Tuesday, June 15, 2004 | 11:09 a.m.
Two Mandalay Resort Group shareholders filed separate suits last week in Clark County District Court accusing the company's executives and board of directors of failing to protect shareholders' interests during MGM MIRAGE's unsolicited takeover bid.
Both suits were filed prior to Mandalay's rejection of MGM MIRAGE's initial offer Friday and the reported subsequent agreement by management to a higher bid on Monday.
Both seek class-action status on behalf of similarly affected shareholders and both name officers and directors of Mandalay Resort Group as defendants.
One complaint, filed June 7 on behalf of Robert Lowinger, names Chairman and Chief Executive Officer Michael Ensign, Chief Financial Officer and Director Glenn Schaeffer and directors William Bannen, Jeffrey Benjamin, Michael McKee, Rose McKinney-James, Donna More, Harold Phillips and William Richardson as defendants.
Lowinger's suit, filed the Monday following the announcement of MGM MIRAGE's $7.65 billion acquisition bid on Friday, June 4, claims Mandalay officials failed to "take all appropriate steps to enhance Mandalay's value and attractiveness as a merger/acquisition candidate" and "failed to effectively expose Mandalay to the marketplace in an effort to create an active auction for Mandalay, including but not limited to engaging in serious negotiations with MGM or its representatives."
The second suit, filed June 11 on behalf of Stephan Ham, a trustee for the J.C. Ham Residuary Trust, lists most of the same officers as defendants, omitting Benjamin, but adding director Arthur Bilger as a defendant.
That suit was filed at around the same time Mandalay announced that it was rejecting MGM MIRAGE's initial offer and made references to Mandalay officers' lack of responsiveness to a June 8 deadline MGM MIRAGE initially set. The suit said Mandalay's officers and directors "have not responded and instead sought an extension from MGM in order to negotiate special perquisites for themselves, such as severance packages and continued employment."
The suit said the Mandalay officers "have failed to give proper and good faith consideration to the legitimate MGM bid, which represents a premium of more than 22 percent over the stock's trading price prior to the offer on June 2 for the sole purpose of entrenching themselves in the lucrative positions as managers of a large publicly traded corporation, and to obtain for themselves personal benefits, including personal financial benefits not shared by the plaintiff or the class."
The suits seek a declaration that the defendants breached their duties to shareholders and unspecified compensatory damages.
Mandalay officials could not be reached for comment on the suits.
Attorney Mark Albright filed the suits as class-action complaints, meaning other shareholders eventually could become party to the actions.
A spokeswoman for Albright said he is serving as local counsel for the two actions. The lead attorney for Lowinger's suit is New York attorney Mark Gardy while the lead attorneys for Ham's suit are Randall Baron and Douglas Britton of San Diego.