Hedge Fund Wins Court-Ordered Annual Meeting

Jul 19 2010 | 12:59pm ET

Activist hedge fund Strategic Turnaround Equity Partners had its day in court. Now, it will have its day at the polls in the battle over the future of United American Healthcare Corp.

A Michigan state court judge on Friday granted the New York-based hedge fund’s request to order an annual shareholders meeting for UAHC, which last held one in November 2008. UAHC shareholders will now chose between Turnaround’s slate of three dissident director candidates, which have the backing of proxy advisory services ISS and Riskmetrics, and UAHC’s slate.

The Detroit court ordered that the meeting take place on Sept. 30, the date set by UAHC on Thursday, one day before the hearing. It is the fourth time UAHC has scheduled a date for the annual meeting.

Gary Herman, Strategic’s portfolio manager and one of its board candidates, said he was “pleased” that the court granted injunctive relief. But he took issue with UAHC’s decision to set the record date for the meeting as Sept. 1.

“We strongly believe that the board chose this record date in an attempt to include the new shares that were issued without a shareholder vote to John M. Fife and his affiliates,” Herman said, referring to UAHC’s largest shareholder. “This is a blatant attempt to ‘rig’ the vote in their favor so that they can continue to remain entrenched. It is our opinion that the board and management permitted the company to be delisted from NASDAQ without appeal so as to be able to issue these shares to John M. Fife without a shareholder vote.”

UAHC recently agreed to acquire Pulse Systems, which is majority-owned by Fife. Fife owns 23% of UAHC, and prior to the Pulse acquisition entered into a voting and standstill agreement with the company, allowing it to vote his shares. In exchange, UAHC granted Fife a put option that guarantees a healthy profit for him, as well as granting him the right to buy even more shares under the put agreement.

Strategic, which owns 9.98% Of UAHC, already has one representative on the company’s seven-member board, winning that concession after UAHC lost its primary contract, accounting for some 95% of its business, more than two years ago.

Herman told FINalternatives last week, prior to the court hearing, that he believes that Strategic’s slate was well ahead in the voting before UAHC cancelled the meeting for a third time.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.