Hanover Shareholders Sue to Keep Company Public
Chelsey also was named as a defendant, as were Hanover's individual directors. The lawsuit alleges that the defendants breached their fiduciary duty to the company's shareholders and seeks class certification, an injunction of the going private transaction and damages if the transaction proceeds.
Hanover said in a statement that it has not been served with the complaint yet but based on the information available believes it has no liability. The company also said its board has appointed a committee of three independent directors to evaluate the proposal from Chelsey Direct, which is Hanover's largest shareholder.
Hanover sells home, apparel and gift items under brand names such as Domestications, The Company Store, Company Kids, Silhouettes, International Male and Scandia Down.
The proposal is for Chelsey Direct to acquire the shares of Hanover common stock that it does not already own for a cash price of $1.25 per share. Chelsey currently maintains 91 percent of the voting shares through its various holdings.
In a letter dated Feb. 23, Chelsey said Hanover should become privately owned because of the financial drain imposed by the company remaining public as well as the limited benefits from maintaining that status.
As previously reported, Hanover was delisted by the American Stock Exchange in January 2005 because of its failure to report 2004 financial statements on time. It continued to have difficulty staying caught up with its filings over the course of the year.
On Feb. 21, Hanover announced the completion of its 2004 year-end audit and the release of its financial results for the third fiscal quarter of 2004, the 2004 fiscal year as well the first, second and third fiscal quarters of 2005. The company also said it had filed all its past due quarterly and annual reports with the Securities and Exchange Commission for those periods.
Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters