Cardinal Capital Management, a Greenwich, CT-based investor group, has requested documents from infoUSA regarding CEO Vinod Gupta’s proposed purchase of the Omaha, NE-based data firm.
Cardinal says it is interested in whether a special committee established to evaluate Gupta’s offer received, or was negligent in soliciting, other offers from outside investors. In August, infoUSA dissolved the special committee after Gupta withdrew his offer.
Gupta responded in an interview that he has not seen any other offers for the firm. As a company incorporated under Delaware law, infoUSA is required to turn over the requested documents, and will do so, he added.
“The question is, did the board discharge its duties to all shareholders or did they kowtow to the CEOs wishes that he remain in control of everything,” said Rob Kirkpatrick, a managing director at Cardinal.
Cardinal’s request mirrors those of two other investment groups, Dolphin Partnership Ltd. of Stamford, CT and Awad Asset Management of St. Petersburg, FL. All three firms have asked to see documents and records pertaining to the sale, to determine whether the committee pursued other purchase offers.
Some of the challenges raised by the investment firms cite luxuries owned by Gupta, or another of his companies, Annapurna Corp., an investment firm. In its quarterly financial filings, infoUSA lists a long-term lease of a boat, a skybox at the University of Nebraska’s stadium and a fractional share in NetJets, an airplane-leasing firm, as assets infoUSA has acquired from Gupta.
Gupta said in the interview that these assets were used by infoUSA both as promotional vehicles and as corporate rewards, and that he sold them to the company at below-market value. InfoUSA’s use of the assets, and the payments Gupta received for their use, have long been disclosed in infoUSA’s financial filings, Gupta added.
Kirkpatrick said that his company had not received any of the documents sought from infoUSA, but acknowledged that there was an ongoing dialog between the two firms’ lawyers.
Separately, two class-action shareholder lawsuits similarly alleging a breach of fiduciary duty have been withdrawn, according to Gupta.
If the investment groups do attempt a proxy fight, it will be an uphill battle. According to public disclosures, the three firms manage 5.7 million shares, or under 10% of the stock. Gupta holds 38% of the outstanding shares.
On Monday, infoUSA announced that it had made a $9 million debt payment: $6.5 million in principal and $2.5 million in interest.
PacificNet to Acquire an Interest in a Chinese Infomercial Firm PacificNet Inc. has entered an agreement to acquire a (51%) controlling interest in Hitching International Corp., an infomercial and call center services firm located in China. A $10.2 million price tag has been set, subject to HIC meeting certain financial targets.
The purchase price is based on achievement of quarterly earn-out targets. HIC has guaranteed to generate $4 million in annual profits. The terms include a 35% cash payment and roughly 825,000 restricted shares of stock, which may be adjusted if profit targets are not met.
Upon completion of the acquisition, the combined firm with more than 2,000 employees would be one of the largest firms of its kind in China. HIC provides services for financial advisory firms in China.
“This strategic acquisition is a compelling move by PacificNet to capture part of the rapidly growing DRTV telemarketing services market in China,” said Victor Tong, president of PacificNet, in a statement.
PacificNet maintains headquarters in Minneapolis and Hong Kong.
Network
