THIS JUST IN:
Lawsuits filed against Cedar Fair
By MELISSA TOPEY and TOM JACKSON Wednesday, December 23, 2009 1:12 AM EST
New legal action could delay the sale of Cedar Fair to Apollo Global Management.
Four lawsuits filed in Erie County Common Pleas Court on behalf of five Cedar Fair unitholders claim the deal is unfair.
The civil suits represent Sandusky residents Mary Denslow and John R. Sprau, Indiana resident Todd Miller, Connecticut resident Kenneth Loiselle and Milford resident Joseph J. Braun.
They allege the offer price of $11.50 per limited partnership unit undervalues the company's worth, depriving its unitholders of the profits they seek.
The Dec. 16 deal, valued at $2.4 billion, includes $1.6 billion in debt. At least two-thirds of Cedar Fair's unitholders would have to approve the deal before Apollo could take the helm of the amusement park company. Meanwhile, the company has 33 days to accept another offer.
Stacy Frole, director of investor relations for Cedar Fair, had no immediate response to the lawsuits.
Given the size of the transaction, she said, "it's not surprising there would be people looking at litigation."
As for whether the offer is generous enough, Frole said the $11.50 per unit is a 28 percent premium over the Dec. 15 closing price.
Cedar Fair's managers and board of directors considered a wide range of options and decided the deal was in the best interest of unitholders, Frole added.
The lawsuits argue Cedar Fair and its executive board breached their financial responsibility in this deal.
D. Thomas Rengel, attorney for Denslow and Sprau, said part of this breach includes the fact that Cedar Fair may be required to pay Apollo up to $19.5 million if the sale sours.
Those who disagree with the Apollo deal are not convinced it's in their best interest.
"The whole objective is to make sure the shareholders get a fair shake," said William Flynn, one of several attorneys for Loiselle and Braun.
The lawsuits seek to stop Cedar Fair from moving forward until legal issues are addressed.
To do that, a judge would have to determine if the unitholders have a solid case against Cedar Fair. The judge must also determine what's in the public's best interest and which action would cause the least harm.
The lawsuits will likely be assigned to Judge Tygh Tone.
Tone said he will check to make sure he does not have a conflict of interest. Judge Roger Binette said he's not aware of any reason he could not accept the cases if Tone steps down.
While he would not discuss the particulars of this lawsuit, Tone said he generally addresses a request for injunctive relief -- in this case, stopping negotiations -- as soon as possible.
Denslow and Sprau requested the cases be consolidated into a class action lawsuit that others may join.