-----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, Ey3IV1GqMfEUcWTMi7OoY8M8sXNzMjuZv6rPtRvzQU4DvtOxHBzK6EyM6jH2pi0i FPSamMTaKQ3wm4CEtK3yDw== 0000950172-97-000703.txt : 19970725 0000950172-97-000703.hdr.sgml : 19970725 ACCESSION NUMBER: 0000950172-97-000703 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970718 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970724 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAVANNAH FOODS & INDUSTRIES INC CENTRAL INDEX KEY: 0000086941 STANDARD INDUSTRIAL CLASSIFICATION: SUGAR & CONFECTIONERY PRODUCTS [2060] IRS NUMBER: 581089367 STATE OF INCORPORATION: DE FISCAL YEAR END: 0929 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11420 FILM NUMBER: 97644529 BUSINESS ADDRESS: STREET 1: P O BOX 339 CITY: SAVANNAH STATE: GA ZIP: 31402 BUSINESS PHONE: 9122341261 8-K 1 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 JULY 18, 1997 _________________________________ (Date of earliest event reported) SAVANNAH FOODS & INDUSTRIES, INC. ______________________________________________________ (Exact name of Registrant as specified in its charter) DELAWARE 1-11420 58-1089367 ______________ _____________________ __________________ (State of (Commission File No.) (IRS Employer Incorporation) Identification No.) P.O. BOX 339, SAVANNAH, GEORGIA 31402 ____________________________________________________________ (Address of principal executive offices, including zip code) (912) 234-1261 ____________________________________________________ (Registrant's telephone number, including area code) NOT APPLICABLE _____________________________________________________________ (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS. Three purported class action lawsuits (collectively, the "Actions") were filed on or about July 18, 1997 in the Court of Chancery of the State of Delaware in and for New Castle County by purported stockholders (the "Plaintiffs") of Savannah Foods & Industries, Inc. (the "Company") against the Company, current members and a former member of the Board of Directors of the Company and Flo-Sun Incorporated (collectively, the "Defendants") in connection with the proposed merger of a subsidiary of XSF Holdings, Inc., a newly formed corporate holding company, with and into the Company, and certain related transactions (the "Transactions"). The Actions allege, among other things, that certain of the Defendants have breached the fiduciary duties they owe the stockholders of the Company and that the value of the common stock of the Company is materially greater than the consideration being offered pursuant to the Transactions. The Actions are captioned Fredric Michael Boyk v. William W. Sprague III et al., C.A. 15815 (Del. Ch.), Steven Horowitz and Dina Horowitz v. R. Eugene Cartledge et al., C.A. 15819 (Del. Ch.) and Achimon Louis v. R. Eugene Cartledge et al., C.A. 15816 (Del. Ch.), and each seeks, among other things, a preliminary and permanent injunction enjoining the Defendants from consummating the Transactions, and damages, including attorneys' fees and expenses. The Company believes that the Plaintiffs' claims are without merit and the Company intends to defend vigorously against the Actions. A copy of each of the Actions is filed as an exhibit to this Form 8-K and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF THE BUSINESSES ACQUIRED. Not Applicable. (b) PRO FORMA FINANCIAL INFORMATION. Not Applicable. (c) EXHIBITS: EX. NO. DESCRIPTION 99.5 Complaint filed by Fredric Michael Boyk in the Delaware Court of Chancery on or about July 18, 1997. 99.6 Complaint filed by Steven Horowitz and Dina Horowitz in the Delaware Court of Chancery on or about July 18, 1997. 99.7 Complaint filed by Achimon Louis in the Delaware Court of Chancery on or about July 18, 1997. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: July 24, 1997 SAVANNAH FOODS & INDUSTRIES, INC. By: /s/ Gregory H. Smith ---------------------- Gregory H. Smith Senior Vice President, Chief Financial Officer and Treasurer EXHIBIT INDEX EX. NO. DESCRIPTION 99.5 Complaint filed by Fredric Michael Boyk in the Delaware Court of Chancery on or about July 18, 1997. 99.6 Complaint filed by Steven Horowitz and Dina Horowitz in the Delaware Court of Chancery on or about July 18, 1997. 