One of the risks of investing in small caps is lack of liquidity, and shareholders of Trans World Media Entertainment (TWMC), operator of f.y.e. (For Your Entertainment) stores, were reminded of how illiquid their stock is when CEO Robert J. Higgins withdrew his proposal to acquire the firm. The stock fell not only after the announcement, but was down already some 10% during the day just prior to the press release. Some shareholders seem to have known the news before it was published.
The settlement of the shareholder litigation after Lukoil (ticker: LUKOY) bought out the minority shareholders of Chaparral Resources, Inc. has been approved by the court this morning. We documented the litigation and Lukoil’s egregious behavior in September 2006, and wrote about the settlement this January.
The net settlement available for public shareholders should come to $1.80 per share. This represents a 31% increase over the price Lukoil paid minority shareholders and shows quite clearly the success, albeit temporary, of the oil giant’s attempts to depress Chaparral’s stock price. Eligible to receive it are only shareholders who held Chaparral stock at the closing of the merger in September 2006. Anyone who sold before the closing will not be eligible to receive a payment.
Claim forms must be received by the claims administrator by April 12. Payment should be made shortly thereafter, but the exact timing will depend on the number of claim forms that need processing.
Thomas Kirchner manages the Pennsylvania Avenue Event-Driven Fund (PAEDX), which owned shares in Chaparral Resources, Inc. through the closing of the merger.
Large financial institutions tend to be reluctant to get involved in lawsuits, even when it would benefit their clients or shareholders. German state-owned banks are a notable exception to the rule.
Former shareholders of National Home Health Care Corp, which was acquired by Angelo Gordon last year, Read the rest of this entry »
Shareholders of American Community Properties Trust (ticker: APO) are eerily reminded of the stalled sale of Wilshire Enterprises (ticker: WOC). Chairman and CEO Michael Wilson proposed a going-private transaction in July, and it has dragged on for half a year without any visible progress. Read the rest of this entry »
Russian oil giant Lukoil’s (ticker: LUKOY) buyout of the minority shareholders of Chaparral Resources, Inc. has been marred by allegations of serious wrongdoing and fraud that came to light during discovery in shareholder litigation, which we wrote about in September 2006. More than one year later, Lukoil has agreed to settle the litigation by paying over $36 million to the former shareholders of Chaparral Resources. Read the rest of this entry »
In a year where Home Depot (ticker: HD) Bob Nardelli’s $210 million golden parachute set a new record for pay without performance, Porsche (ticker: PSEPF) CEO Wendlin Wiedeking’s €68 million ($100.2 million) compensation contrasts as a precedent for good compensation and the alignment of shareholder and executive interests.