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recapitalization 6 days later. Public shareholders received $80
cash and one share of new FMC stock for each share of old FMC
stock. The cash payment made by petitioner under the revised
plan, less the cash payment which it would have made under the
first plan, equaled $217,649,340 (21,764,934 shares multiplied by
the $10 difference between $80 and $70).
Petitioner had obtained preliminary financing for the first
plan with a consortium of banks, led by Morgan Guaranty. With
the additional $217,649,340 in cash required for the revised
plan, the banks revised the terms of the loans to impose
restrictive covenants on petitioner and refused to fund the
additional cash payment, so that petitioner had to raise the
funds through a senior subordinated debt offering. The change in
financing also led the rating agencies to downgrade petitioner’s
debt.
On November 14, 1986, the SEC filed a Complaint for
Injunctive and Other Equitable Relief against Boesky in the
U.S. District Court for the Southern District of New York. The
complaint alleged that Boesky was part of a trading scheme in
which Brown, Sokolow, Levine, and others gathered material non-
public information on pending business combinations or other
extraordinary transactions. The complaint alleged that Levine
conveyed this information to Boesky, who traded on the basis of
the information knowing, or recklessly disregarding, that the
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