Case 1:21-cv-00131-UNA Document 1 Filed 02/01/21 Page 1 of 10 PageID #: 1
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`UNITED STATES DISTRICT COURT
`DISTRICT OF DELAWARE
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`SALIF COULIBALY,
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`Plaintiff,
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`Case No. ______________
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`JURY TRIAL DEMANDED
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`COMPLAINT FOR VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934
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`v.
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`ALASKA COMMUNICATIONS SYSTEMS
`GROUP, INC., DAVID W. KARP, PETER
`D. AQUINO, WAYNE BARR, JR., BILL
`BISHOP, BENJAMIN C. DUSTER, IV, and
`SHELLY LOMBARD,
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`Defendants.
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`Plaintiff, by his undersigned attorneys, for this complaint against defendants, alleges upon
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`personal knowledge with respect to himself, and upon information and belief based upon, inter
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`alia, the investigation of counsel as to all other allegations herein, as follows:
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`NATURE OF THE ACTION
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`1.
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`This action stems from a proposed transaction announced on January 4, 2021 (the
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`“Proposed Transaction”), pursuant to which Alaska Communications Systems Group, Inc.
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`(“Alaska Communications” or the “Company”) will be acquired by affiliates of ATN International,
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`Inc.
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`2.
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`On December 31, 2020, Alaska Communications’ Board of Directors (the “Board”
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`or “Individual Defendants”) caused the Company to enter into an agreement and plan of merger
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`(the “Merger Agreement”) with Project 8 Buyer, LLC (“Parent”) and Project 8 MergerSub, Inc.
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`(“Merger Sub,” and together with Parent, “Project 8”). Pursuant to the terms of the Merger
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`Agreement, Alaska Communications’ stockholders will receive $3.40 in cash for each share of
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`Alaska Communications common stock they own.
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`3.
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`On January 25, 2021, defendants filed a proxy statement (the “Proxy Statement”)
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`with the United States Securities and Exchange Commission (the “SEC”) in connection with the
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`Proposed Transaction.
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`4.
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`The Proxy Statement omits material information with respect to the Proposed
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`Transaction, which renders the Proxy Statement false and misleading. Accordingly, plaintiff
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`alleges herein that defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of
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`1934 (the “1934 Act”) in connection with the Proxy Statement.
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`JURISDICTION AND VENUE
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`5.
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`This Court has jurisdiction over the claims asserted herein pursuant to Section 27
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`of the 1934 Act because the claims asserted herein arise under Sections 14(a) and 20(a) of the 1934
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`Act and Rule 14a-9.
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`6.
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`This Court has jurisdiction over defendants because each defendant is either a
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`corporation that conducts business in and maintains operations within this District, or is an
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`individual with sufficient minimum contacts with this District so as to make the exercise of
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`jurisdiction by this Court permissible under traditional notions of fair play and substantial justice.
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`7.
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`Venue is proper under 28 U.S.C. § 1391(b) because a portion of the transactions
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`and wrongs complained of herein occurred in this District.
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`PARTIES
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`8.
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`Plaintiff is, and has been continuously throughout all times relevant hereto, the
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`owner of Alaska Communications common stock.
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`9.
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`Defendant Alaska Communications is a Delaware corporation and a party to the
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`Merger Agreement. Alaska Communications’ common stock is traded on the NASDAQ under the
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`ticker symbol “ALSK.”
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`10.
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`11.
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`12.
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`13.
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`Company.
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`14.
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`15.
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`16.
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`Defendant David W. Karp is Chairman of the Board of the Company.
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`Defendant Peter D. Aquino is a director of the Company.
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`Defendant Wayne Barr, Jr. is a director of the Company.
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`Defendant Bill Bishop is President, Chief Executive Officer, and a director of the
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`Defendant Benjamin C. Duster, IV is a director of the Company.
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`Defendant Shelly Lombard is a director of the Company.
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`The defendants identified in paragraphs 10 through 15 are collectively referred to
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`herein as the “Individual Defendants.”
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`Background of the Company and the Proposed Transaction
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`SUBSTANTIVE ALLEGATIONS
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`17.
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`Alaska Communications is the leading provider of advanced broadband and
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`managed IT services for businesses and consumers in Alaska.
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`18.
