Rumson appeals court approval of Nash Finch conversion rate adjustment

By Susanna Moon

Chicago, July 25 - Nash Finch Co. said hedge fund Rumson Capital, LLC filed an appeal with the Hennepin County District Court on the June 2 ruling that held that Nash Finch properly adjusted the conversion rate on its senior subordinated convertible notes due 2035 after the company increased dividends to shareholders.

The hedge fund directed the trustee to execute a supplemental indenture that clarified the provision of the indenture allowing for a conversion rate adjustment, according to a press release.

Rumson Capital also is appealing the trial court's earlier issuance of a temporary restraining order. Nash Finch said it believes the appeal has no merit and intends to oppose it.

In September 2007, Nash Finch received a notice of default from some holders of the convertibles alleging that the company was in breach of the section of the indenture governing the adjustment of the conversion rate in the event of a dividend increase.

In response, Nash Finch requested and received a temporary restraining order preventing the holders from declaring a default and accelerating the convertibles. The company then asked the court to determine that it properly adjusted the conversion rate.

At the time, the company said it believed it made all required adjustments to the conversion rate and, accordingly, that no default had occurred.

According to a Monday news release from the company, the court found that Nash Finch's interpretation of the conversion rate adjustment provision is "consistent with the offering memorandum and the reasonable expectation of the sophisticated investor."

The court also ordered the note trustee to execute a supplemental indenture requested by Nash Finch that cures any ambiguity in the matter.

Nash Finch is a Minneapolis-based food distribution company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.