99.7 Complaint filed by Achimon Louis in the Delaware Court of Chancery on or about July 18, 1997. EX-99 2 EXHIBIT 99.5 EXHIBIT 99.5 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - - - - - - - - - - - - - - - - - x FREDRIC MICHAEL BOYK, : Plaintiff, : Civil Action No. 15815 -against- : WILLIAM W. SPRAGUE III, R. EUGENE CARTLEDGE, LEE B. DURHAM, JR., : CLASS ACTION COMPLAINT ROBERT L. HARRISON, JAMES M. REED, DALE C. CRITZ, ARTHUR M. : GIGNILLIAT, JR., ROBERT S. JEPSON, ARNOLD TENENBAUM, W. : WALDO BRADLEY, JOHN D. CARSWELL, F. SPRAGUE EXLEY, HUGH M. : TARBUTTON, SAVANNAH FOODS & INDUSTRIES, INC. and FLO-SUN : INC., : Defendants. - - - - - - - - - - - - - - - - - x Plaintiff, by his attorneys, alleges the following upon information and belief, except for those allegations which pertain to plaintiff, which allegations are based upon personal knowledge: THE PARTIES 1. Plaintiff, Fredric Michael Boyk, is and has been, at all relevant times, the owner of shares of the common stock of Savannah Foods & Industries Inc. ("Savannah Foods" or the "Company"). 2. Savannah Foods is a corporation organized and existing under the laws of the State of Delaware with its principal executive offices located at 2 East Bryan Street, Savannah, Georgia. It refines and markets bulk and liquid sugars and sugar products and produces and markets a line of packaged sugars and portion control items. 3. Defendant William Sprague III ("Sprague") is the President, Chief Executive Officer and Chairman of the Board of Directors of Savannah Foods. Defendant F. Sprague Exley is the Senior Vice President of Human Resources and Administration, Assistant Secretary and a director of Savannah Foods. 4. Defendants R. Eugene Cartledge, Lee B. Durham, Jr., Robert L. Harrison, James M. Reed, Dale C. Critz, Arthur M. Gignilliat, Jr., Robert S. Jepson, Arnold Tenenbaum, W. Waldo Bradley, John D. Carswell and Hugh M. Tarbutton are directors of Savannah Foods. 5. The above-named individual defendants (collectively, the "Individual Defendants") owe fiduciary duties of good faith, loyalty, fair dealing, due care, and candor to plaintiff and the other members of the Class (as defined below). CLASS ACTION ALLEGATIONS 6. Plaintiff brings this action pursuant to Rule 23 of the Rules of this Court, on behalf of himself and all other stockholders of the Company similarly situated and their successors in interest (the "Class"). Excluded from the Class are the defendants herein, members of their immediate families, and any subsidiary, firm, trust, corporation, or other entity related to or affiliated with any of the defendants. 7. This action is properly maintainable as a class action for the following reasons: (a) the Class is so numerous that joinder of all members is impracticable. There are millions of shares of Savannah Foods common stock outstanding held by hundreds of shareholders of record and many more beneficial owners; (b) there are questions of law and fact which are common to the Class including, inter alia, the following: (i) whether the Individual Defendants, aided and abetted by Flo-Sun, have breached their fiduciary duties owed to plaintiff and the other members of the Class; and (ii) whether plaintiff and the other members of the Class would be irreparably damaged were defendants not enjoined from the conduct described herein; (c) the claims of plaintiff are typical of the claims of the other members of the Class and plaintiff has no interest that are adverse or antagonistic to the interests of the Class; (d) the plaintiff is committed to prosecuting this action and has retained counsel competent and experienced in litigation of this nature. Plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class; (e) the prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; and (f) the defendants have acted, or refused to act, on grounds generally applicable to, and causing injury to, the Class and, therefore, preliminary and final injunctive relief on behalf of the Class as a whole is appropriate. SUBSTANTIVE ALLEGATIONS 8. (a) On July 15, 1997, Savannah Foods announced that it had entered into an agreement whereby a new entity would be created in which the present shareholders of Savannah Foods would have a 41.5% equity interest, Flo-Sun would have a 39.4% interest, and Florida Crystals Inc., a unit of Flo-Sun, would have a 19.1% interest. Flo-Sun, however, would have eight votes per share and therefore 83% of the voting power of the shares of the new entity (the proposed transaction will be referred to as the "Sale of Control"). (b) Flo-Sun is a privately-owned company controlled by the Fanjul family. Thus, if the Sale of Control is consummated, control of Savannah Foods and its valuable assets and affairs will pass from its present shareholders to Flo-Sun and the Fanjul family. 