Plains directors failed in their duty to get the best price for the company’s stock, according to shareholders who sued in Delaware Chancery Court. Today, the investors are asking the judge to issue a preliminary injunction to halt the deal.
“Plains shareholders cannot make an informed decision regarding whether or not the Plains acquisition is in their best interests because defendants have failed to disclose such basic financial metrics as their unlevered cash flows,” lawyer Peter B. Andrews said in a March 29 brief.
Judge John Noble, presiding over the hearing, may not immediately render a decision on the dispute.
“This case is about a premium transaction” which “stockholders are fully empowered to reject,” a lawyer for the company’s directors, Lisa Schmidt, wrote in an April 19 brief. “No bidder has come forward to offer the stockholders anything better” and a vote on the deal should be allowed.
Opponents said the deal “is riddled with disabling conflicts of interest.” Plains Chief Executive Officer and Chairman James C. Flores stands to collect more than $140 million in shares and tax payments once the company changes hands, according to the investor complaint.
A hearing on a related case, in which shareholders sued McMoRan Exploration Co. (MMR), was postponed.
Freeport, based in Phoenix, said in a statement Dec. 5 that it would buy Houston-based Plains for $25 in cash and 0.6531 Freeport share for each Plains share; and would buy New Orleans- based McMoRan for $14.75 a share and 1.15 units of a royalty trust.
The cases are Rice v. Plains, CA8090, and Krieger v. McMoRan, CA8091, Delaware Chancery Court (Wilmington).
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