Mudrick Capital has filed a lawsuit against Globalstar for its impending merger with another firm. The lawsuit claims that the company is self-dealing with its merger plans because it involves chief executive officer (CEO) James Monroe III. Monroe is also the chairman of Globalstar, which is what has prompted the lawsuit from Mudrick Capital, according to a report.
The merger plans show that Globalstar is to merge with FiberLight LLC and a handful of other assets. The deal is reportedly worth $1.65 billion. The lawsuit by Mudrick Capital was filed on Thursday, May 17, in Delaware Chancery Court. It makes claims that the merger is unfair and notes that Monroe will benefit from it because of the roles he holds at both companies.
Mudrick Capital owns a little more than 5 percent of stock in Globalstar. The company could very well see more than half of its stake in the company become diluted by a large amount if the deal were to be approved. The lawsuit does not ask the court to block the merger. Instead, Mudrick Capital has asked to review the books and records of Globalstar.
Monroe spoke favorably of the proposed merger when it was first announced in April. He holds 53 percent of Globalstar. FiberLight is controlled by Thermo Companies. Monroe is the founder of Thermo Companies and the controlling stockholder of the company. Globalstar, which is headquartered in Louisiana, has not issued a comment on the pending litigation.
Business and commercial law are two very important topics in Louisiana. Companies find themselves in litigation fights almost regularly for various reasons. These reasons can involve mergers, deceptive trade practices, ethics violations, breach of contract and more.
Source: Bloomberg, "Mudrick Capital Sues Globalstar Over ‘Self-Dealing’ Merger," May 17, 2018