The Orchard Enterprises, Inc.
The Orchard Enterprises, Inc. Securities Settlement
The lawsuit was settled for $10.75 million in cash. The following is a summary of the proceedings in this lawsuit: ‘The lawsuit claimed the Board and Dimensional breached their fiduciary duties to Orchard stockholders in connection with the Cash-Out Merger. The lawsuit claimed that Dimensional, Orchard controlling stockholder, and Orchard Board of Directors, engaged in an unfair process in approving and recommending the Cash-Out Merger, and effectuated the Cash-Out Merger at an unfairly low price. The alleged unfair dealing included alleged inaccurate disclosures regarding (i) whether Dimensional was entitled to a $25 million liquidation preference in the Cash-Out Merger unless Orchard Certificate of Designations was amended to permit the Cash-Out Merger to occur; (ii) the reason why the financial advisor of the Board Special Committee for the Cash-Out Merger subtracted the $25 million liquidation preference from the value of Orchard common stock in evaluating the fairness of the Cash-Out Merger; (iii) whether the Special Committee Chairman had any relationship with Dimensional; and (iv) Dimensional negotiations with certain third-party bidders. The lawsuit also alleged that Dimensional got a credit that it was not entitled to in connection with the Cash-Out Merger and therefore that the cash payment of $2.05 per share provided to stockholders in the Cash-Out Merger was not adequate. Defendants vigorously deny each of these allegations and all liability and damages.’