New Rock owners hit with shareholder suit.

Some of the new owners of Rockefeller Center and former directors have been hit with a shareholder lawsuit charging them with securities fraud in connection with the purchase of the property from the real estate trust shareholders and the subsequent sale of the NBC condominium at 30 Rock.

The shareholders, Charal Investment Co. of New Jersey and C.W. Somer & Co. of Texas, have asked for class action status. They say that if the original Rockefeller Center Property Trust board had informed them of the pending sale of the NBC space, totalling 19 percent of the entire property, for $440 million, other shareholders would not have voted to sell the REIT to the new ownership for a total of $308 million or $8 per share, and been forced to tender their shares for this "artificially low price."

The infusion of $440 million would have removed the property from bankruptcy and placed the Center back in the black, the shareholders charge.

REW first detailed complaints being made by shareholders to the Securities and Exchange Commission regarding this deal on June 19, 1996.

The Federal lawsuit, that was filed in Delaware on Nov. 15, charges that parties, including David Rockefeller and board president Richard Scarlatta, kept the deal secret in order to ensure the shareholders tendered the shares.

Also named in the suit is former board member Peter D. Linneman; Goldman Sachs Mortgage Co.; Whitehall Street Limited Partnership V; W.H. Advisors Inc. V; WH Advisors LP, Goldman-Sachs Group LP, Goldman Sachs & Co; and Daniel M. Niedich, a Goldman Sachs appointed director to the board who resigned on August 8, 1995 and formed the winning Goldman Sachs investment group.

Neither investor Jerry Speyer nor Tishman Speyer properties is named in the lawsuit.

On November 7th, 1995 the REIT reached a definitive merger agreement with the Goldman Sachs Group - that included David Rockefeller and Speyer - and mentioned "$440 million in new equity" that would be brought to support the Center.

The NBC condominium purchase, which had to be made first by the REIT before it could turn it over to the new ownership, also needed the prior approval of the city's Industrial Development Agency and other complicated legal work that shareholders believe was begun long before the deal was announced on April 23, 1996.

One newspaper article quoted NBC officials stating that GE and NBC had been in discussions for about two years with every party that had a potential opportunity to take over the property. In fact, GE was a party to a nearly winning bid made by Sam Zell.

On June 6, 1996, in an article that he authored, NBC Executive Vice President Rick Cotton also disclosed that city officials, including Deputy Mayor Fran Reiter and Economic Development Corp. and IDA head Charles Millard, were "extremely creative in helping NBC overcome obstacles to the purchase and in providing targeted incentives," implying that a great deal of work and time went into the deal.

Shareholders, however, were sent a letter on March 18th by REIT CEO Richard Scarlata stating that if the stockholders did not approve the plan, the company would be subject to substantial uncertainty.

Scarlatta was paid $750,000 for completing the sale of the entire REIT to the new owners, while Linneman was paid $200,000.

Because of clauses in the original complicated mortgage agreement with Mitsubishi Trust for $1.3 billion and later financing and REIT agreements, if Rockefeller did not manage to change the way the Center was owned, his family would have lost management control of the Center on December 31, 2000.

The shareholders are asking unspecified financial damages and possible rescission of the sale.

Defendants call the suit "meritless."