SC 13D 1 sch13d.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. __) Prime Group Realty Trust -------------------------------------------------------------------------------- (Name of Issuer) Common Shares of Beneficial Interest, par value $0.01 per share -------------------------------------------------------------------------------- (Title of Class of Securities) 74158J 10 3 -------------------------------------------------------------------------------- (CUSIP Number) Gwen Klees Senior Legal Counsel Cadim inc 800, Square Victoria, Bureau 4400 Case postale 118 Montreal, Quebec H4Z 1B7 (514) 875-3360 -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 22, 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 which is the subject of this Schedule 13D, and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [] (Continued on following pages) (Page 1 of 11 Pages) Page 1 of 10 CUSIP NO.: 74158J 10 3 SCHEDULE 13D 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Cadim inc. -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [x] -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION QUEBEC -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES 8 ------------------------------------------ BENEFICIALLY SHARED VOTING POWER OWNED BY EACH 8,797,907* REPORTING ------------------------------------------ PERSON 9 SOLE DISPOSITIVE POWER 0 ------------------------------------------ 10 SHARED DISPOSITIVE POWER ------------------------------------------ 8,797,907* ------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,797,907* -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.9% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO -------------------------------------------------------------------------------- Page 2 of 10 * On August 22, 2001, Cadim Inc. ("Cadim"), Michael W. Reschke ("Reschke"), The Prime Group, Inc. ("PGI"), Primestone Investment Partners L.P. ("Primestone"), Prime Group VI, L.P. ("PLP"), PG/Primestone, L.L.C. ("PG LLC") and Prime Group Limited Partnership ("Prime LP" and together with PGI, Primestone, PLP and Reschke, sometimes referred to as the "PGI Parties") executed a Memorandum of Understanding described in Item 4. By virtue of entering into the Memorandum of Understanding, Cadim may be deemed to have formed a group with the PGI Parties for purposes of Rule 13d-5 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). On August 30, 2001, Cadim and the PGI Parties entered into an Amended and Restated Support and Standstill Agreement described in Item 4. As such, Cadim may be deemed to share with the PGI Parties beneficial ownership of the equity securities owned by the PGI Parties. As such, Cadim may be deemed to beneficially own (i) 134,881 common shares of beneficial interest, par value $0.01 per share (the "Common Shares"), of Prime Group Realty Trust (the "Company") that Reschke owns and options to acquire 340,036 Common Shares within 60 days, (ii) 256,572 Common Shares and 47,525 common units of limited partner interest of Prime Group Realty, L.P. (the "Common Units"), which are exchangeable on a one-for-one basis for Common Shares at any time (or at the Company's election, the cash equivalent value) held by PLP, (iii) 74,000 Common Shares directly held by Prime LP, and (iv) 7,944,893 Common Units held by Primestone. The filing of this statement on Schedule 13D shall not be construed as an admission that any such person is, for purposes of Section 13(d) or Section 13(g) of the Exchange Act, the beneficial owner of any securities held by any other person. Page 3 of 10 ITEM 1. SECURITY AND ISSUER This statement relates to the common shares of beneficial interest, par value $0.01 per share (the "Common Shares") of Prime Group Realty Trust, a Maryland real estate investment Trust (the "Company"). The Company's principal executive offices are located at 77 West Wacker Drive, Suite 3900, Chicago, Illinois 60601. ITEM 2. IDENTITY AND BACKGROUND (a) - (c) This statement is being filed by Cadim inc., a corporation incorporated under Part IA of the Companies Act (Quebec) ("Cadim"). Cadim's principal executive offices are located at 800, Square Victoria, Bureau 4400, Case postale 118, Montreal, Quebec H4Z 1B7. Cadim is a real estate company that invests mainly in the residential sector and related products, and in non-conventional real estate investments such as real estate securities and opportunity products. The names, business addresses and principal occupation or employment (and the name, principal business and address of any corporation or other organization in which such employment is conducted) of each of the persons specified by Instruction C of Schedule 13D are set forth on Schedule I. Cadim is a wholly owned subsidiary of Caisse de depot et placement du Quebec, a corporation organized under Chapter C-2 of An Act Respecting the Caisse de Depot et Placement de Quebec ("CDP Capital"). CDP Capital's principal executive offices are located at 1981, Avenue McGill College, Montreal, Quebec H3A 3C7. CDP Capital is a leading fund manager in Canada, one of the largest portfolio managers in North America and the largest holder of real estate in Canada. CDP Capital manages assets valued at more than $125 billion Canadian dollars. The names, business addresses and principal occupation or employment (and the name, principal business and address of any corporation or other organization in which such employment is conducted) of each of the persons specified by Instruction C of Schedule 13D are set forth on Schedule I. (d) - (e) Neither Cadim, CDP Capital, nor to the knowledge of Cadim and CDP Capital, any of the persons specified in Schedule I has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) nor has been 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. (f) The citizenship of each of the persons specified by Instruction C of the Schedule 13D is set forth on the attached Schedule I. