PHILADELPHIA – A stockholder in MMA Capital Holdings, Inc. has brought suit against the company and its Board of Directors, claiming the defendants withheld key information about a proposed merger between itself and two other corporations.
Matthew Whitfield first filed suit in the U.S. District Court for the Eastern District of Pennsylvania on July 28 versus MMA Capital Holdings, Inc., a Delaware corporation, Chairman of the Board of Directors Michael Falcone and Board Members Frederick Puddester, James Preston Grant, Cecil E. Flamer, Chris Hunt, Lisa Kay and Suzanne G. Kucera.
“On May 24, 2021, MMA Capital Holdings, Inc. entered into an agreement and plan of merger to be acquired by FP Acquisition Parent, LLC and FP Acquisition Merger Sub, LLC. Under the terms of the Merger Agreement, MMA’s stockholders will receive $27.77 in cash per share,” the suit says.
“On July 13, 2021, defendants filed a proxy statement with the U.S. Securities and Exchange Commission. As alleged herein, the Proxy fails to disclose material information regarding the Proposed Merger, and defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934.”
The litigation alleges that the Proxy fails to disclose financial projections of the company’s stock, traded on the NASDAQ exchange under the ticker symbol “MMAC”, relevant financial analyses and the background of the proposed merger.
“The Proxy fails to disclose material information regarding the analyses performed by TD Securities (USA), LLC. When a banker’s endorsement of the fairness of a transaction is touted to shareholders, the valuation methods used to arrive at that opinion as well as the key inputs and range of ultimate values generated by those analyses must also be fairly disclosed. Regarding TD Securities’ Net Asset Value Analysis, the Proxy fails to disclose: (i) the financial projections used by TD Securities in the analysis; (ii) the inputs and assumptions underlying the discount rates; and (iii) the basis for applying the multiples range,” per the suit.
“Regarding TD Securities’ Precedent Transactions Multiples Analysis, the Proxy fails to disclose the individual multiples for the transactions. Regarding TD Securities’ Precedent Transaction Premiums Analysis, the Proxy fails to disclose the premiums paid in the transactions observed by TD Securities. The Proxy Statement fails to disclose the timing and details of the prior services TD Securities performed for MMA, and the fees received by TD Securities in connection therewith. The Proxy fails to disclose the terms of the non-disclosure agreements signed by MMA. The omitted information would significantly alter the total mix of information available to MMA’s stockholders.”
For counts of violating Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9, the plaintiff is seeking various reliefs:
• A permanent injunction preventing the defendants and all persons acting in concert with them from consummating the proposed merger;
• In the event defendants consummate the proposed merger, rescinding it and setting it aside or awarding rescissory damages;
• Directing the individual defendants to disseminate a proxy that does not contain any untrue statements of material fact and that states all material facts required in it or necessary to make the statements contained therein not misleading;
• Declaring that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act, as well as Rule 14a-9 promulgated thereunder;
• Awarding plaintiff the costs of this action, including reasonable allowance for attorneys’ and experts’ fees; and
• Granting such other and further relief as this Court may deem just and proper, in addition to a trial by jury on all issues so triable.
The plaintiff is represented by Joshua H. Grabar of Grabar Law Office, in Philadelphia.
The defendants have not yet obtained legal counsel.
U.S. District Court for the Eastern District of Pennsylvania case 2:21-cv-03365
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com