-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V+aHIyvwVKEdj1D5OAcSH1muplukW60DwlaRUS7GX6YIMRX10cbk5JugS5DPpike /6A/1zIvSG81Q4tK/8TfgA== 0000898822-96-000232.txt : 19960710 0000898822-96-000232.hdr.sgml : 19960710 ACCESSION NUMBER: 0000898822-96-000232 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960703 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960709 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: FALCON CABLE SYSTEMS CO CENTRAL INDEX KEY: 0000783008 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 954108170 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09322 FILM NUMBER: 96592496 BUSINESS ADDRESS: STREET 1: 10900 WILSHIRE BLVD 15TH FL CITY: LOS ANGELES STATE: CA ZIP: 90024 BUSINESS PHONE: 3108249990 MAIL ADDRESS: STREET 1: 10900 WILSHIRE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90024 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 3, 1996 Falcon Cable Systems Company, a California limited partnership (Exact name of registrant as specified in its charter) California (State or other jurisdiction of incorporation) 1-9332 95-4108170 (Commission File Number) (IRS Employer Identification No.) 10900 Wilshire Boulevard, 15th Floor, Los Angeles, CA 90024 (Address of principal executive offices) (Zip Code) (310) 824-9990 (Registrant's Telephone Number) ITEM 5. OTHER EVENTS. On July 3, 1996, a complaint entitled Regina Needleman et. al. vs. Falcon Cable Systems Company, et. al., case no. BC152244 filed in the Superior Court of the State of Cali- fornia, County of Los Angeles on June 19, 1996 (the "Needle- man Complaint"), was served, which complaint is filed as ex- hibit 1 hereto, and is hereby incorporated herein by refer- ence. Falcon Cable Systems Company, L.P. believes the Needleman Complaint is without merit. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. Exhibit No. Description 1 Complaint entitled Regina Needleman, et. al. vs. Falcon Cable Systems Company, et. al., case no. BC152244 filed in the Superior Court of the State of California, County of Los An- geles on June 19, 1996. SIGNATURE Pursuant to the requirements of the Securities Ex- change Act of 1934, the registrant has duly caused this re- port to be signed on its behalf by the undersigned hereunto duly authorized. Date: July 9, 1996 FALCON CABLE SYSTEMS COMPANY, a California limited partnership By: Falcon Cable Investors Group, Managing General Partner By: Falcon Holding Group, L.P. General Partner By: Falcon Holding Group, Inc. General Partner By: /s/ Michael K. Menerey Michael K. Menerey, Secretary and Chief Financial Officer -2- EXHIBIT INDEX Exhibit No. Description Page No. 1 Complaint entitled Regina Needleman, et. al. vs. Falcon Cable Systems Company, et. al., case no. BC152244 filed in the Superior Court of the State of California, County of Los Angeles on June 19, 1996. EX-1 2 EXHIBIT 1 KEVIN J. YOURMAN (CSB 147159 WEISS & YOURMAN 10940 Wilshire Blvd., 24th Floor Los Angeles, CA 90024 (310) 208-2800 JOSEPH E. WEISS WEISS & YOURMAN 319 Fifth Avenue New York, New York 10016 Tel: (212) 532-4171 NADEEM FARUQI FARUQI & FARUQI, LLP 415 Madison Avenue New York, New York 10017 (212) 986-1074 Attorneys for Plaintiff SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES REGINA NEEDLEMAN, on behalf ) Case No. BC152244 herself and all others similarly ) situated, ) CLASS ACTION COMPLAINT FOR ) BREACH OF FIDUCIARY DUTIES Plaintiff, ) ) JURY TRIAL DEMAND - against - ) ) FALCON CABLE SYSTEMS CO., L.P, ) FALCON CABLE INVESTORS GROUP, ) FALCON HOLDING GROUP, L.P., FALCON ) HOLDING GROUP, INC., STANLEY S. ) ITSKOWITCH, and MARC B. NATHANSON, ) ) Defendants. ) ___________________________________) Plaintiff, by her attorneys, for her complaint against defendants, alleges upon information and belief, except for paragraphs 1 and 2 hereof, which are alleged upon knowledge as follows: 1. Plaintiff brings this action, individually and as a class action, on behalf of all persons, other than defen- dants, who own units ("Units") of Falcon Cable Systems Co. L.P. ("Falcon" or the "Partnership") and who are similarly situated, to enjoin the consummation of the proposed acquisition of all of the cable systems of Falcon for approximately $247.40 mil- lion in cash. 2. Plaintiff has been the owner of the Units of Falcon since prior to the transaction herein complained of and continuously to date. 3. Defendant Falcon is a California limited part- nership duly organized and existing under the laws of the State of California. The Partnership's principal offices are located at 10900 Wilshire Boulevard, Los Angeles, California 90024. The Partnership's Units trade on the American Stock Exchange. 4. Defendant Falcon Cable Investors Group ("FCIG") is a California limited partnership. Falcon Cable Investors is the general partner of the Partnership (the "General Partner"). 5. Defendant Falcon Holding Group L.P. ("FHGLP") is a California Limited Partnership duly organized and existing under the laws of the State of California. Falcon Holding is the general partner of the General Partner. -2- 6. Defendant Falcon Holding Group, Inc. ("FHGI") is a California corporation. FHGI was the general partner of the General Partner prior to FHGLP. The management of FHGLP is substantially the same as that of FHGI. 7. Defendant Marc B. Nathanson is Chairman of the Board and CEO of FHGI. Defendant Nathanson also owns close to 29% of Falcon. 8. Defendant Stanley S. Itskowitch is a director of FHGI. 9. Defendants are in a fiduciary relationship with plaintiff and the other public Unitholders of Falcon and owe them the highest obligations of good faith and fair dealing. CLASS ACTION ALLEGATIONS 10. Plaintiff brings this action individually on her own behalf and as a class action on behalf of all Unitholders of the Partnership (except defendants herein, and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants) and their successors in interest, who are or will be threatened with injury arising from defendants' actions as more fully described herein (the "Class"). 