After being sued last week by Riley Investment Management, which is trying to force a special shareholders meeting (8/10/07 RBR #156), Regent Communications has now sued Riley in Delaware Federal Court, along with SMH Capital, accusing Riley and SMH of federal securities law violations. Regent alleges that Riley has failed to disclose to the SEC that it is working in concert with SMH Capital and other shareholders and that SMH has failed to disclose its significant stock holdings in Regent.
"As indicated in the lawsuit we filed today, we believe Riley and SMH Capital have engaged in a number of violations with regard to federal securities laws in their solicitation of Regent’s shareholders. We believe Riley engaged in improper communications with shareholders and Riley’s requests for a special shareholder meeting are invalid. We are prepared to call a special meeting of shareholders upon receipt of valid requests solicited in compliance with applicable securities laws. Our management and board remain committed to maximizing value for all shareholders. As we execute on our strategy, we will continue to evaluate, in conjunction with our legal and financial advisors, all stockholder proposals that may be presented to the company," said Regent CEO Bill Stakelin in a statement sent yesterday to RBR.
Riley wants the special shareholders meeting so it can propose to elect four of its own nominees to the board of directors and has indicated that it wants to force a sell-off of Regent’s stations.