PEI STATES COMPLAINT IS WITHOUT FOUNDATION
PEI STATES COMPLAINT IS WITHOUT FOUNDATION WILKES-BARRE, Pa., Nov. 8 /PRNewswire/ -- Pennsylvania Enterprises,
Inc. (NASDAQ: PENT) (PEI) today confirmed that a derivative suit had been filed against it and certain of its current and former directors and officers, alleging, among other things, mishandling of the process by which the company had solicited offers for its sale and also seeking an injunction to force the company's board to continue the sale process and the appointment of an independent oversight committee.
Additional remedies sought are damages under the Racketeer Influenced and Corrupt Organizations Act and withdrawal of a recently announced common stock rights offering permitting shareholders to purchase the company's common stock at a price below then current market. The plaintiffs in this action are Lindner Management Corporation and related entities, the company's largest shareholder. The company has not yet been served. The company said it believes that the allegations in the complaint are without foundation and that the company and the other defendants will prevail. Commenting on the suit, Dean T. Casaday, president and chief executive officer of the company, said, "This is the fourth suit against the company by the same group of lawyers in less than two years. In the first suit, they said we shouldn't sell the company to NUI at $52.05 a share. They later withdrew that suit. "In the second suit, they changed their minds and did a 180,' saying we should sell the company to NUI at $40 a share. "Then they tried to prevent our recent sale of first mortgage bonds and called for an investigation of the company's financing plans. The Pennsylvania Public Utility Commission denied their petitions. "Now they are back again with many of the same factual distortions and misstatements used by them in their prior suits." Casaday noted, "A list of these distortions and misstatements would be as long as their complaint. These misstatements start at the very beginning of the plaintiffs' story' and go to the very heart of their claim of a sham auction.' In fact, as a result of our solicitation of bids for the sale of the company in 1989 and 1990, we signed sale agreements each time with the highest bidder. These deals failed not because of some illicit scheme' by the company (as the plaintiffs allege). The first sale agreement terminated because the buyer could not arrange financing for its bid after trying for two and a half months (not three weeks as the plaintiffs say). The second sale agreement terminated because one of the two buyers walked away, surprising both us and the other buyer who was quoted as saying the withdrawal was a staggering surprise,' and a shock.' "Even simple factual statements have been distorted by the plaintiffs. They say due to our mismanagement the cost of the company's water treatment projects rose from $41 million to $235 million. The plaintiffs are twisting the facts by comparing apples and oranges. The $41 million amount approximates the estimated cost in 1985 for two filtration plants. The $235 million amount approximates the inflation- adjusted cost six years later for eight plants and extensive main replacement and rehabilitation programs. "These distortions continue through to the plaintiffs' description of the most recent events. Their complaint makes much of an offer by NUI of a $25 million cash infusion.' As we found out in our negotiations with NUI, it was not $25 million' or cash.' NUI would determine the amount of the infusion' only after it conducted an additional study of the company's business. The cash' might not be cash either, but loan guarantees, which would not have helped the company. NUI's demand that this infusion' be paid back immediately if a proposed merger with NUI did not go through would have put additional, unwarranted financial pressure on the company." Casaday expressed his disappointment that the company would have to incur additional expenses refuting these distortions and misstatements again, but concluded by saying, "The company and the other defendants will prevail in this latest of a series of suits filed by the same group." The Pennsylvania Gas and Water Company, an operating public utility, is the principal subsidiary of PEI and serves approximately 129,000 gas customers and approximately the same number of water customers in northeastern Pennsylvania. -0- 11/8/91 /CONTACT: Tom Ward of Pennsylvania Enterprises, 717-829-8812/ (PENT NUI) CO: Pennsylvania Enterprises, Inc.; Lindner Management Corporation; NUI Corporation ST: Pennsylvania; New Jersey IN: UTI SU: CC-LJ -- PH019 -- 2613 11/08/91 13:16 EST
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|Date:||Nov 8, 1991|
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