Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 1 of 21
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`Case No.: _________________
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`COMPLAINT
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`DEMAND FOR JURY TRIAL
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`THEODORE CORACI,
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`Plaintiff,
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`-against-
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`ALASKA COMMUNICATIONS SYSTEMS
`GROUP, INC., WILLIAM H. BISHOP,
`DAVID W. KARP, PETER D. AQUINO,
`WAYNE BARR JR., BENJAMIN C.
`DUSTER IV, and SHELLY LOMBARD,
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`Defendants.
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`Plaintiff, Theodore Coraci (“Plaintiff”), by his undersigned attorneys, alleges upon
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`personal knowledge with respect to himself, and information and belief based upon, inter alia, the
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`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 is an action brought by Plaintiff against Alaska Communications Systems
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`Group, Inc. (“Alaska Communications” or the “Company”) and the members of the Company’s
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`board of directors (collectively referred to as the “Board” or the “Individual Defendants” and,
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`together with Alaska Communications, the “Defendants”) for their violations of Sections 14(a)
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`and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78n(a) and
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`78t(a), and SEC Rule 14a-9, 17 C.F.R. § 240.14a-9, in connection with the proposed acquisition
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`(the “Proposed Merger”) of Alaska Communications by ATN International, Inc. (“ATN”) and
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`Freedom 3 Capital, LLC (“FC3”). Plaintiff also asserts a claim against the Individual Defendants
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`for breaching their fiduciary duty of candor/disclosure under state law.
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`2.
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`On December 31, 2020, Alaska Communications entered into an Agreement and
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 2 of 21
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`Plan of Merger (the “Merger Agreement”), pursuant to which the Company’s shareholders will
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`receive $3.40 in exchange for each share of Alaska Communications common stock they own (the
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`“Merger Consideration”).
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`3.
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`On January 25, 2021, in order to convince Alaska Communications shareholders to
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`vote in favor of the Proposed Merger, Defendants authorized the filing of a materially incomplete
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`and misleading preliminary proxy statement (the “Proxy”) with the Securities and Exchange
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`Commission (“SEC”), in violation of Sections 14(a) and 20(a) of the Exchange Act and in breach
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`of the Individual Defendants’ duty of candor/disclosure.
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`4.
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`In particular, the Proxy contains materially incomplete and misleading information
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`concerning: (i) financial projections for Alaska Communications; (ii) the valuation analyses
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`performed by Alaska Communications’ financial advisor, B. Riley Securities, Inc. (“B. Riley”), in
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`support of its fairness opinion; (iii) the potential conflicts of interest faced by B. Riley; and (iv)
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`the background of the Proposed Merger.
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`5.
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`The special meeting of Alaska Communications shareholders to vote on the
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`Proposed Merger (the “Shareholder Vote”) is forthcoming. It is imperative that the material
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`information that has been omitted from the Proxy is disclosed prior to the Shareholder Vote so
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`Plaintiff can cast an informed vote and properly exercise his corporate suffrage rights.
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`6.
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`For these reasons, and as set forth in detail herein, Plaintiff asserts claims against
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`Defendants for violations of Sections 14(a) and 20(a) of the Exchange Act and breach of the duty
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`of candor/disclosure. Plaintiff seeks to enjoin Defendants from taking any steps to consummate
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`the Proposed Merger until the material information discussed herein is disclosed to Alaska
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`Communications’ shareholders sufficiently in advance of the Shareholder Vote or, in the event the
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`Proposed Merger is consummated, to recover damages resulting from the Defendants’ violations
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 3 of 21
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`of the Exchange Act and breach of the duty of candor/disclosure.
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`JURISDICTION AND VENUE
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`7.
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`This Court has original jurisdiction over this action pursuant to Section 27 of the
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`Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331 (federal question jurisdiction) as Plaintiff
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`alleges violations of Sections 14(a) and 20(a) of the Exchange Act.
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`8.
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`The Court has supplemental jurisdiction over the state law claim for breach of the
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`duty of candor/disclosure pursuant to 28 U.S.C. § 1367.
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`9.
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`Personal jurisdiction exists over each Defendant either because the Defendant
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`conducts business in or maintains operations in this District, or is an individual who is either
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`present in this District for jurisdictional purposes or has sufficient minimum contacts with this
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`District as to render the exercise of jurisdiction over the Defendants by this Court permissible
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`under traditional notions of fair play and substantial justice. “Where a federal statute such as
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`Section 27 of the [Exchange] Act confers nationwide service of process, the question becomes
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`whether the party has sufficient contacts with the United States, not any particular state.” Sec. Inv’r
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`Prot. Corp. v. Vigman 764 F.2d 1309, 1315 (9th Cir. 1985). “[S]o long as a defendant has minimum
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`contacts with the United States, Section 27 of the Act confers personal jurisdiction over the
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`defendant in any federal district court.” Id. At 1316
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`10.
