California Jockey Club shareholders committee objects to corporate restructuring agreement.
Ron Volkman, a member of the Committee and one of the Committee's nominees for election to the board of directors, commented as follows:
"There is nothing good about this deal for CJC shareholders. CJC shareholders would be `locked in' to a minority position without obtaining a true premium for surrendering control of the company. There is no guarantee that the massive cash infusion will be used wisely, rather than for even more improvident real estate speculation to the detriment of our historic franchise of live racing.
"The only persons benefitting from the arrangement are Hudson Bay and the CJC management team, which would be rewarded with yet more options on CJC stock. It is ludicrous, given their sorry track record, to provide them additional incentive to mismanage the company's affairs.
"The announcement of the deal, on the eve of the holdover directors being forced from office, illustrates their monumental arrogance and contempt for shareholder rights. Fortunately, this deal is beyond the holdover board's power to complete. CJC shareholders and the BMOC board can and should reject it.
"To add insult to injury, the holdover directors have agreed to pay Hudson Bay a $2.9 million breakup fee if a better deal is presented to Cal Jockey before the transaction is consummated. We do not believe Cal Jockey can be made to pay such a breakup fee. The holdover directors have rushed into this terrible agreement in a desperate attempt to remain in office. Hudson Bay should not and cannot be rewarded for encouraging the holdover directors to violate their clear duties to CJC shareholders.
"We intend to put both Hudson Bay and the holdover directors on notice of our position with regard to this agreement and its breakup fee. If elected, we will take any and all appropriate action to investigate and remedy this and other wrongful acts committed by the holdover directors."
The Shareholders Committee was formed back in May when a group of shareholders who had tired of the current Board's activities joined together and decided to present a slate of five candidates for election to the company's board of directors at the upcoming annual meeting scheduled for June 27. When the incumbent board learned that their board seats would be challenged, they responded by canceling the meeting. The committee has successfully sued to require the board to hold the annual meeting on Aug. 30.
Information released by CJC indicated that the Hudson Bay agreement involves a $300 million investment by Hudson Bay into two new limited partnerships in exchange for 15 million of the new limited partnership units, which are then convertible into 72% of the CJC/Bay Meadows Operating Company paired stock at $20 a share. CJC and BMOC are also required to contribute all of their assets to the new limited partnerships in exchange for partnership units on a share-for-unit basis. As a part of the deal, CJC has additionally agreed to pay a $2.9 million termination fee to Hudson Bay if it accepts a higher, unsolicited offer and terminates the agreement with Hudson Bay.
CONTACT: California Jockey Club Shareholders Committee
David Gjerdrum, 415/813-0912
Pillsbury Madison & Sutro LLP
Terry Kee, 415/983-1724
|Printer friendly Cite/link Email Feedback|
|Date:||Aug 20, 1996|
|Previous Article:||MACWORLD EXPO BOSTON EXCEEDS 58,000 12th annual Macworld Expo Boston sets new attendance record.|
|Next Article:||Medicare of Transamerica life to begin reimbursement of cryosurgical treatment of the prostate; Landmark decision bodes well for patients with...|