CASES
Remy International, Inc.
Summary of Case:
A securities class action has been filed against Remy International, Inc. (RMYI) ("Remy" or the "Company") on behalf of all existing Remy International common stockholders. The case has been filed in the Delaware Chancery Court.
The claims arise out of breaches of fiduciary duty in connection with Remy's Preferred Stock Exchange Offering whereby outstanding Series A and Series B Preferred Stock (collectively the "Preferred Stock") are to be exchanged for newly-issued shares of common stock (the "Exchange Offer"). Pursuant to the terms of the Exchange Offer, each share of Preferred Stock will be exchanged for common stock in an amount equal to the liquidation preference of $1,000 per share, plus all accrued and unpaid dividends, up to the settlement date (the "Liquidation Preference"). For purposes of the Exchange Offer, Remy has valued its common stock at $9.00 per share, $5.00 less than the price at which Remy's stock traded at prior to the announcement of the Exchange Offer, but has disclosed no information regarding how that value was determined.
Remy will issue approximately 18,016,824 new shares of common stock in the Exchange Offer, nearly twice the amount of shares currently outstanding, and approximately 84% of those shares will be issued to Fidelity National Special Opportunities, Inc. ("Fidelity") and Ore Hill Hub Fund Ltd. ("Ore Hill"). Fidelity and Ore Hill collectively control more than 54% of Remy's common stock, 95% of the Series A Preferred, and 79% of Series B Preferred. Fidelity and Ore Hill have entered into agreements with Remy to exchange their Preferred Stock in the Offer, and pursuant to those agreements, Remy is required to, among other things, indemnify Fidelity and Ore Hill in connection with the Exchange Offer.
The complaint alleges that the Exchange Offer is blatantly unfair, grossly undervalues Remy's common stock, and is wrongfully dilutive to Remy's minority stockholders. The complaint alleges that Remy's Board of Directors, a majority of which are conflicted or lack independence, has thus breached its fiduciary duties to Remy's minority stockholders in pursuing the Exchange Offer, and has failed to disclose material information concerning the Exchange Offer in seeking the common stockholders' approval.
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