Harbinger Sued Over Spectrum Brands Deal

Dec 22 2010 | 11:48am ET

Harbinger Capital Management’s new permanent capital vehicle has found itself the target of litigious, unhappy investors.

Alan Kahn, an investor in Harbinger Group, has sued the acquisitions company over Harbinger’s plan to transfer its stake in Spectrum Brands Holdings. Under that plan, Harbinger hedge funds will see their stake in Harbinger Group grow to 93%, with Harbinger Group taking on the Spectrum stake in exchange. But that means Harbinger Group is “vastly overpaying” for the stake, Kahn alleges.

The deal means that Harbinger will have “suffered no loss of control over Spectrum,” the Delaware lawsuit says. “Thus HCP has diluted the minority shares; acquired a virtually 100% interest in HGI; and at the same time managed to maintain control over the very consideration that it has ‘paid’ as consideration of the deal. Such blatant self-dealing is unconscionable.”

The complaint also names Harbinger founder Philip Falcone.

Kahn wants a judge to overturn the deal, which allows Falcone to be “the overwhelming majority owner of a publicly-traded company where he answers to no one,” the lawsuit alleges. “Indeed, he will no longer need to appease dissatisfied investors that have fled his fund in the wake of his personal cash crunch.”

Falcone has found himself under fire for a $113 million loan he took from his hedge funds to pay a tax bill. Falcone has also taken at least two personal loans from banks in recent months, including a $22.5 million mortgage on his Manhattan mansion.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

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

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

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.