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`The Company operates a highly reliable, advanced statewide data network with the
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`latest technology and the most diverse undersea fiber optic system connecting Alaska to the
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`contiguous U.S.
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`19.
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`On December 31, 2020, Alaska Communications’ Board caused the Company to
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`enter into the Merger Agreement.
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`20.
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`Pursuant to the terms of the Merger Agreement, Alaska Communications’
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`stockholders will receive $3.40 in cash for each share of Alaska Communications common stock
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`they own.
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`21.
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`According to the press release announcing the Proposed Transaction:
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`Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) (“Alaska
`Communications” or the “Company”) announced today that on December 31, 2020
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`it entered into a definitive agreement pursuant to which the Company will be
`acquired by a newly formed entity owned by ATN International, Inc. (NASDAQ:
`ATNI) (“ATN”) and Freedom 3 Capital, LLC (“FC3”) in an all cash transaction
`valued at approximately $332 million, including net debt. The merger will result in
`Alaska Communications becoming a consolidated, majority owned subsidiary of
`ATN and is expected to close in the second half of 2021. Alaska Communications’
`prior agreement to be acquired by an affiliate of Macquarie Capital (“Macquarie”)
`and GCM Grosvenor (“GCM”), through its Labor Impact Fund, L.P., has been
`terminated.
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`Under the terms of the agreement, an affiliate of ATN will acquire all the
`outstanding shares of Alaska Communications common stock for $3.40 per share
`in cash. This represents a premium of approximately 78% over the closing per share
`price of $1.91 on November 2, 2020, the last trading day prior to the date when
`Alaska Communications’ original merger agreement with Macquarie and GCM
`was executed, a 70% premium to the 30-day volume weighted average price up to
`and including November 2, 2020 and a 4% premium to Macquarie and GCM’s prior
`binding agreement to acquire the Company.
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`The merger agreement follows the determination by the Alaska Communications
`Board of Directors, after consultation with its legal and financial advisors, that the
`ATN proposal constituted a “Superior Proposal” as defined
`in Alaska
`Communications’ previously announced merger agreement with Macquarie and
`GCM. Consistent with that determination and following the expiration of the
`negotiation period with Macquarie and GCM required under such agreement,
`Alaska Communications terminated that agreement. In connection with the
`termination, Alaska Communications paid Macquarie and GCM a $6.8 million
`break-up fee. . . .
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`The merger is subject to the approval of Alaska Communications' stockholders,
`regulatory approvals and other customary closing conditions. The merger has fully
`committed debt and equity financing and is not subject to any condition with regard
`to financing. Alaska Communications’ Board of Directors has unanimously
`approved
`the agreement and recommends
`that Alaska Communications’
`stockholders approve the proposed merger and merger agreement. Alaska
`Communications expects to hold a special meeting of stockholders to consider and
`vote on the proposed merger and merger agreement as soon as practicable after the
`mailing of the proxy statement to its stockholders.
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`TAR Holdings, LLC, which owns approximately 8.8% of the outstanding shares of
`Alaska Communications common stock, has entered into a voting agreement with
`ATN agreeing, among other things, to vote in favor of the merger. The voting
`agreement will automatically terminate upon the earliest of (a) the vote of
`stockholders on the merger, (b) any termination of the Merger Agreement, (c) any
`change in recommendation by the Board of Alaska Communications and (d) 14
`months after the signing of the Merger Agreement. Under the voting agreement,
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`TAR Holdings, LLC may sell shares of the Company’s stock in the open market
`through a broker dealer.
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`Advisors
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`Bank Street Group, LLC is serving as financial advisor and Morrison & Foerster
`LLP is serving as legal advisor to ATN in connection with the transaction.
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`B. Riley Securities, Inc. is serving as financial advisor and Sidley Austin LLP is
`serving as legal advisor to Alaska Communications in connection with the
`transaction.
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`The Proxy Statement Omits Material Information, Rendering It False and Misleading
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`22.
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`Defendants filed the Proxy Statement with the SEC in connection with the Proposed
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`Transaction.
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`23.
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`24.
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`As set forth below, the Proxy Statement omits material information.
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`First, the Proxy Statement omits material information regarding the Company’s
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`financial projections.
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`25.
