By Julie Reynolds
Union members at the Chicago Tribune on Tuesday asked for the immediate removal of three Tribune Publishing board members associated with the hedge fund Alden Global Capital, saying the three committed “gross violations of their fiduciary responsibilities.”
A letter sent Tuesday from the Chicago Newspaper Guild to Board Chairman Philip Franklin said Alden founder Randall D. Smith and fellow Tribune board members Dana Goldsmith Needleman, and Christopher Minnetian put their own financial interests above those of shareholders when Alden “failed to publicly inform investors of its new plans and proposals within the time limits required by law” before it proposed last week to buy the entire company at $14.25 per share.
Alden’s “wheeling and dealing” with another investor “smacks of corruption and insiderism,” the letter stated.
“The dealings outlined in Alden’s own filings about these proposed transactions show that Alden representatives who serve on the Tribune Publishing board have put their own interests ahead of shareholders, and they should be removed from the board,” said Jon Schleuss, president of The News Guild, parent union of the Chicago Newspaper Guild, in a press release. The Chicago Guild is a Tribune shareholder.
The Wall Street Journal reported on the Guild’s demand Tuesday.
At issue is a Dec. 14 letter Alden recently filed with the Securities and Exchange Commission, which the Guild called “a signed confession of corporate malfeasance.” In the document, Smith “describes a conversation with another investor three days earlier in which the latter expressed an ‘interest in respect of certain assets of Tribune.”
“It is clear from the filing that Alden’s purpose here was to collude with the said investor to reach an agreement on the purchase of Tribune shares,” the Guild wrote.
An attached proposal to Tribune’s shareholders also describes apparent self-dealing by Smith and Alden: “Using his apparent control of Company decisions to force the investor to negotiate with Alden, Mr. Smith sought to misappropriate a corporate opportunity to benefit Alden instead of the Company.”
According to SEC rules, beneficial owners holding more than 5 percent of a company must report to shareholders “within 10 calendar days both a change in shareholdings and a change in the purpose of those holdings,” the Guild’s letter states.
“Alden reported the conversation with the investor 20 days after the conversation. It reported the Smith letter to the board 17 days later. This was a deliberate and willful violation of the SEC guidelines.”
While Alden’s offer to buy outstanding shares at $14.25 was an increase over the trading price in December, by Monday Tribune’s stock closed at $14.67 a share, leading some observers to comment that Alden’s offer is far too low to interest shareholders.
“Filings made by Alden indicate that Alden failed to publicly inform investors of its new plans and proposals within the time limits required by law,” the Guild wrote, “and show a disturbing abuse of Smith’s position on the board and the Alden board members’ responsibilities to Tribune Publishing shareholders.”
“It is no surprise that Alden treats shareholders with no more respect than employees, the newspapers they own, and the communities they serve,” Schleuss added.
Alden has reported it plans to take Tribune private, and that it will extract cash from its MNG newspaper chain to buy the company.