In a definitive proxy statement filed today with the Securities and Exchange Commission, company officials announced that a class action lawsuit filed by a shareholder March 24 in the 3rd Judicial District in Shawnee County, Kansas, has been settled.
The terms of the settlement were not included in the statement and, of course, as part of the deal Empire admits to no wrongdoing.
On June 7, 2016, following arms length negotiations, Empire and other defendants entered into a Memorandum of Understanding (the MOU) providing for the settlement, subject to court approval, of all claims asserted in the Halberstam complaint against all defendants. In connection with the MOU, Empire has agreed to make additional disclosures related to the merger in this proxy statement. Empire and the other defendants that entered into the MOU did so solely to avoid the costs, risks and uncertainties inherent in litigation and without admitting any liability or wrongdoing, and vigorously denied , and continue to vigorously deny, that they committed any violation of law or engaged in any wrongful acts alleged in the Halberstam complaint.
The parties to the MOU have agreed to attempt in good faith to finalize and execute a stipulation of settlement and to present the stipulation of settlement to the Court for final approval. The stipulation of settlement will be subject to customary conditions, including approval by the Court. The stipulation of settlement will provide for, among other things, certification of the alleged class as a non-opt-out class action and an award of plaintiffs reasonable attorneys fees and expenses. The stipulation of settlement will also provide for the release of any and all claims arising out of or relating to the merger. The settlement is subject to final Court approval following notice to the class members. There can be no assurance that the settling parties will ultimately enter into a stipulation of settlement or that the Court will approve the settlement. In such event, or if the merger is not consummated for any reason, the proposed settlement will be null and void and of no force and effect.
The settlement was announced just eight days before Empire District Electric stockholders vote on the merger.
The plaintiff in the lawsuit was Adrienne Halberstam. Listed as defendants, in addition to Empire District Electric Company, Liberty Utilities, and Liberty's parent company, Canadian-based Algonquin Power & Utiilities Corp. are Empire CEO Bradley Beecher and members of Empire District Electric's board of directors.
The lawsuit said the board breached its fiduciary duties by agreeing to the merger,
In an SEC filing, Empire District Electric officials said the lawsuit had the potential of creating a roadblock for the merger:
The outcome of the lawsuit cannot be predicted with any certainty. A preliminary injunction could delay or jeopardize the completion of the merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin completion of the merger. All of the defendants believe that the claims asserted against them in the lawsuit are without merit.