MERCURY AIR ACCUSES GROUPS OF LYING TO SEC.

Byline: Brent Hopkins Staff Writer

Mercury Air Group lashed out Monday against a series of investor groups and a prospective business partner, claiming they lied in filings with the Securities and Exchange Commission and misused trade secrets.

Los Angeles-based Mercury, which runs airport fixed-base operations - providing aviation fuel products, air cargo services and aircraft support services - filed suit against the five foreign investor groups and British investment figure Christopher Mills in Los Angeles federal court on Friday.

Additionally, Mercury accused Mills of using his position as a shareholder in Executive Air Support Inc., based in Plano, Texas, to illegally obtain Mercury trade secrets while the two companies were engaged in confidential negotiations over the proposed sale of some Mercury FBOs.

Mercury runs FBOs at Burbank-Glendale-Pasdena Airport, Los Angeles International Airport, Ontario International Airport and 15 other sites nationwide.

``We feel we need to protect our shareholders and the public from false and misleading SEC statements,'' said Wayne Lovett, Mercury's executive vice president and general counsel.

Last fall, Acquisitor Holdings LLC of Bermuda, British-based JO Hambro Capital Management Ltd., JO Hambro Capital Management Group Ltd., American Opportunity Trust PLC and Cayman Islands-based Trident North Atlantic Fund bought up 9.89 percent of Mercury's shares. Mills serves as a director, board member, executive or significant shareholder of each firm, according to Mercury.

In a Dec. 6 printed statement, the investor groups indicated displeasure with Mercury's management.

``The filing parties believe that the current corporate governance of (Mercury) relating to its officers falls well short of acceptable practice,'' they said in the joint release. ``Consequently, the filing parties now intend to consider means by which some or all of the directors may be removed from the board.''

None of the groups could be reached for comment on Monday. Lovett believes their attempts to change directors is an attempt to seize control of Mercury, combine it with Executive Air Support and create a large-scale FBO group that could rival industry leader Signature Flight Support.

In the lawsuit, Executive is accused of improperly using its business relationship with Mercury to funnel confidential information back to the investors at the same time they were picking up shares.

Obligated to raise $30 million in debt payments, Mercury had explored selling some FBOs to Executive to raise cash. No deal materialized, but Mercury contends that Executive used the due-diligence period to gather information improperly.

``We read it just this morning, and we haven't been served yet,'' said Sue Sommers, Executive's vice president of sales and marketing. ``We won't have anything prepared until we actually find out what this is all about.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com