Judge Sides with Shareholders in Apple Dispute

US-IT-INTERNET-TELECOM-APPLE-FILESHedge fund Greenlight Capitol and its operator David Einhorn heard some good news on February 22nd.  They have a huge interest in the future of Apple because they currently own a great deal of Apple stock valued at $585 million.  A federal judge blocked Apple from holding a vote during a February 27th shareholder meeting to issue a new type of preferred stock, titled “blank check” stock.

“Blank check” stock is a tactic that allows companies to ward off takeover attempts by majority shareholders.  It creates a cache of un-issued shares that the company holds.  This came about, in part, to defend against Einhorn’s request to issue tens of billions of dollars in 4% “perpetual preferred” stock which he termed iPref.  This stock would eliminate some of Apple’s hoard of $137 billion in cash and dispense those funds to shareholders of the company.

Apple tried to bundle several shareholder proposals into one to create a difficult vote at the meeting.  The first issue was regarding the “blank check” stock and another was to institute staggered voting for directors.  US District Judge Richard Sullivan said that this would present shareholders with an intolerable choice.

While the lawsuit is still pending, many think that Sullivan sided with Einhorn and other shareholders.  The bundle of proposals up for vote was a violation of the Securities and Exchange Commission’s regulations.

Shareholder and owner disputes are common experiences while owning a business.  Letting a problem become fatal to your business is not advisable.  Contact an experienced business lawyer in Oak Brook who can negotiate or litigate to your preferred settlement.