11. This action is properly maintainable as a class action. 12. The class of Unitholders for whose benefit this action is brought is so numerous that joinder of all Class mem- bers is impracticable. There are approximately 6 million Units of the Partnership outstanding. -3- 13. There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual Class member. The common questions include, inter alia, the following: (a) whether defendants have breached their fiduciary and other common law duties owed by them to plaintiff and the members of the Class; (b) whether the transaction, hereinafter described, constitutes a breach of the defendants' duty to deal fairly with plaintiff and the other members of the Class; (c) whether the defendants have breached their fidu- ciary duties of due care and loyalty owed by them to plaintiff and members of the Class and/or have aided and abetted in such breach, by virtue of their participation and/or acquiescence and by their other conduct complained of herein; (d) whether the defendants have wrongfully failed and refused to seek to protect the interests of all of Falcon's Unitholders and to adequately explore all alternatives to maxi- mizing the value of the Units by, among other things, engaging in a fair appraisal process as described fully below; and (e) whether plaintiff and the other members of the Class will be damaged irreparably by defendants' failure to conduct an active auction of Falcon and failure to engage in a fair appraisal process. 14. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in liti- gation of this nature. The claims of plaintiff are typical of -4- the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accord- ingly, plaintiff will fairly and adequately represent the Class. 15. The prosecution of separate actions by individ- ual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class and establish incompatible standards of conduct for the party opposing the Class. 16. Defendants have acted and are about to act on grounds generally applicable to the Class, thereby making appropriate final injunctive relief with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS 17. On June 13, 1996, FHGLP announced that its board of representatives approved the acquisition of all of the cable systems of Falcon for approximately $247.40 million in cash (the "Acquisition"). This represents a potential distribution to Unitholders of approximately $9.17 per Unit. 18. The Units have traded at between $9 3/8 and $12 3/8 per Unit since February of 1996. Thus, based on this trading range, Falcon's Unitholders are not receiving any premium for their Units. 19. FHGLP's offer was the result of an appraisal process that was controlled and manipulated by defendants. The appraisal process provided that the acquisition price would be -5- the average of three appraisals of the Partnership. The appraisals ranged from $4.69 per Unit to $14.00 per Unit. 20. Given the lack of any premium to Falcon's Unit- holders in connection with the Acquisition, it is evident that such transaction is structured and timed to allow defendants to buy out Falcon's Unitholders at a substantially inadequate price and allow them to take control of Falcon's cable systems without paying any premium. 21. The consideration to be paid to Class members in the transaction is unconscionable and unfair and grossly inad- equate because, among other things, the intrinsic value of Fal- con's Units is closer to $14.00 -- a figure that is closest to Falcon executives' own private valuation, regularly updated for bankers. 22. Under the circumstances, defendants are obli- gated to explore all alternatives to maximize Unitholder value. 23. The defendants are engaged in unfair dealing to the detriment of the Class to whom they owe the highest fidu- ciary duties. 24. The defendants have breached their duty of loy- alty to Falcon's Unitholders by using their control of Falcon to manipulate the appraisal process and force plaintiff and the Class to liquidate their equity interest in Falcon at an unfair price, and deprive Falcon's public Unitholders of maximum value to which they are entitled. 25. The terms of the transaction are grossly unfair to the Class, and the unfairness is compounded by the gross -6- disparity between the knowledge and information possessed by defendants by virtue of their positions of control of Falcon and that possessed by Falcon's public Unitholders. 26. Plaintiff has no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: A. declaring this to be a proper class action; B. enjoining, preliminarily and permanently, the Acquisition under the terms presently proposed and requiring defendants to fulfill their fiduciary obligations by placing the Partnership up for auction and/or to conduct an independent appraisal determination; C. to the extent, if any, that the transaction com- plained of is consummated prior to the entry of this Court's final judgment, rescinding the same or awarding rescissory dam- ages to the Class; D. directing that defendants account to plaintiff and the Class for all damages caused to them and account for all profits and any special benefits obtained by defendants as a result of their unlawful conduct; E. awarding to plaintiff the costs and disburse- ments of this action, including a reasonable allowance for the fees and expenses of plaintiff's attorneys and experts; and F. granting such other and further relief as the Court deems appropriate. -7- JURY DEMAND Plaintiffs demand a trial by jury of all issues so triable. Dated: June 18, 1996 KEVIN J. YOURMAN WEISS & YOURMAN By: /s/ Kevin J. Yourman Kevin J. Yourman 10940 Wilshire Blvd., 24th Floor Los Angeles, CA 90024 (310) 208-2800 JOSEPH H. WEISS WEISS & YOURMAN 319 Fifth Avenue New York, New York 10016 Tel: (212) 532-4171 NADEEM FARUQI FARUQI & FARUQI, LLP 415 Madison Avenue New York, New York 10017 (212) 986-1074 Attorneys for Plaintiff -8- -----END PRIVACY-ENHANCED MESSAGE-----