Included in the lawsuit that Regent Communications has filed against Riley Investment Management and SMH Capital are copies of faxed letters from Regent co-founder and former CEO Terry Jacobs joining in the request for a special shareholders meeting. Jacobs, however, is not named as a defendant. He did not return a call from RBR seeking comment on what he wants to see happen at the company he co-founded with current CEO Bill Stakelin.
In his letter, Jacobs declares that he is the holder of 400,031 shares of Regent stock. His request is identical to that filed by Riley and investors represented by SMH calling for a special meeting on September 3rd to change the company’s bylaws to increase the size of the board of directors and elect the four nominees proposed by Riley.
In its federal lawsuit, Regent charges that Riley has violated federal securities laws by soliciting support for its efforts without filing any proxy information with the SEC. Regent accuses SMH of failing to make the SEC filings required of anyone owning 5% or more of a stock issue of any public company, while it now controls over 15% via various clients. Regent also charges that SMH has been shopping Regent to potential buyers without any authority to do so.
"Defendants have concealed their concerted efforts and aim to steal control of Regent’s board not only because they desire to avoid paying a control premium and hope to obtain that premium for theselves [sic] in a forced future sale, but also to avoid the anti-takeover protections that may be triggered if full disclosure of their full shareholding, purposes and group actions are made," Regent charged in its lawsuit.
RBR observation: Not every major shareholder approached by Riley agreed to submit a demand for a special shareholders meeting. Regent’s lawsuit says long-time director Jack Wyant, who owns over 8% of the company’s stock, was solicited by John Ahn, one of the men Riley wants to place on the board, but that Wyant declined to join in the call for a special meeting.