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KNOXVILLE, Tenn., Dec. 9 /PRNewswire-FirstCall/ -- Goodys Family
Clothing, Inc. (Nasdaq: GDYS) announced that the Chancery Court for Knox
County, Tennessee, today entered a temporary injunction requiring that
$1,000,000 be withheld from the tender offer proceeds (approximately $0.03 per
share) in connection with the announced Agreement and Plan of Merger between
Goodys Family Clothing, Inc. and affiliates of GMM Capital LLC, and Prentice
Capital Management, LP (the "Merger Agreement"). The Merger Agreement provides
for a price of $9.60 per share. The $1,000,000 amount is to be withheld
pending determination of what amount of fees, if any, Plaintiffs counsel are
entitled to receive. Prentice/GMM have advised Goodys that they are likely to
exercise their right to extend the expiration of the tender offer for 10
business days. Any extension of the tender offer will be made pursuant to an
announcement and filing with the Securities and Exchange Commission by
Prentice/GMM and this release does not constitute such an extension.
The temporary injunction was entered in connection with Plaintiffs fourth
class action lawsuit, which was filed on November 10, 2005 (the "Fee
Complaint") in the consolidated action naming the Company, its directors,
certain of its officers, GMM Capital LLC, Prentice Capital Management, LP, and
Acquisition Corp. as defendants.
The Fee Complaint alleges that the increase in tender offer price of $8.00
per share in the merger agreement previously entered into with affiliates of
Sun Capital Partners, IV to the $9.60 per share in the Merger Agreement with
affiliates of Prentice/GMM was caused by the Plaintiffs lawsuits and related
actions, and that counsel for the putative class are entitled to an award of
attorneys fees as a percentage of the total increase in value of the
transaction. The Fee Complaint seeks, among other things, a declaration that
the matter is properly maintainable as a class action, and an injunction
prohibiting consummation of the merger until "an appropriate amount of the
merger proceeds" is set aside for a future award of attorneys fees.
Plaintiffs counsel also sought by motion a temporary restraining order to
enjoin the distribution of $10,595,200 of the proceeds of the tender offer so
that funds remain available to be used to pay an award of attorneys fees.
At the proceeding today, the Chancery Court granted Plaintiffs a temporary
injunction requiring that $1,000,000 be withheld of the tender offer proceeds
and indicated that a further hearing would be scheduled to determine whether
Plaintiffs counsel are entitled to receive any of such withheld amount. In
determining said amount, the Court rejected Plaintiffs contention that fees
should be awarded as a percentage of tender offer proceeds and stated that any
award would be on the basis of quantum meruit, or "as much as deserved,"
rather than as a percentage of the tender offer proceeds. In the event that an
amount less than $1,000,000 is awarded to Plaintiffs counsel, an additional
distribution to shareholders could be made following further proceedings. The
Court reserved decision on whether the shareholder defendants (certain
officers and directors of the Company, including Robert M. Goodfriend) will be
excluded from contribution to any fee award as a matter of law because they
have been separately represented in the action.
Goodys, headquartered in Knoxville, Tennessee, is a retailer of
moderately priced family apparel, and with the temporary closure of one store
due to hurricane damage, currently operates 381 stores in the 21 states of
Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, Ohio,
Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia.
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