WILMINGTON, DE An Order of Consolidation was signed on October 11, 2000 by Delaware Chancery Court Vice Chancellor Jack Jacobs, consolidating the five class actions brought against Sunburst Hospitality Corp. into one suit. There are currently no other motions scheduled on the case.
Sunburst was sued by several shareholders for breach of fiduciary duty after announcing that it had accepted a $380 million buyout offer from a management-led group. The lawsuits, in Delaware Chancery Court for the County of Newcastle, claim that the proposed deal undervalues the company.
According to reports, court papers state: The buyout group timed the announcement (so that) the market would not reflect Sunburst s improving potential, thereby purporting to justify an unreasonably low price.
The buyout group includes Chairman Stewart Bainum Jr., and members of Bainums family, who control about 46% of company stock, the suit says.
The cash transaction, to be financed through Chase Manhattan Bank, is structured as a recapitalization. A shareholder vote was expected by the end of the year. The agreement was unanimously approved by Sunbursts board of directors acting upon the unanimous recommendation of a special committee of the board. The committee was comprised of directors who are not affiliated with the group of purchasing stockholders. (10/18/00) Jay Nussbaum