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Crown Media minority stockholder objects to recapitalization deal
By Caroline Salls
Pittsburgh, March 1 - Crown Media Holdings, Inc. said a minority stockholder has objected to its proposed recapitalization agreement with Hallmark Cards, Inc. and its affiliates, arguing that the transactions would unfairly dilute the economic and voting interests of Crown Media's minority stockholders, according to an 8-K filed Monday with the Securities and Exchange Commission.
The company said the objecting stockholder filed a lawsuit in July 2009 in the Delaware Court of Chancery against Crown Media's board of directors and Hallmark in connection with the recapitalization proposal received in May 2009.
The parties to the lawsuit subsequently entered into a stipulation under which Crown Media agreed not to complete the recapitalization until not less than seven weeks after providing the plaintiff with a notice of terms of the proposed transaction, including copies of the final transaction agreements.
Crown Media and Hallmark entered into definitive agreements for a recapitalization on Friday, and the terms follow the provisions of the earlier term sheet.
In the objection, Crown Media said that the minority shareholder said the transactions should be subject to a vote of the majority of the minority stockholders.
The plaintiff also indicated that it would follow through with the lawsuit if the company executed definitive documents for the recapitalization.
According to the 8-K, a special committee of Crown Media's board believes the recapitalization is fair to stockholders.
Based in Studio City, Calif., Crown Media owns and operates pay television channels, including the Hallmark Channel and Hallmark Movie Channel.
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