9. Defendant Sprague will serve as president of the new entity's refining division. The new entity's Chief Executive Officer will be the present Chief Executive Officer of Flo-Sun, Alfonso Fanjul. 10. Following the announcement of the Sale of Control, the price of Savannah Foods' common stock dropped more than 15% from $18 11/16 to $14 7/8. 11. Commentators had nothing but negative things to say about the Sale of Control. Patricia Row, a manager at Kennedy Capital Management, was quoted as stating, "Savannah Foods is throwing in the towel and it's not getting cash or anything." Robert Buettner, a manager at Ryback Management, was quoted as stating, "This company has dramatically increased the quality of its balance sheet and now it seems ready to just give it away. It is likely that if Savannah Foods were for sale, there would be a higher bidder." 12. The Sale of Control is wrongful, unfair and harmful to Class members because, among other things: (a) the intrinsic value of Savannah Foods' stock is materially in excess of the consideration which Savannah Foods' shareholders will receive in the Sale of Control, giving due consideration to the Company's future earnings potential, cash flow and profitability; (b) the directors of Savannah Foods have failed to maximize the value of its shareholders' equity by "shopping" the Company or conducting an auction of the Company or seeking other alternatives to maximize shareholder value; (c) Savannah Foods' directors have failed to conduct a market check to ascertain the highest price that could be attained for Savannah Foods in a change of control transaction; (d) Savannah Foods' directors have failed to negotiate for an adequate premium for the Sale of Control of Savannah Foods to Flo-Sun and the Fanjul family. Indeed, not only will Savannah Foods' shareholders be deprived of a premium for transferring control of Savannah Foods, but instead they will suffer a diminution in the value of their investment, evidenced by the investment community's reaction to the announcement of the Sale of Control. In essence, if the Sale of Control is consummated, Savannah Foods' shareholders will sell control of the Company for no consideration whatsoever. 13. The decisions of the defendants are not protected by the business judgment rule because the transaction at issue is a sale of control to Flo-Sun. Under these circumstances, the Individual Defendants have a fiduciary duty to Savannah Foods' shareholders to: (a) secure the best value available to the Savannah Foods' shareholders; (b) evaluate critically and in an informed manner whether or not all material aspects of the Sale of Control are reasonable and in the best interest of Savannah Foods' shareholders; (c) determine whether the Sale of Control (i) adversely affects the value provided to the Savannah Foods' shareholders; (ii) inhibits or encourages alternative bids; and (iii) advances or retards the defendants' duty to secure for Savannah Foods' shareholders the best value available under the circumstances; and (d) ensure that mechanisms are in place to protect the interests of Savannah Foods' shareholders if they become minority shareholders of the new entity by restricting the unfettered exercise of voting control of Flo-Sun and the Fanjul family in significant corporate transactions. 14. The Individual Defendants have failed to discharge their obligations in the proposed Sale of Control transaction as described in paragraph 13. As a consequence, the Individual Defendants have violated their fiduciary duties to the stockholders of Savannah Foods in that they have failed to maximize shareholder value (including failing to actively pursue the acquisition of Savannah Foods by other companies or conducting an adequate market check) and have otherwise failed to take other steps to protect the interests of the Class. 