Tribune shareholder files complaint against company CEO for ‘breach of fiduciary duty’
With the shareholder’s meeting set for later this morning, Tribune Publishing was hit with a complaint filed in Delaware last night – where Tribune is incorporated – claiming a ‘breach of fiduciary duty’ against the company’s Board of Directors and CEO Michael Ferro. The complaint is the latest in the ongoing battle between the publisher of the Los Angeles Times and Chicago Tribune, its suitor Gannett, and dissatisfied shareholders who would like to be able to dump their shares at the $15 per share price being offered by the publisher of USA Today (or maybe even at a higher price).
The complaint filed by Capital Structures Realty Advisors LLC traces the recent history of Tribune Publishing from the investment by Michael Ferro of 17 percent of TPUB stock at $8.50 per share, to his ouster of then CEO Jack Griffin (who recently popped up at the M&A firm DeSilva+Phillips), to Gannett’s two offers, and finally the company’s move to bring in a new investor, Patrick Soon-Shiong.
“Tribune Publishing just received a copy of the complaint and is reviewing it carefully,” Tribune Publishing said in a statement released to TNM. “The stock sales to Merrick Media and Nant Capital were approved by the Board of Directors and will provide valuable growth capital to allow the company to execute on its new value-creating business plan.”
The complaint claims that Ferro’s moves were designed to “silence the dissident stockholders’ voices” in order to fend off the Gannett acquisition bid. “Because the Board agreed to the sale to defendant Soon-Shiong in order to entrench itself, and in breach of its duty of loyalty to the Company, it will have the burden of proving the entire fairness of the transaction. It will be unable to do so here,” the filing states.
What the disgruntled shareholder wants is for the court of halt the stock sale to Nant Capital/Patrick Soon-Shiong, bring in a special committee of new independent directors that will consider the Gannett sale offer, and award damages.
In an otherwise down market, TPUB shares are trading a tick higher today at $11.66 a share.