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Conclusions from Investigation of Reported Settlement
Response of Lead Counsel
Fair opportunity to consider a settlement that may not exist
Business view of Lead Counsel’s
bill for $1.45 per share
The only thing that has been learned about the Dell settlement with
the ineligible T Rowe Price petitioners since Tuesday’s Forum report[1]
about what we “need to know” is that we are not likely to get any
information without court orders to require disclosure. We therefore
need to consider whether those efforts would be justified.
Response of Lead Counsel
Responding to my Monday letter,[2] Stuart
Grant of Grant & Eisenhofer (“G&E”) told me by telephone yesterday
morning that he would not provide the requested copy of the written
agreement for the settlement he had negotiated with Dell on behalf of
his T Rowe Price clients, stating that the agreement was confidential.
In response to my view that we should be able to review what the Court
approved, he stated that the Court had not been given a copy, and had
relied upon only the verbal explanations he and Dell’s counsel had
provided during the June 27 teleconference.[3]
Mr. Grant also stated that he considers my Forum reports of these
issues to be “misleading and destructive.” I therefore invited him to
send me a statement of any views he wants to offer, and assured him
that they would be presented without editing.[4]
Nothing has been received, but anything Mr. Grant wishes to submit in
the future will of course be presented and posted publicly on the
Forum website.
Fair opportunity to consider a settlement that may not exist
The surprising report that no written agreement was provided to the
court raises obvious questions on many levels about what, if anything,
was actually settled.
As a practical business matter, though, eligible claimants may not
need to concern themselves with the details of the supposed
settlement. We can assume that Dell did in fact pay $28 million to T
Rowe Price, since both of them report that amount in SEC filings.[5]
If the purpose of that payment really was to eliminate risks of
eligibility appeals that most professionals considered virtually
worthless, we can assume that Dell will take the initiative itself to
offer significantly more than that $.88 per share to persuade all the
eligible claimants that they should give up their much more valuable
rights to appeal.
If Dell does not make such an offer to eligible claimants during the
next week or two, it should simply be left to the court to determine
why it was asked to approve a payment that appears to be for purposes
other than the stated termination of rights to appeal. This inquiry
could of course be important to the public interests that concern the
court, but it is unlikely to result in any direct financial benefit to
eligible claimants.
Business view of Lead Counsel’s bill for $1.45 per share
Our attention to the reported settlement between Dell and T Rowe Price
supports the view that G&E has served its T Rowe Price clients well,
but has served the other appraisal claimants only to the extent that
their interests coincided with those of T Rowe Price.
While the lawyers in the case may develop complicated arguments about
the $1.45 per share that G&E wants to charge the non-client eligible
claimants as their appointed Lead Counsel, the business analysis is
very simple:
§
G&E has chosen to provide services and opportunities to its clients
that have not been provided to the non-client claimants the firm was
obligated to serve as Lead Counsel.
§
As reported in many pages of court filings, G&E had repeatedly refused
to satisfy the obligations of Lead Counsel established by the Court’s
Consolidation Order, and will not provide any support of its charges.[6]
We can assume that G&E will in any event be well paid by its T Rowe
Price clients, even if only for their negotiation of the miraculous
$28 million settlement. Beyond that, as astute lawyers G&E can be
expected to have rights under their engagement contract to require
full payment of the fees they should have earned in reliance upon the
affidavits T Rowe Price had signed for their petitioners verifying
that they had “not voted in favor” of the transaction. And if G&E had
been aware that they could not rely upon those stated voting positions
that were presented to court, we would not need to be sympathetic to their
loss of fees.
Based on this business analysis, there should no longer be any need
for us to learn more about G&E’s charges or about what T Rowe Price is
paying them, or to be distracted by any other information demands that
will delay the final resolution of the case and a distribution of
payments to eligible claimants. If the Magnetar or Global petitioners
that are already engaged in motions relating to the fee application
adopt this business analysis to argue that the court should not impose
any G&E charges on the eligible claimants, I will recommend the Cavan
petitioner’s support of their position.
GL – July 14, 2016
Gary Lutin
Chairman, The Shareholder Forum
575 Madison Avenue, New York, New York 10022
Tel: 212-605-0335
Email:
gl@shareholderforum.com
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