Archive > The AMAZING RACE 31
CBS 2018 LEGAL Conflict and what that could mean for TAR 31 and Beyond
theschnauzers:
Today's developments left nothing resolved but began to set the stage for a return to the courts
* The judge in yesterday's hearing denied the request for a temporary order to restrain NAI from acting.
* The CBS board did meet and voted 11-3 to approve the special dividend. CBS management says that's sufficient for approval; NAI says that its shareholder consents yesterday make the threshhold 90% of the directors and thus was not approved.
*Consequently, the annual shareholder meeting set for tomorrow was postponed to a time and date TBA.
Both parties are now quite likely to take these disputes back into court as early as tomorrow (Friday).
georgiapeach:
90% would be 13. Wow....
theschnauzers:
Here's the latest from Deadline.com on the Redstone-CBS dispute:
I will break up the quote of the article to insert comments.
http://deadline.com/2018/05/cbs-challenge-last-minute-bylaw-change-vote-shari-redstone-viacom-national-amusements-1202396129/
--- Quote ---
CBS is preparing to challenge a change in the company’s bylaws that would nullify last week’s board vote to diminish the power of its controlling shareholder, Shari Redstone’s National Amusements.
A filing today with the Securities and Exchange Commission signals the company’s plan to challenge the validity of the bylaw change. It’ll argue that SEC regulations mandate giving stockholders 20 days notice before such a corporate action could be taken.
National Amusements disagrees, arguing that the bylaw change takes immediate effect.
--- End quote ---
This highlights a distinction between what Delaware corporation law permits for a business corporation and what the SEC can require corporations with publicly-owned shares to do under the federal securities laws.
--- Quote ---The timing is critical. National Amusements, which controls a nearly 80% of CBS’s voting stock, changed the network’s corporate bylaws last Wednesday to require a supermajority of directors to support a dividend payment. This modification came ahead of the board’s 11-3 vote Thursday to grant 0.57 share of Class A voting stock to every shareholder, including those who currently hold non-voting shares.
--- End quote ---
CBS Corporation has two classes of shares. One has voting rights as shareholders, of which the Redstone/NAI group clearly owns a majority, and a non-shareholder voting class, which are the shares that are mostly traded through the stock exchanges that anyone can buy.
--- Quote ---The board’s action, if upheld by the courts, would lessen Redstone’s control over the company by reducing her voting interest from 80% to 20%. A judge in Delaware ultimately will decide the matter. Expect CBS to file an amended complaint this week.
--- End quote ---
The ramifications of the dispute is now two-fold. The interests of all shareholders are now involved with the plan to give voting shares to all nonvoting shares, and the duty of the directors and officers to take such actions only when it is in the best interests of all shareholders. The CBS management and special directors committee clearly don't see a merger with Viacom has being in CBS' best interests.
--- Quote ---The long-simmering tensions between CBS and Redstone reached a boiling point early last week, when CBS initially sought a temporary restraining order. The aim was to prevent Redstone and National Amusements from taking any actions that would interfere with its efforts to operate as an independent company. Thus far this week, the waters have calmed somewhat, at least on the surface. Shares in CBS and Viacom have both dipped a fraction on lighter-than-average trading volume.
The independent directors of CBS have raised concerns that Redstone would take actions — including even ousting CEO Leslie Moonves, or replacing board members — to a force a merger with corporate sibling Viacom.
National Amusements has repeatedly said that it would not compel any combination that lacked the support of both companies, though it clearly would not stand for any moves by CBS to diminish its control over the network.
There's also the possibility of trying to bring the director voting threshold to the SEC for review, But that would be more time consuming.
--- End quote ---
theschnauzers:
--- Quote from: theschnauzers on May 22, 2018, 05:08:16 PM ---Here's the latest from Deadline.com on the Redstone-CBS dispute:
I will break up the quote of the article to insert comments.
http://deadline.com/2018/05/cbs-challenge-last-minute-bylaw-change-vote-shari-redstone-viacom-national-amusements-1202396129/
--- Quote ---
CBS is preparing to challenge a change in the company’s bylaws that would nullify last week’s board vote to diminish the power of its controlling shareholder, Shari Redstone’s National Amusements.
A filing today with the Securities and Exchange Commission signals the company’s plan to challenge the validity of the bylaw change. It’ll argue that SEC regulations mandate giving stockholders 20 days notice before such a corporate action could be taken.
National Amusements disagrees, arguing that the bylaw change takes immediate effect.
--- End quote ---
This highlights a distinction between what Delaware corporation law permits for a business corporation and what the SEC can require corporations with publicly-owned shares to do under the federal securities laws.
--- Quote ---The timing is critical. National Amusements, which controls a nearly 80% of CBS’s voting stock, changed the network’s corporate bylaws last Wednesday to require a supermajority of directors to support a dividend payment. This modification came ahead of the board’s 11-3 vote Thursday to grant 0.57 share of Class A voting stock to every shareholder, including those who currently hold non-voting shares.
--- End quote ---
CBS Corporation has two classes of shares. One has voting rights as shareholders, of which the Redstone/NAI group clearly owns a majority, and a non-shareholder voting class, which are the shares that are mostly traded through the stock exchanges that anyone can buy.
--- Quote ---The board’s action, if upheld by the courts, would lessen Redstone’s control over the company by reducing her voting interest from 80% to 20%. A judge in Delaware ultimately will decide the matter. Expect CBS to file an amended complaint this week.
--- End quote ---
The ramifications of the dispute is now two-fold. The interests of all shareholders are now involved with the plan to give voting shares to all nonvoting shares, and the duty of the directors and officers to take such actions only when it is in the best interests of all shareholders. The CBS management and special directors committee clearly don't see a merger with Viacom has being in CBS' best interests.
--- Quote ---The long-simmering tensions between CBS and Redstone reached a boiling point early last week, when CBS initially sought a temporary restraining order. The aim was to prevent Redstone and National Amusements from taking any actions that would interfere with its efforts to operate as an independent company. Thus far this week, the waters have calmed somewhat, at least on the surface. Shares in CBS and Viacom have both dipped a fraction on lighter-than-average trading volume.
The independent directors of CBS have raised concerns that Redstone would take actions — including even ousting CEO Leslie Moonves, or replacing board members — to a force a merger with corporate sibling Viacom.
National Amusements has repeatedly said that it would not compel any combination that lacked the support of both companies, though it clearly would not stand for any moves by CBS to diminish its control over the network.
--- End quote ---
There's also the possibility of trying to bring the director voting threshold to the SEC for review, But that would be more time consuming.
--- End quote ---
theschnauzers:
Not exactly sure how that last post ended up being a full quote of the previous post, but here's the latest on the first business day after the Memorial Day weekend.
National Amusements (the Redstones) has filed a complaint in the US District Court of Delaware against the CBS directors and officers on these same issues, in response to the amended complaint CBS filed in the Delaware (state) Chancery Court late last week.
Not exactly sure how that helps National Amusements, as (1) it will make it easier for CBS to raise the SEC rules on bylaw amendments in publicly held corporations and (2) CBS should be able to successfully move the federal court to hold the federal suit in abeyance as the state proceeding covers the same issues and was already pending.
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