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION No funds were required in connection with entering into the MOU. ITEM 4. PURPOSE OF THE TRANSACTION On August 22, 2001, Cadim, Reschke, PGI, Primestone, PLP, PG LLC and Prime LP executed a Memorandum of Understanding (the "original MOU") whereby, among other things, an affiliate of Cadim and PGI would make a joint tender offer, subject to the execution of a standstill and support agreement by and among the Company, Cadim and PGI (the "PGE Standstill Agreement") and other terms and conditions described in the original MOU, to acquire all of the outstanding Common Shares of the Company (including preferred shares of beneficial interest) and Common Units (collectively, the "Outstanding Company Shares"), excluding the Company's outstanding 9% Series B Cumulative Redeemable Shares of Beneficial Interest (the "Series B Preferred Shares") and any and all shares/units currently owned by the PGI Parties and any of their affiliates, at a per share/unit price of $14.00. The original MOU contemplated a two-step transaction in which an affiliate of Cadim and PGI, or its designated affiliate, Page 4 of 10 would purchase all of the Outstanding Company Shares pursuant to the tender offer described in the previous sentence, followed by a merger between the Company and an entity to be formed by an affiliate of Cadim and PGI, or its designated affiliate, pursuant to which the Company's remaining shareholders would also receive $14.00 for each share or unit. Subsequent to the execution of the Memorandum of Understanding, Cadim and PGI submitted a letter to the Board of Trustees of the Company proposing that Cadim and PGI acquire the Company on the terms as outlined in the original MOU. Cadim and PGI negotiated terms of the PGE Standstill Agreement with the Company and, as a result of those negotiations, on August 30, 2001, (i) Cadim, Reschke, PGI, Primestone, PLP, PG LLC and Prime LP executed an Amended and Restated Memorandum of Understanding (the "MOU") on August 30, 2001, a copy of which is attached hereto as Exhibit 99.1, (ii) the PGI Parties and Cadim executed an Amended and Restated Support and Standstill Agreement (the "PGI Standstill Agreement"), a copy of which is attached hereto as Exhibit 99.2, and (iii) Cadim, PGI, Prime Group Realty, L.P. and the Company entered into the PGE Standstill Agreement, a copy of which is attached hereto as Exhibit 99.3. The MOU contemplates, among other things, that an affiliate of Cadim and PGI will make a joint tender offer, subject to the terms and conditions described in the section entitled "Structure" in the MOU, to acquire all of the Outstanding Company Shares at a per share/unit price of $14.50, excluding the Series B Preferred Shares and any and all shares/units currently owned by the PGI Parties and any of their affiliates (the "Tender Offer"). The proposed acquisition would be accomplished through a two-step transaction in which an affiliate of Cadim and PGI, or its designated affiliate, would tender for all of the Outstanding Company Shares pursuant to the Tender Offer, followed by a merger (the "Merger") between the Company and an entity to be formed by an affiliate of Cadim and PGI, or its designated affiliate, pursuant to which the Company's remaining shareholders (i.e., all shareholders other than the affiliate of Cadim, the PGI Parties and the holders of the Series B Preferred Shares) would receive the same per share cash consideration as that paid in the Tender Offer. Following the Tender Offer and the Merger, an affiliate of Cadim and the PGI Parties would each own 49.5% of the Company's outstanding equity on a fully diluted basis and the other 1% would be owned by a certain number of individuals or entities yet to be named. The basic terms and conditions of the Tender Offer and Merger are set forth in the MOU and include, among other things, the completion of due diligence and the execution of definitive documentation. The Series B Preferred Shares would remain outstanding and the Company would remain a reporting company under the Securities Exchange Act of 1934, as amended. The preceding summary of the MOU does not purport to be complete. Reference is made to the full text of the MOU that is filed as an exhibit to this statement and is incorporated in this Schedule 13D by this reference. In the PGI Standstill Agreement, the PGI Parties and Cadim agreed, among other things, to promptly commence negotiations concerning the implementation of the business