New Investor Suit Seeks to Halt SunCoke Merger Vote
SunCoke would purchase all publicly traded units of SunCoke Energy Partners that it did not already own, in exchange for SunCoke stock.
June 07, 2019 at 04:56 PM
3 minute read
Another investor in SunCoke Energy Partners has sued to stop a planned investor vote later this month on a proposed merger with its general partner and majority owner, unless company officials turn over information the board allegedly withheld.
The complaint, filed Friday in Delaware federal court, claimed investors were missing important financial information necessary to decide whether to approve the deal, in which SunCoke would purchase all publicly traded units of SunCoke Energy Partners that it did not already own, in exchange for SunCoke stock.
SunCoke announced the merger in early February, saying the deal would streamline the company's governance structure and create a larger public firm for processing and handling raw materials.
But the complaint alleged that the company's proxy materials contained incomplete and missing information, including data related to financial projections for both firms used in connection with separate valuation analyses and respective fairness opinions.
Without it, plaintiff Simon Zolotarev argued, investors would be unable to make an informed decision on whether to approve the deal during a planned June 27 special unitholder meeting, and he asked that the vote be postponed until the information was produced.
“The material omissions and misrepresentations of the projected financial performance of SXCP and SXC bears directly on the valuation of the outstanding common units and the fairness of the Merger Consideration,” the complaint said, referencing the respective ticker symbols for SunCoke Energy Partners and SunCoke.
The securities suit was at least the fourth in the U.S. District Court for the District of Delaware to target the merger over allegedly deficient disclosures.
SunCoke announced the deal in a Feb. 5 press release, saying that it had been negotiated, reviewed and approved by the conflicts committee of the board of SunCoke Energy Partners' general partner. The merger, SunCoke said, would add immediate value to shareholders and reduce complexity for investors.
“With a simplified corporate structure, increased liquidity and improved financial flexibility, we will be better positioned to execute on our strategic growth opportunities and generate immediate and long-term value for SXC and SXCP stakeholders alike,” SunCoke president and CEO Mike Rippey said in a statement.
According to the complaint, the deal provided a merger consideration of just $13 for each SunCoke Energy Partner unit. However, that figure fell well below the $21 to $30 that Zolotarev said analysts had valued the units at in early 2018. Moreover, he claimed, the conflicts committee had previously rejected a similar squeeze-out deal with a value of $17.60 per unit.
“Thus, the merger consideration is not fair to SXCP unit holders,” he said.
Zolotarev is represented by attorneys from Faruqi & Faruqi in New York and Wilmington. An online docket-tracking service did not list counsel for SunCoke on Friday.
The case is captioned Zolotarev v. SunCoke Energy Partners.
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