15. Flo-Sun has knowingly aided and abetted the breaches of fiduciary duty committed by the Individual Defendants complained of herein. Indeed, the proposed Sale of Control could not take place without the knowing participation of Flo-Sun. 16. Plaintiff and the Class will suffer irreparable damage unless the Individual Defendants are enjoined from breaching their fiduciary duties and from pursuing the proposed Sale of Control. 17. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: A. Declaring this action to be a proper class action and certifying plaintiff as the representative of the Class; B. Granting preliminary and permanent injunctive relief against consummation of the Sale of Control as described herein; C. In the event the Sale of Control is consummated, rescinding the Sale of Control and/or awarding rescissory damages to the Class; D. Ordering defendants, jointly and severally, to account to plaintiff and other members of the Class for all damages suffered and to be suffered by them as the result of the acts and transactions alleged herein; E. Awarding plaintiff the costs and disbursements of the action including allowances for plaintiff's reasonable attorneys' and experts' fees; and F. Granting such other and further relief as the Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By:______________________________ Suite 1401, Mellon Bank Center P.O. Box 1070 Wilmington, DE 19899 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: WOLF POPPER LLP 845 Third Avenue New York, New York 10022 (212) 759-4600 EX-99 3 EXHIBIT 99.6 EXHIBIT 99.6 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY _________________________________ x STEVEN HOROWITZ and DINA : HOROWITZ, on behalf of themselves and all others similarly : situated, : Plaintiffs, C.A. No. 15819 : -against- : R. EUGENE CARTLEDGE, LEE B. DURHAM, JR., ROBERT L. HARRISON, : JAMES M. REED, DALE C. CRITZ, CLASS ACTION ARTHUR M. GIGNILLIAT, JR., ROBERT : COMPLAINT S. JEPSON, JR., ARNOLD TENENBAUM, W. WALDO BRADLEY, JOHN D. : CARSWELL, F. SPRAGUE EXLEY, WILLIAM W. SPRAGUE, III, HUGH M. : TARBUTTON, FLO-SUN, INC. and SAVANNAH FOODS & INDUSTRIES, INC. : Defendants. : x _________________________________ Plaintiffs allege upon information and belief except as to paragraph 1, which is alleged on knowledge, as follows: THE PARTIES 1. Plaintiffs are and at all times relevant hereto have been the owners of shares of the common stock of Savannah Foods & Industries, Inc. ("Savannah" or the "Company"). 2. Savannah is a corporation organized and existing under the laws of the State of Delaware with offices in Savannah, Georgia. Savannah is one of the largest sugar refiners in the country, best known for Dixie Crystals, which has a 20% market share. Savannah has approximately 28.7 million shares of common stock issued and outstanding which trade on the New York Stock Exchange. 3. (a) Defendant R. Eugene Cartledge ("Cartledge") is and was at all relevant times Chairman of the Board of Savannah. (b) Defendant Lee B. Durham, Jr. ("Durham") is and was at all relevant times a director of Savannah and is of counsel to Clark Hill P.L.C., a law firm which serves as general counsel to Michigan Sugar Co., a wholly-owned subsidiary of Savannah. (c) Defendant Robert L. Harrison ("Harrison") is and was at all relevant times a director of Savannah and President of Stevens Shipping & Terminal Co., a company which conducts business with Savannah related to port activities associated with the importation of new sugar. (d) Defendant James M. Reed ("Reed") is and was at all relevant times a director of Savannah and Vice Chairman and Chief Financial Officer of Union Camp Corporation, a company which provides packaging supplies to Savannah (in 1996, amounting to $7.7 million). Defendant Cartledge formerly served as Union Camp's Chairman and Chief Executive Officer for approximately 8 years. (e) Defendant Dale C. Critz ("Critz") is and was at all relevant times a director of Savannah. (f) Defendant Arthur M. Gignilliat, Jr. ("Gignilliat") is and was at all relevant times a director of Savannah. (g) Defendant Robert S. Jepson, Jr. ("Jepson") is and was at all relevant times a director of Savannah. (h) Defendant Arnold Tenenbaum ("Tenenbaum") is and was at all relevant times a director of Savannah. (i) Defendant W. Waldo Bradley ("Bradley") is and was at all relevant times a director of Savannah. (j) Defendant John D. Carswell ("Carswell") is and was at all relevant times a director of Savannah. (k) Defendant F. Sprague Exley ("Exley") is and was at all relevant times a director of Savannah and a senior executive of the Company. (l) Defendant William F. Sprague, III ("Sprague") is and was at all relevant times President and Chief Executive Officer of the Company. (m) Defendant Hugh M. Tarbutton ("Tarbutton") is and was at all relevant times a director of Savannah. 