Navios Maritime Holdings is moving to throw a repeat shareholder lawsuit out of court, arguing the first lawsuit did not hold up in court and this one does not either.
The New York-listed bulker owner last week filed a motion to dismiss Norman Roberts' January lawsuit that alleged it had set up a "prisoner's dilemma" to force out he and other investors in two series of preferred shares.
"The 2018 offer provides shareholders with a real economic choice," Navios' attorneys wrote in asking the court to dismiss the suit with prejudice. "[Roberts'] tortured reading of Navios’ SEC filings fail to articulate any threat of retribution by defendants."
The motion to dismiss argues that Roberts' lawsuit — nearly identical to one filed in 2016 over a similar deal — says Navios breached their fiduciary duty to the preferred shareholders by offering them cash or bonds to tender their shares and, when tenders, constitutes a vote to strip the remaining preferred shares of their unpaid, accrued dividends.
But attorneys for Navios assert past precedent says financial instruments and the rights they carry are governed by contract law. And even if it were simply a matter of fiduciary duty, Roberts' complaint is "mere pejorative rhetoric that need not be credited by the court".
Attorneys also pointed to comments made by a judge in the 2016 lawsuit, who said the case would not have survived a motion to dismiss.
"The same result should inure here," last week's motion read.
Roberts' lawsuit, filed in Manhattan federal court, alleges tying together tendering and a "yes" vote was coercive and forced holders to give up their shares against their best interest or be left with nothing.
By forcing the preferred shareholders out, the complaint reads, Navios chief executive Angeliki Frangou would then be able to pay a dividend to common shareholders. That dividend would allegedly provide Frangou much-needed cash, as her bank accounts were frozen in connection with a Greek money laundering investigation.
Roberts' 2016 lawsuit did not include the money laundering allegations. It ended when Navios revised the offer twice, the second time removing the consent mechanism. Roberts moved to get attorneys fees, but was denied by the court.
Navios has followed a similar pattern with this tender offer. The company has revised the offer three times, significantly bumping up the cash and bond offer and stripping the "yes" vote from one of the two series of preferred shares.
As it stands, shareholders can now receive either $7.75 in cash or $8.78 in 9.75% notes due 2024 or $7.66 in cash or $8.69 in notes, depending on series.
