Rural/Metro Wins Tentative Approval of $11.6 Million PactPhil Milford
Rural/Metro Corp., the bankrupt ambulance service, won a judge’s tentative approval for a lawsuit settlement that will distribute as much as $11.6 million to stockholders of record before a $438 million buyout in 2011.
Investors sued Rural/Metro, based in Scottsdale, Arizona, in April 2011 contending the $17.25-a-share offer by Warburg Pincus LLC was “grossly inadequate.”
The settlement “delivered real value,” Delaware Chancery Court Judge J. Travis Laster said at a hearing in Wilmington today. “Getting that cash was not easy.”
Laster also awarded plaintiffs’ lawyers more than $4 million in fees and expenses. The agreement is subject to review by the U.S. Bankruptcy Court.
The settlement is being funded with $5 million from financial adviser Moelis & Co. and the rest from Rural/Metro. The fairness of Moelis’s financial analysis had been questioned, according to court papers. As part of the settlement, defendants deny all allegations of wrongdoing and deny they acted improperly.
The buyout was completed on June 30, 2011. The company filed for Chapter 11 bankruptcy protection in Wilmington on Aug. 4, in a reorganization aimed at eliminating more than $300 million in debt. Rural/Metro cited “reduced revenue and delayed cash collections” as a reason for its distress.
Shareholders received a 37.5 percent premium in the deal, said Andrea Hurst a Moelis spokeswoman.
“Moelis acted appropriately in all respects,” and “decided to resolve this matter to avoid the continued burden, expense and distraction of litigation,” she said in a phone interview.
Ed Trissel, a Warburg Pincus spokesman, didn’t immediately respond to a request for comment on the settlement. Both companies are based in New York.
The case is In re Rural/Metro Corp. Shareholders Litigation, CA6350, Delaware Chancery Court (Wilmington). The bankruptcy is In re Rural/Metro, 13-bk-11952, U.S. Bankruptcy Court, District of Delaware (Wilmington).