4. The individual defendants are in a fiduciary relationship with plaintiff and the other public stockholders of Savannah and owe to plaintiff and other members of the class the highest obligations of good faith, fair dealing and full disclosure. 5. The individual defendants are long-time social and/or business acquaintances. For example, in addition to serving as Savannah directors: (a) Defendants Harrison, Gignilliat, Exley and Tarbutton all serve together as directors of Nationsbank, N.A. ("South"); (b) Defendants Gignilliat and Tenenbaum serve as directors of Savannah Electric and Power Company; and (c) Defendants Tenenbaum and Bradley serve as directors of First Union corporate entities. 6. Defendant Flo-Sun, Inc. ("Flo-Sun") is a private company in Palm Beach, Florida and is one of the largest producers of sugar in Florida. Flo-Sun is named herein as an aider and abettor of the breaches of fiduciary duty described herein. CLASS ACTION ALLEGATIONS 7. Plaintiffs bring this case on their own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all public stockholders of Savannah, and their successors in interest, who are or will be threatened with injury arising from defendants' actions as more fully described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants. 8. This action is properly maintainable as a class action because: (a) The class is so numerous that joinder of all members is impracticable. As of September 30, 1996 there were approximately 3,000 stockholders of record located throughout the United States. (b) There are questions of law and fact which are common to the class and which predominate over questions affecting any individual class member. (c) Plaintiffs are committed to prosecuting this action and have retained competent counsel experienced in litigation of this nature. The claims of plaintiffs are typical of the claims of other members of the class and plaintiffs have the same interests as the other members of the class. Accordingly, plaintiffs are adequate representatives of the class and will fairly and adequately protect the interests of the class. CLAIM FOR RELIEF 9. On or about July 15, 1997, Savannah announced that it would merge with the domestic sugar operations of Flo- Sun, a privately-held company run by the Fanjul family, and Florida Crystals, a unit of Flo-Sun. 10. Pursuant to the terms of the transaction, Flo- Sun and affiliated shareholders will own 58.5% of the new entity, while Savannah public stockholders will own the remaining 41.5%. 11. In addition, defendant Sprague will remain as president of Savannah's sugar refining business. 12. Flo-Sun shareholders, pursuant to the terms of the transaction, will receive supermajority voting rights and, thus, will control 83% of the vote of the new entity. 13. It is impossible to value the transaction at this time. However, in response to the announcement, the price of Savannah common stock fell $2.94 or 16%, to $15.75 per share. Thus, it is evident that Savannah's public stockholders will not receive a premium over Savannah's market price although they will lose control over Savannah and its valuable assets. 14. According to a July 16, 1997 article in the Sun-Sentinel, the founding families of both Savannah and Flo- Sun have worked together for years. 15. In fact, none of the individual defendants own any substantial amount of stock in Savannah and thus have no interests to protect as shareholders of the Company. 16. Flo-Sun is a privately-held company owned by the Fanjul family. If the transaction is consummated, the Fanjul family and affiliates will have control of the new company. Thus, control of Savannah will have passed from its public shareholders to the Fanjuls. 