Highland Cries Foul At MHR Stock Deal

Oct 24 2006 | 12:08pm ET

It’s hedge fund versus hedge fund as Highland Capital Management seeks to derail what it calls preferential treatment accorded New York-based MHR Fund Management.

In a letter to a special committee of Loral Space & Communication’s board of directors, J. Kevin Ciavarra, general counsel at Dallas-based Highland, which owns more than 5% of Loral, calls the terms of a proposed $300 million sale of convertible perpetual preferred stock to MHR – Loral’s largest shareholder – “a magnet for private and governmental scrutiny and stockholder litigation.” Highland has, in turn, offered to purchase the shares on terms it calls more favorable.

“In this transaction, it appears that, as Loral’s largest stockholder, MHR is using its insider position to enrich itself to the detriment of Loral and other stockholders,” Ciavarra wrote. He went on to say the deal “reeks of self-dealing, self-interest and is contrary to established market principles of fairness. That [the special committee] have associate yourselves with this questionable transaction by approving it under a cloak of ignorance would make you equally culpable.”

According to Highland, the coupon, conversion price and perpetual nature of the stock sale are contrary to typical market terms. The firm also decries the awarding of an additional board seat to MHR, and accuses Loral of failing to offer the securities to other large shareholders.

Highland is offering to underwrite the $300 million deal with a lower coupon, higher conversion price or both, and said it would offer shares to all large Loral shareholders, except MHR.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

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.