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`The Proxy Statement fails to disclose: (i) all line items used to calculate adjusted
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`EBITDA and adjusted free cash flow; (ii) projected net income; (iii) the projections presented to
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`the Board at the March 25, 2020 Board meeting; and (iv) a reconciliation of all non-GAAP to
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`GAAP metrics.
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`26.
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`The disclosure of projected financial information is material because it provides
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`stockholders with a basis to project the future financial performance of a company, and allows
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`stockholders to better understand the financial analyses performed by the company’s financial
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`advisor in support of its fairness opinion.
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`27.
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`Second, the Proxy Statement omits material information regarding the analyses
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`performed by the Company’s financial advisor, B. Riley Securities, Inc. (“B. Riley”).
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`28. With respect to B. Riley’s Selected Public Company Analysis, the Proxy Statement
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`fails to disclose the individual multiples and metrics for the companies observed in the analysis.
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`29. With respect to B. Riley’s Selected Precedent Transactions Analysis, the Proxy
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`Statement fails to disclose the individual multiples and metrics for the transactions observed in the
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`analysis.
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`30. With respect to B. Riley’s Discounted Cash Flow Analysis, the Proxy Statement
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`fails to disclose: (i) the unlevered free cash flows used in the analysis and all underlying line items;
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`(ii) the terminal values of the Company; (iii) B. Riley’s basis for applying multiples ranging from
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`4.5x to 5.5x; and (iv) the individual inputs and assumptions underlying the discount rates ranging
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`from 11.5% to 12.5%
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`31. With respect to B. Riley’s Premiums Paid Analysis, the Proxy Statement fails to
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`disclose: (i) the transactions observed in the analysis; and (ii) the premiums paid in the transactions.
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`32. When a banker’s endorsement of the fairness of a transaction is touted to
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`shareholders, the valuation methods used to arrive at that opinion as well as the key inputs and
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`range of ultimate values generated by those analyses must also be fairly disclosed.
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`33.
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`34.
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`Third, the Proxy Statement omits material information regarding B. Riley.
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`The Proxy Statement fails to disclose whether B. Riley has performed past services
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`for any parties to the Merger Agreement or their affiliates, and if so, the timing and nature of such
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`services and the amount of compensation received by B. Riley for performing such services.
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`35.
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`Full disclosure of investment banker compensation and all potential conflicts is
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`required due to the central role played by investment banks in the evaluation, exploration,
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`selection, and implementation of strategic alternatives.
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`36.
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`Fourth, the Proxy Statement fails to disclose whether the Company entered into any
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`confidentiality agreements that contained “don’t ask, don’t waive” provisions.
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`37. Without this information, stockholders may have the mistaken belief that, if these
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`potentially interested parties wished to come forward with a superior offer, they are or were
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`permitted to do so, when in fact they are or were contractually prohibited from doing so.
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`38.
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`Fifth, the Proxy Statement fails to disclose whether the Company or B. Riley
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`contacted Party A or Party B during the “go-shop” period.
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`39.
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`The Company’s stockholders are entitled to an accurate description of the process
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`leading up to the Proposed Transaction.
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`40.
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`The omission of the above-referenced material information renders the Proxy
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`Statement false and misleading.
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`41.
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`The above-referenced omitted information, if disclosed, would significantly alter
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`the total mix of information available to the Company’s stockholders.
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`COUNT I
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`Claim for Violation of Section 14(a) of the 1934 Act and Rule 14a-9 Promulgated
`Thereunder Against the Individual Defendants and Alaska Communications
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`42.
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`43.
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
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`The Individual Defendants disseminated the false and misleading Proxy Statement,
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`which contained statements that, in violation of Section 14(a) of the 1934 Act and Rule 14a-9, in
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`light of the circumstances under which they were made, omitted to state material facts necessary
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`to make the statements therein not materially false or misleading. Alaska Communications is liable
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`as the issuer of these statements.
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`44.
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`The Proxy Statement was prepared, reviewed, and/or disseminated by the
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`Individual Defendants. By virtue of their positions within the Company, the Individual Defendants
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`were aware of this information and their duty to disclose this information in the Proxy Statement.
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`45.
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`The Individual Defendants were at least negligent in filing the Proxy Statement
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`with these materially false and misleading statements.
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`46.
