Investment Firm Looks to Block Cablevision From Going Private

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Jul. 27--Penn Capital Management, an investment management firm, has filed a lawsuit challenging the Dolan family's plan to take Cablevision Systems Corp. private without considering other potential bidders.

The Cablevision board "has chosen to abrogate its fiduciary duties through exclusive pursuit of the proposal to allow the Dolans to take the cable business private and retain control of Cablevision's remaining operating businesses," the lawsuit filed Monday in Delaware Chancery Court states.

The Dolans, who control 71 percent of the company's shareholder votes, proposed on June 19 paying stockholders $21 per share in cash for the telecommunications operations after spinning off the sports operations, including Madison Square Garden, and the entertainment operations to shareholders.

The family said it would not consider offers from other possible bidders for its 20 percent stake. The board chose a special committee of independent directors to review the proposal.

The lawsuit, which seeks class-action status, is at least the third to be filed challenging the Dolan plan, but apparently the first by an investment firm rather than an individual shareholder.

Penn Capital, based in Cherry Hill, N.J., also criticized Cablevision's board for shrinking the committee from three to two directors without explaining why and for declining to identify committee members for weeks.

A Cablevision spokeswoman declined to comment on the suit.

The investment firm said the $7.9-billion plan for the company grew out of a months-long battle between Cablevision chairman Charles Dolan and his chief executive son, James, over the fate of the now-shut Voom satellite TV venture.

Charles Dolan would be chairman of the private company, and James would be chairman of the public Rainbow Media spin-off.

"The Dolans' proposal is triggered largely by a family feud between Charles and James Dolan, who seek to divide Cablevision between them so each will have a personal fiefdom to control," the suit states.

Cablevision's stock price dropped 1 cent per share yesterday to $30.80, more than 8 percent below the $33.50 value the Dolans have put on their offer.
 

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