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The Orchard Enterprises, Inc. Securities Litigation
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The Orchard Enterprises, Inc. (NasdaqGM: ORCD) shareholder litigation in
connection with alleged unfair takeover offer
On March 16, 2010, The Orchard Enterprises, Inc. (“Orchard” or the “Company”)
announced that it agreed to sell the Company to Dimensional Associates, LLC, a
private equity affiliate of JDS Capital, L.P. ("Dimensional"). Dimensional currently
owns approximately 42% of the Company’s outstanding common stock and 99%
of the Company’s outstanding Series A Preferred Stock, representing an
aggregate of approximately 53% of the Company’s voting securities. Under the
terms of the proposed transaction, Orchard shareholders will receive $2.05 in
cash for each share of Orchard they own. Orchard shareholders will also receive a
contingent right to receive additional consideration, under certain circumstances,
if Dimensional Associates or any of its affiliates enters into a commitment to sell
at least 80% of Orchard’s voting securities or assets within six months of the
consummation of the merger.
The investigation concerns whether the Orchard Board of Directors breached their
fiduciary duties to Orchard stockholders by failing to adequately shop the
Company before entering into this transaction and whether Dimensional is
underpaying for Orchard shares, thus unlawfully harming Orchard stockholders.
In particular, Orchard shares traded at $2.10 per share as recently as August 12,
2009, traded at a 52-week high of $3.49 and the Company has a book value of
$2.05 per share.
connection with alleged unfair takeover offer
On March 16, 2010, The Orchard Enterprises, Inc. (“Orchard” or the “Company”)
announced that it agreed to sell the Company to Dimensional Associates, LLC, a
private equity affiliate of JDS Capital, L.P. ("Dimensional"). Dimensional currently
owns approximately 42% of the Company’s outstanding common stock and 99%
of the Company’s outstanding Series A Preferred Stock, representing an
aggregate of approximately 53% of the Company’s voting securities. Under the
terms of the proposed transaction, Orchard shareholders will receive $2.05 in
cash for each share of Orchard they own. Orchard shareholders will also receive a
contingent right to receive additional consideration, under certain circumstances,
if Dimensional Associates or any of its affiliates enters into a commitment to sell
at least 80% of Orchard’s voting securities or assets within six months of the
consummation of the merger.
The investigation concerns whether the Orchard Board of Directors breached their
fiduciary duties to Orchard stockholders by failing to adequately shop the
Company before entering into this transaction and whether Dimensional is
underpaying for Orchard shares, thus unlawfully harming Orchard stockholders.
In particular, Orchard shares traded at $2.10 per share as recently as August 12,
2009, traded at a 52-week high of $3.49 and the Company has a book value of
$2.05 per share.
