Grubb & Ellis (GBE) Seeking Consents From the Holders of its 7.95% Senior Convertible Notes

From an 8-K filed by Grubb & Ellis this morning:

On March 8, 2011, Grubb & Ellis Company (the "Company") commenced a solicitation of consents (the "Consent Solicitation") from the holders of its 7.95% Senior Convertible Notes Due 2015 (the "Notes"). The Company is seeking consents to proposed amendments to certain provisions in the Indenture, dated as of May 7, 2010 (the "Indenture"), between the Company as issuer and U.S. Bank National Association as trustee (the "Trustee"), which governs the Notes. The Consent Solicitation will expire at 5:00 p.m., New York City time, on March 21, 2011 (the "Expiration Date"), unless extended by the Company.

The terms and conditions of the consent solicitation are described in the Consent Solicitation Statement, dated March 8, 2011, and related Letter of Consent distributed to the holders of the Notes (collectively, the "Consent Solicitation Materials"). Pursuant to the Consent Solicitation Materials, the Company proposes to amend certain provisions set forth in Section 9.01 (Events of Default) of the Indenture, specifically Sections 9.01(h), (i) and (j) of the Indenture, to provide that Daymark Realty Advisors, Inc. and NNN Realty Advisors, Inc., subsidiaries of the Company (and each of such subsidiaries' direct and indirect subsidiaries) would be excluded from the determination of an event of default under such provisions of the Indenture. The proposed amendments require the consent of the holders of a majority-in-interest of the principal amount of the Notes outstanding as of the Record Date (the "Required Holders").

As of March 7, 2011, which the Company has fixed as the record date for determining the holders entitled to give consents (the "Record Date"), the aggregate principal amount of the Notes issued and outstanding was $31,500,000. Consenting holders of the Notes are being offered a fee (the "Consent Fee") payable in unregistered shares of common stock, par value $0.01 per share, of the Company (the "Restricted Stock"), in amount equal to 36.0360 shares of Restricted Stock per $1,000 principal amount of Notes. Fractional shares will be rounded to the nearest whole number. The Consent Fee is equal to approximately four percent (4%) of the principal amount of the Notes (per $1,000) based on the ten (10) day volume weighted average closing price of the Company's common stock for the ten (10) trading day period ending on the Record Date.

This does not sound good.