RDM shareholder lawsuit filed:
Milberg Weiss Names Former Officers and Directorsand Controlling Shareholders of RDM Sports Group, Inc. In SecuritiesClass Action
August 21, 1998 05:01 PM
NEW YORK--(BUSINESS WIRE)--Aug. 21, 1998--
The following is a news release issued by Milberg Weiss Bershad
Hynes & Lerach LLP:
Milberg Weiss announces that notice is hereby given that a class action lawsuit was filed on August 19, 1998, in the United States District Court for the Northern District of Georgia, Atlanta Division, on behalf of all persons who purchased the securities of RDM Sports Group, Inc. RDMG , formerly Roadmaster Industries, Inc. RDM , ("RDM" or the "Company") between July 19, 1996, and August 22, 1997, inclusive (the "Class Period"). RDM is presently in Bankruptcy and, therefore, is not a named defendant in the action.
The complaint charges Henry Fong, Charles E. Sanders, Equitex, Inc. EQTX and Metromedia International Group, Inc. ("Metromedia")MMG with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Metromedia's principal shareholder is John Kluge ("Kluge"), who has not, however, been named as a defendant.
The complaint alleges that in 1995, RDM, which held the trademarks to such well-known names as Roadmaster, Vitamaster, Flexible Flyer, American Playworld, MacGregor, DP, Hutch, Reach and Forster, reported revenues of $730.9 million. Despite the seemingly positive revenue stream, RDM was burdened by debt resulting from several acquisitions that the Company had engaged in with Metromedia and/or its affiliates. These transactions, inured primarily to the financial benefit of Kluge and entities controlled by him.
The complaint further alleges that the Company was unable to service the enormous debt that had been foisted upon it by Kluge and his affiliates because of deteriorating business conditions in certain of its divisions. For example, as alleged in the complaint, the Company's fitness division, which manufactured exercise equipment and became part of the Company in a transaction with Actava Group, Inc. -- a Kluge-controlled entity -- was plagued by quality control problems. These problems led to substantial returns of the Company's products and caused the Company's warranty expenses to rise substantially. In response, as set forth in the complaint, RDM was forced to attempt to restructure its manufacturing operations in order to rectify the severe quality control problems it was experiencing. Similarly, the Company's other divisions were experiencing weakening demand for their products.
The complaint alleges that in response to these mounting problems, defendants, who understood and appreciated the grave nature of the dire circumstances facing the Company, schemed to appropriate the assets and monies of Roadmaster for themselves. In order to accomplish this, as alleged in the complaint, defendants orchestrated a virtual liquidation of the Company's core assets and recapitalization of the Company's finances that was designed to siphon assets out of the Company and protect the interests of defendants to the detriment of plaintiff and other members of the Class, all of whom bought Roadmaster securities without knowledge of the scheme or the true state of affairs at the Company.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Milberg Weiss Bershad Hynes & Lerach LLP ("Milberg Weiss"), Chitwood & Harley and Harold Webb, Esq. Milberg Weiss maintains offices in New York City, San Diego, Los Angeles and San Francisco and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in numerous important actions on behalf of defrauded investors, and is responsible for a number of outstanding recoveries which, in the aggregate, total approximately $2 billion. For more information about Milberg Weiss, please visit our website at www.milberg.com.
If you are a member of the class described above, you may, not later than sixty days from today, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Milberg Weiss (Steven G. Schulman or Samuel H. Rudman) at One Pennsylvania Plaza, 49th Floor, New York, New York 10119-0165.
c 1998 Business Wire.
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