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`The omissions and false and misleading statements in the Proxy Statement are
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`material in that a reasonable stockholder will consider them important in deciding how to vote on
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`the Proposed Transaction. In addition, a reasonable investor will view a full and accurate
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`disclosure as significantly altering the total mix of information made available in the Proxy
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`Statement and in other information reasonably available to stockholders.
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`47.
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`The Proxy Statement is an essential link in causing plaintiff to approve the Proposed
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`Transaction.
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`48.
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`By reason of the foregoing, defendants violated Section 14(a) of the 1934 Act and
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`Rule 14a-9 promulgated thereunder.
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`49.
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`Because of the false and misleading statements in the Proxy Statement, plaintiff is
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`threatened with irreparable harm.
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`COUNT II
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`Claim for Violation of Section 20(a) of the 1934 Act
`Against the Individual Defendants
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`50.
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`51.
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
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`The Individual Defendants acted as controlling persons of Alaska Communications
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`within the meaning of Section 20(a) of the 1934 Act as alleged herein. By virtue of their positions
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`as officers and/or directors of Alaska Communications and participation in and/or awareness of
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`the Company’s operations and/or intimate knowledge of the false statements contained in the
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`Proxy Statement, they had the power to influence and control and did influence and control,
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`directly or indirectly, the decision making of the Company, including the content and
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`dissemination of the various statements that plaintiff contends are false and misleading.
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`52.
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`Each of the Individual Defendants was provided with or had unlimited access to
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`copies of the Proxy Statement alleged by plaintiff to be misleading prior to and/or shortly after
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`these statements were issued and had the ability to prevent the issuance of the statements or cause
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`them to be corrected.
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`53.
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`In particular, each of the Individual Defendants had direct and supervisory
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`involvement in the day-to-day operations of the Company, and, therefore, is presumed to have had
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`the power to control and influence the particular transactions giving rise to the violations as alleged
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`herein, and exercised the same. The Proxy Statement contains the unanimous recommendation of
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`the Individual Defendants to approve the Proposed Transaction. They were thus directly involved
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`in the making of the Proxy Statement.
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`54.
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`By virtue of the foregoing, the Individual Defendants violated Section 20(a) of the
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`1934 Act.
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`55.
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`As set forth above, the Individual Defendants had the ability to exercise control
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`over and did control a person or persons who have each violated Section 14(a) of the 1934 Act and
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`Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions as controlling
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`persons, these defendants are liable pursuant to Section 20(a) of the 1934 Act. As a direct and
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`proximate result of defendants’ conduct, plaintiff is threatened with irreparable harm.
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`PRAYER FOR RELIEF
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`WHEREFORE, plaintiff prays for judgment and relief as follows:
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`A.
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`Preliminarily and permanently enjoining defendants and all persons acting in
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`concert with them from proceeding with, consummating, or closing the Proposed Transaction;
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`B.
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`In the event defendants consummate the Proposed Transaction, rescinding it and
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`setting it aside or awarding rescissory damages;
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`C.
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`Directing the Individual Defendants to disseminate a Proxy Statement that does not
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`contain any untrue statements of material fact and that states all material facts required in it or
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`necessary to make the statements contained therein not misleading;
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`D.
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`Declaring that defendants violated Sections 14(a) and/or 20(a) of the 1934 Act, as
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`well as Rule 14a-9 promulgated thereunder;
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`E.
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`Awarding plaintiff the costs of this action, including reasonable allowance for
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`plaintiff’s attorneys’ and experts’ fees; and
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`F.
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`Granting such other and further relief as this Court may deem just and proper.
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`Plaintiff hereby requests a trial by jury on all issues so triable.
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`JURY DEMAND
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`Dated: February 1, 2021
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`By:
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`RIGRODSKY LAW, P.A.
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`/s/ Gina M. Serra
`Seth D. Rigrodsky (#3147)
`Gina M. Serra (#5387)
`Herbert W. Mondros (#3308)
`300 Delaware Avenue, Suite 210
`Wilmington, DE 19801
`Telephone: (302) 295-5310
`Facsimile: (302) 654-7530
`Email: sdr@rl-legal.com
`Email: gms@rl-legal.com
`Email: hwm@rl-legal.com
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`Attorneys for Plaintiff
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