17. The consideration to be paid to class members is unfair and grossly inadequate because, among other things: (a) the intrinsic value of Savannah's common stock is materially in excess of the consideration to be received by Savannah's public shareholders in the transaction giving due consideration to the Company's recent operating results, the recent market price of the Company's stock and Savannah's present and projected cash flow, and profitability; (b) the directors of Savannah have failed to maximize the value of its shareholders' equity by "shopping" the Company, or conducting an auction of the Company or seeking other alternatives to maximize shareholder value; (c) Savannah's directors have failed to conduct a market check to ascertain the highest price that could be attained for Savannah stock in a change of control transaction; and (d) Savannah's directors have failed to negotiate for an adequate premium for the sale of control of Savannah. 18. As a result of the foregoing, the individual defendants have breached their fiduciary duties owed to Savannah's stockholders in a change of control transaction. Defendant Flo-Sun, without whom this transaction could not occur, has aided and abetted the breaches of fiduciary duty. 19. Unless enjoined by this Court, the individual defendants will continue to breach their fiduciary duties owed to plaintiff and the other members of the Class to the irreparable harm of Class members who will be denied their right to maximize the value of their investment in Savannah in a change of control transaction. 20. Plaintiffs and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiffs demand judgment as follows: (a) declaring this to be a proper class action; (b) ordering the individual defendants to carry out their fiduciary duties to plaintiffs and the other members of the Class by announcing their intention to: (i) undertake an appropriate evaluation of alternatives designed to maximize value for Savannah's public stockholders; and (ii) adequately ensure that no conflicts of interests exist between defendants' own interests and their fiduciary obligations to Savannah's public stockholders or, if such conflicts exist, ensure that all conflicts would be resolved in the best interests of Savannah's public stockholders. (c) preliminarily and permanently enjoining the proposed transaction or awarding rescissory damages to the Class; (d) ordering defendants, jointly and severally, to account to plaintiffs and the other members of the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; (e) awarding plaintiffs the costs and disbursements of the action, including a reasonable allowance for plaintiffs' attorney's fees and experts' fees; and (f) granting such other and further relief as this Court may deem to be just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: _______________________________ Suite 1401, Mellon Bank Center P.O. Box 1070 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiffs OF COUNSEL: LOWEY DANNENBERG BEMPORAD & SELINGER, P.C. The Gateway One North Lexington Avenue White Plains, NY 10601 Tel: (914) 997-0500 Fax: (914) 997-0035 GOODKIND LABATON RUDOFF & SUCHAROW LLP 100 Park Avenue New York, NY 10017 Tel: (212) 907-0700 Fax: (212) 818-0477 EX-99 4 EXHIBIT 99.7 EXHIBIT 99.7 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - - - - - - - - - - - - - - - - - - - - - -X ACHIMON LOUIS, on behalf of himself : and all others similarly situated, : Plaintiff, : - against - C.A. No. 15816 : R. EUGENE CARTLEDGE, LEE B. DURHAM, JR., ROBERT L. HARRISON, JAMES M. REED, : DALE C. CRITZ, ARTHUR M. GIGNILLIAT, JR., ROBERT S. JEPSON, JR., ARNOLD : TENENBAUM, W. WALDO BRADLEY, CLASS ACTION JOHN D. CARSWELL, F. SPRAGUE EXLEY, : COMPLAINT WILLIAM W. SPRAGUE, III, HUGH M. TARBUTTON, FLO-SUN, INC. and SAVANNAH : FOODS & INDUSTRIES, INC., : Defendants. : - - - - - - - - - - - - - - - - - - - - - -X Plaintiff alleges upon information and belief except as to paragraph 1, which is alleged on knowledge, as follows: THE PARTIES 1. Plaintiff is and at all times relevant hereto has been the owner of shares of the common stock of Savannah Foods & Industries, Inc. ("Savannah" or the "Company"). 2. Savannah is a corporation organized and existing under the laws of the State of Delaware with offices in Savannah, Georgia. Savannah is one of the largest sugar refiners in the Country, best known for Dixie Crystals, which has a 20% market share. Savannah has approximately 28.7 million shares of common stock issued and outstanding which trade on the New York Stock Exchange. 