Saturday, 20 December 2014
Last updated 16 hours ago
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.
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
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.