DJ Rare Medium Sued By Former Owners Of Firm It Purchased
22 May 08:15
By Colleen DeBaise
Of DOW JONES NEWSWIRES
(This story was published late Monday)
NEW YORK (Dow Jones)--The former owners of a Dallas Internet firm sold to
Rare Medium Group Inc. (RRRR) claim in a lawsuit that Rare Medium prevented
them from cashing in on a potentially lucrative deal.
The four men, who sold Big Hand Inc. to Rare Medium in March 1999 for 12
million restricted shares, are seeking an unspecified amount in damages.
The men, who agreed not to sell the shares for a year after the deal closed,
claim the terms of the acquisition agreement allowed them to "lock in," or
"collar," a price range on Rare Medium stock in April 2000. Rare Medium hit a
high of $94.75 in March 2000, but began sliding afterwards. It currently trades
at less than $1.
Jay M. Wolff, David Bliss, Tim Barber and Steve O'Brien charge in the suit
that Rare Medium "deliberately and maliciously" ignored the acquisition
agreement and refused to guarantee a high price on the restricted stock.
The men contend Rare Medium refused to authorize the transactions "because it
was trying to protect its own stock price at plaintiffs' expense."
A spokesman for Rare Medium, which provides Web consulting services, couldn't
immediately be reached for comment. The suit was filed late Friday in Manhattan
federal court.
As a result, Big Hand's former owners claim they have suffered "enormous
financial injury."
An attorney for the four plaintiffs, Jeffrey M. Tillotson, said the men still
own Rare Medium shares even though the lock-up period ended last fall. He noted
that the price of the stock hasn't change significantly since then. Rare
Medium's shares closed Monday at 85 cents.
The four men acquired the stock through the sale of Big Hand when Rare Medium
traded at roughly $8. The stock increased over 20 times, but because of its
tumble "the damagehas been done," the suit says.
Earlier this month, Motient Corp. (MTNT) agreed to acquire Rare Medium using
a combination of newly issued Motient shares, shares of XM Satellite Radio
Holdings Inc. (XMSR) and certain other consideration.
-By Colleen DeBaise, Dow Jones Newswires; 212-227-2017;
colleen.debaise@dowjones.com
(END) DOW JONES NEWS 05-22-01
08:15 AM |