combination summarized in the MOU and to participate in reasonable due diligence, Cadim agreed to treat all materials relating thereto as confidential, the PGI parties agreed to not solicit or encourage any alternative proposal or offer with respect to the acquisition of the Company, and to publicly support, and vote all shares of beneficial interest in the Company in favor of, the business combination summarized in the MOU. In the PGE Standstill Agreement, the Company, Cadim, PGI and Prime Group Realty, L.P. agreed, among other things, to promptly commence negotiations concerning the structuring and terms of a possible business combination transaction of the type summarized in the MOU and to participate in reasonable due diligence, Cadim agreed to treat all materials relating thereto as confidential, and the Company agreed to not solicit or encourage any alternative proposal or offer with respect to the acquisition of the Company. Except as set forth in this Item 4 or as provided in the MOU or as otherwise referred to or described in this Schedule 13D, Cadim has no present plan or proposal which relates to or would result in any of the matters referred to in Items (a) through (j) of Item 4 of Schedule 13D. Page 5 of 10 ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) - (b) By reason of its execution of the Memorandum of Understanding described in Item 4 of this Schedule 13D, Cadim may be deemed to have formed a group with the PGI Parties for purposes of Rule 13d-5 under the Exchange Act, and accordingly may be deemed to share with the PGI Parties beneficial ownership of the equity securities owned by the PGI Parties. As such, and as a result of its execution of the PGI Standstill Agreement, Cadim may be deemed to beneficially own (i) 134,881 Common Shares of the Company Reschke owns and options to acquire 340,036 Common Shares within 60 days, (ii) 256,572 Common Shares and 47,525 Common Units, which are exchangeable on a one-for-one basis for Common Shares at any time (or at the Company's election, the cash equivalent value) held by PLP, (iii) 74,000 Common Shares directly held by Prime LP, and (iv) 7,944,893 Common Units held by Primestone, the equity securities in clauses (i)-(iv) above collectively representing approximately 38.9% of the total outstanding Common Shares. The filing of this statement on Schedule 13D shall not be construed as an admission that any such person is, for purposes of Section 13(d) or Section 13(g) of the Exchange Act, the beneficial owner of any securities held by any other person. (c) Other than the execution of the original MOU, the MOU and the PGI Standstill Agreement described in Item 4 of this Schedule 13D, none of Cadim, CDP Capital or, to Cadim and CDP Capital's knowledge, any of the persons named on the attached Schedule I has effected any transactions in Common Shares in the past 60 days. (d) - (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Reference is made to Item 4 above. Except as provided in the MOU and as otherwise referred to or described in this Schedule 13D, to Cadim's knowledge, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between Cadim and the Company or any other person with respect to securities of the Company. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit No. Description ----------- ----------- 99.1 Amended and Restated Memorandum of Understanding, dated August 30, 2001, by and among Cadim inc., Michael W. Reschke, The Prime Group, Inc., Primestone Investment Partners L.P., Prime Group VI, L.P., Prime Group Limited Partnership and PG/Primestone, L.L.C. 99.2 Amended and Restated Support and Standstill Agreement, dated August 30, 2001, by and among Cadim inc., The Prime Group, Inc., Prime Group VI, L.P., Primestone Investment Partners L.P., Prime Group Limited Partnership, PG/Primestone LLC and Michael Reschke 99.3 Support and Standstill Agreement, dated August 30, 2001, by and among Cadim inc., The Prime Group, Inc., Prime Group Realty Trust and Prime Group Realty, L.P. Page 6 of 10 SCHEDULE I Information Concerning Executive Officers and Directors of Cadim inc. The current executive officers and directors of Cadim are listed below. Cadim's principal executive offices are located at 800, Square Victoria, Bureau 4400, Case postale 118, Montreal, Quebec H4Z 1B7. Unless otherwise indicated, the business address listed for each individual not principally employed by Cadim is also the address of the corporation or other organization which principally employs that individual. CORPORATE OFFICERS ------------------- NAME PRESENT POSITION WITH CADIM CITIZENSHIP Andre Collin President and Chief Operating Officer Canadian Richard Dansereau Vice-President, Investment Canadian Sylvie Drouin Vice-President, Legal Affairs Canadian Pierre Gibeault Vice-President, Investment Canadian Line Lefebvre Vice-President, Finance and Administration Canadian Genevieve B. Beaulieu Corporate Secretary and Director, Administration Canadian

Page 9 of 10 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. CADIM INC. By: /s/ Richard Dansereau ------------------------------------- Name: Richard Dansereau Title: Vice President, Investment Dated: September 4, 2001 Page 10 of 10

CADIM INC SC 13D