Sunday, 26 April 2015
Last updated 2 days ago
Jan 15 2009 | 2:08am ET
It did not take long for Steel Partners’ controversial plan to transform its flagship hedge fund into a publicly-listed vehicle to attract virulent opposition, in the form of a lawsuit.
Bank of America and ACF Industries, which is affiliated with Steel’s fellow activist hedge fund manager Carl Icahn, filed suit Tuesday in Delaware Chancery Court, accusing New York-based Steel of “a classic ‘bait and switch,’” Reuters reports. The complaint alleges that Steel neither gave sufficient notice of its plan to reverse merge its $1.2 billion Steel Partners II fund with an industrial loan company that it already owned most of, nor gave investors an opportunity to vote on the proposal.
According to the lawsuit, Steel head Warren Lichtenstein told Icahn on Christmas Eve of “his plans for the fund and how to satisfy the redemption requests,” which at 38% of fund assets led Steel to bar withdrawals last month. He also promised the famed corporate raider that he would notify investors and hold meetings with them before taking action, and that the plan would not be put into effect until next month at the earliest.
Steel completed the reverse merger by Dec. 31, the complaint alleges, “without the knowledge and consent of investors.” According to reports, Steel plans for WebFinancial Corp., the Utah-based company that it merged with Steel Partners II, to go public in the second quarter, after which it will implement a $200 million share buyback, the equivalent of allowing investors to redeem 17% of the fund’s assets.
Steel “pulled off a classic ‘bait and switch’ by stripping investors of what they had purchased and replacing it with something entirely different,” the lawsuit charges.
ACF manufactures railcars and railcar components. It invested $15 million with Steel in 2005.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…