3. (a) Defendant R. Eugene Cartledge ("Cartledge") is and was at all relevant times Chairman of the Board of Savannah. (b) Defendant Lee B. Durham, Jr. ("Durham") is and was at all relevant times a director of Savannah and is of counsel to Clark Hill P.L.C., a law firm which serves as general counsel to Michigan Sugar Co., a wholly-owned subsidiary of Savannah. (c) Defendant Robert L. Harrison ("Harrison") is and was at all. relevant times a director of Savannah and President of Stevens Shipping & Terminal Co., a company which conducts business with Savannah related to port activities associated with the importation of raw sugar. (d) Defendant James M. Reed ("Reed") is and was at all relevant times a director of Savannah and Vice Chairman and Chief Financial Officer of Union Camp Corporation, a company which provides packaging supplies to Savannah (in 1996, amounting to $7.7 million). Defendant Cartledge served as Union Camp's former Chairman and Chief Executive Officer for approximately 8 years. (e) Defendant Dale C. Critz ("Critz") is and was at all relevant times a director of Savannah. (f) Defendant Arthur M. Gignillast, Jr. ("Gignillast") is and was at all relevant times a director of Savannah. (g) Defendant Robert S. Jepson, Jr. ("Jepson") is and was at all relevant times a director of Savannah. (h) Defendant Arnold Tenenbaum ("Tenenbaum") is and was at all relevant times a director of Savannah. (i) Defendant W. Waldo Bradley ("Bradley") is and was at all relevant times a director of Savannah. (j) Defendant John D. Carswell ("Carswell") is and was at all relevant times a director of Savannah. (k) Defendant F. Sprague Exley ("Exley") is and was at all relevant times a director of Savannah and a senior executive of the Company. (l) Defendant William W. Sprague, III ("Sprague") is and was at all relevant times President and Chief Executive Officer of the Company. (m) Defendant Hugh M. Tarbutton ("Tarbutton") is and was at all relevant times a director of Savannah. 4. The individual defendants are in a fiduciary relationship with plaintiff and the other public stockholders of Savannah and owe to plaintiff and other members of the class the highest obligations of good faith, fair dealing and full disclosure. 5. The individual defendants are long-time social and/or business acquaintances. For example, in addition to serving as Savannah directors: (a) Defendants Harrison, Gignilliat. Exley and Tarbutton all serve together as directors of Nationsbank, N.A. (South): (b) Defendants Gignilliat and Tenenbaum serve as directors of Savannah Electric and Power Company; and (c) Defendants Tenenbaum and Bradley serve as directors of First Union corporate entities. 6. Defendant Flo-Sun, Inc. ("Flo-Sun") is a private company in Palm Beach, Florida and is one of the largest producers of sugar in Florida. Flo-Sun is named herein as an aider and abettor of the breaches of fiduciary duty described herein. CLASS ACTION ALLEGATIONS 7. Plaintiff brings this case on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all public stockholders of Savannah, and their successors in interest, who are or will be threatened with injury arising from defendants' actions as more fully described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants. 8. This action is properly maintainable as a class action because: (a) The class is so numerous that joinder of all members is impracticable. As of September 30, 1996 there were approximately 3,000 stockholders of record located throughout the United States. (b) There are questions of law and fact which are common to the class and which predominate over questions affecting any individual class member. (c) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. The claims of plaintiff are typical of the claims of other members of the class and plaintiff has the same interests as the other members of the class. Accordingly, plaintiff is an adequate representative of the class and will fairly and adequately protect the interests of the class. CLAIM FOR RELIEF 9. On or about July 15, 1997, Savannah announced that it would merge with the domestic sugar operations of Flo-Sun, a privately-held company run by the Fanjul family, and Florida Crystals, a unit of Flo-Sun. 10. Pursuant to the terms of the transaction, Flo-Sun and affiliated shareholders will own 58.5% of the new entity, while Savannah public stockholders will own the remaining 41.5%. 11. In addition, defendant Sprague will remain as president of Savannah's sugar refining business. 