Thursday, Aug. 20, 1998 | 11:27 a.m.
Station Casinos Inc. of Las Vegas said a shareholder filed a class action lawsuit against the locals gaming company and its directors, claiming Station's agreement to pay Crescent Real Estate Equities a $54 million breakup fee in their January merger agreement violated Station's fiduciary duty to its shareholders.
A Station filing with the Securities and Exchange Commission said the shareholder, Crandon Capital Partners, filed the suit because "Station allegedly could not pay the fee when it was agreed to and because the fee allegedly prevented other interested bidders from proposing competing acquisitions of Station."
The suit also alleges "Station's assets were wasted by the agreement to the break-up fee made without stockholder consent."
The shareholder wants the fee agreement declared null and void, an order requiring Station's directors to make the company an attractive acquisition candidate, "an accounting from Station's directors" and unspecified compensatory damages.
Station said it will defend the suit "vigorously" and said Crandon's claims are without merit.
"Station believes that the suit is a typical strike suit and should be dismissed," states the filing. "Station's directors believe they have acted in the best interest of the company and its stockholders in this transaction."
Crescent's $1.5 billion acquisition of Station fell apart in recent weeks amid Station preferred shareholder concerns about their treatment in the deal, and an escalating series of lawsuits between the companies.
Station has said it's confident it won't be required to pay the $54 million breakup fee because the merger was canceled by Crescent, not Station. Such breakup fees are common in mergers and are aimed at preventing companies being acquired from shopping themselves around for a higher price.
Crandon owns less than 5 percent of Station's stock, which today was trading at 6 1-6, up 1-8.