth hundreds of thousands of dollars if they did otherwise, as Bloomberg News reported.

“People were bludgeoned into changing their vote from dissenters to assenters,” Meister told the court.

The real estate investment trust sold 71.5 million shares for $13 each on Oct. 2.

The Empire State Building’s supervisors, Peter and Anthony Malkin of Malkin Holdings, left shareholder voting on the IPO formation open until Sherwood ruled on the question of the buyout, and secured the necessary approvals in May.

Thomas Dewey, an attorney for the Malkins, yesterday asked the court to either affirm Judge Sherwood’s earlier denial to dub the buyout terms unlawful or dismiss Meister’s appeal.

“The IPO has occurred, the stock price is up, there’s no reason to go back and revisit this issue,” Dewey told Bloomberg. [Bloomberg] — Julie Strickland