12. Flo-Sun shareholders, pursuant to the terms of the transaction, will receive supermajority voting rights and, thus, will control 83% of the vote of the new entity. 13. It is impossible to value the transaction at this time. However, in response to the announcement, the price of Savannah common stock fell $2.94 or 16%, to $15.75 per share. Thus, it is evident that Savannah's public stockholders will not receive a premium over Savannah's market price although they will lose control over Savannah and its valuable assets. 14. According to a July 16, 1997 article in the Sun-Sentinel, the founding families of both Savannah and Flo-Sun have worked together for years. 15. In fact, none of the Individual Defendants own any substantial amount of stock in Savannah and thus have no interests to protect as shareholders of the Company. 16. Flo-Sun is a privately held company owned by the Fanjul family. If the transaction is consummated, the Fanjul family and affiliates will have control of the new company. Thus, control of Savannah will have passed from its public shareholders to the Fanjuls. 17. The consideration to be paid to class members is unfair and grossly inadequate because, among other things: (a) the intrinsic value of Savannah's common stock is materially in excess of the consideration to be received by Savannah's public shareholders in the transaction giving due consideration to the Company's recent operating results, the recent market price of the Company's stock and Savannah's present and projected cash flow, and profitability: (b) the directors of Savannah have failed to maximize the value of its shareholders' equity by "shopping" the Company, or conducting an auction of the Company or seeking other alternatives to maximize shareholder value; (c) Savannah's directors have failed to conduct a market check to ascertain the highest price that could be attained for Savannah stock in a change of control transaction; and (d) Savannah's directors have failed to negotiate for an adequate premium for the sale of control of Savannah. 18. As a result of the foregoing, the Individual Defendants have breached their fiduciary duties owed to Savannah's stockholders in a change of control transaction. Defendant Flo-Sun, without whom this transaction could not occur, has aided and abetted the breaches of fiduciary duty. 19. Unless enjoined by this Court, the individual defendants will continue to breach their fiduciary duties owed to plaintiff and the other members of the Class to the irreparable harm of Class members who will be denied their right to maximize the value of their investment in Savannah in a change of control transaction. 20. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: (a) declaring this to be a proper class action; (b) ordering the Individual Defendants to carry out their fiduciary duties to plaintiff and the other members of the Class by announcing their intention to: (i) undertake an appropriate evaluation of alternatives designed to maximize value for Savannah's public stockholders; and (ii) adequately ensure that no conflicts of interests exist between defendants' own interests and their fiduciary obligations to Savannah's public stockholders or, if such conflicts exist, ensure that all conflicts would be resolved in the best interests of Savannah's public stockholders. (c) preliminarily and permanently enjoining the proposed transaction or awarding rescissory damages to the Class; (d) ordering defendants, jointly and severally, to account to plaintiff and the other members of the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; (e) awarding plaintiff the costs and disbursements of the action, including a reasonable allowance for plaintiff's attorney's fees and experts' fees; and (f) granting such other and further relief as this Court may deem to be just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: _________________________________ Suite 1401, Mellon Bank Center P.O. Box 1070 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: GOODKIND LABATON RUDOFF & SUCHAROW LLP 100 Park Avenue New York, NY 10017 Tel: (212) 907-0700 Fax: (212) 818-0477 LOWEY DANNENBERG BEMPORAD & SELINGER, P.C. The Gateway One North Lexington Avenue White Plains, NY 10601 Tel: (914) 997-0500 Fax: (914) 997-0035 -----END PRIVACY-ENHANCED MESSAGE-----