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`Venue is proper in this District under Section 27 of the Exchange Act and 28 U.S.C.
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`§ 1391, because Defendants are found or are inhabitants or transact business in this District.
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`Indeed, Alaska Communications’ common stock trades on Nasdaq stock exchange, which is
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`headquartered in this District rendering venue in this District appropriate. See, e.g., United States
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`v. Svoboda, 347 F.3d 471, 484 n.13 (2d Cir. 2003) (collecting cases).
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`11.
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`Plaintiff is, and at all relevant times has been, a holder of Alaska Communications
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`PARTIES
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`common stock.
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`12.
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` Defendant Alaska Communications is a telecommunications fiber, broadband, and
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`managed IT services provider, offering technology and customer solutions to residential, business,
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`and wholesale customers in and out of Alaska. The Company is incorporated in Delaware and its
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`common stock trades on the Nasdaq stock exchange under the ticker symbol “ALSK”.
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`13.
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`Individual Defendant William H. Bishop is, and has been at all relevant times, the
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`President, Chief Executive Officer, and a director of Alaska Communications.
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`14.
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`Individual Defendant David W. Karp is, and has been at all relevant times, the
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`Chairman of the Board.
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`15.
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`Individual Defendant Peter D. Aquino is, and has been at all relevant times, a
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`director of Alaska Communications.
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`16.
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`Individual Defendant, Wayne Barr, Jr. is, and has been at all relevant times, a
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`director of Alaska Communications.
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`17.
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`Individual Defendant Benjamin C. Duster, IV is, and has been at all relevant times,
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`a director of Alaska Communications.
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`18.
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`Individual Defendant Shelly Lombard is, and has been at all relevant times, a
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`director of Alaska Communications.
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`19.
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`The Individual Defendants referred to in ¶¶ 13-18 are collectively referred to herein
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`as the “Individual Defendants” and/or the “Board”, and together with Alaska Communications
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`they are referred to herein as the “Defendants.”
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 5 of 21
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`SUBSTANTIVE ALLEGATIONS
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`I.
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`Background and the Proposed Merger
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`20.
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`Alaska Communications is a fiber broadband and managed information technology
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`(IT) services provider. The Company is focused primarily on business and wholesale customers in
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`and out of Alaska. The Company also provides telecommunication services to consumers across
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`Alaska. The Company's facilities-based communications network extends across Alaska and
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`connects to the contiguous states through its undersea fiber optic cable systems and its usage rights
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`on an undersea system. It serves customers in various areas, such as Business and Wholesale
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`(broadband, voice and managed IT services); Consumer (broadband and voice services), and
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`Regulatory (carrier termination and access services). It provides voice and broadband services to
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`residential customers. It provides voice and broadband origination and termination services to inter
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`and intrastate carriers serving its retail customers.
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`21.
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`ATN, formerly Atlantic Tele-Network, Inc., is a holding company with multiple
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`business segments, including U.S. Telecom, International Telecom, and Renewable Energy. In the
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`United States, it provides wholesale wireless voice and data roaming services in rural markets to
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`national, regional, local and selected international wireless carriers. Its wholesale networks are
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`located principally in the western United States. It provides wireless voice and data service to retail
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`and business customers in Bermuda under the One name, in Guyana under the GTT name and in
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`the United States Virgin Islands under the Innovative and Choice brand names. ATN offers voice
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`services that include local exchange, regional and long distance calling and voice messaging
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`services in Bermuda, Guyana, the United States Virgin Islands, and in other smaller markets in the
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`Caribbean and the United States. It offers services, which include Wireless, Wireline and
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`Renewable Energy.
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 6 of 21
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`22.
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`On January 4, 2021, Alaska Communications issued a press release announcing the
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`Proposed Merger, which states in relevant part:
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`Alaska Communications Announces Definitive Agreement to Be Acquired by
`ATN International, Inc. in a $332 Million Transaction; Merger Agreement
`with Macquarie Capital and GCM Grosvenor Has Been Terminated
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`ANCHORAGE, Alaska, January 4, 2021 -- Alaska Communications Systems
`Group, Inc. (NASDAQ: ALSK) (“Alaska Communications” or the “Company”)
`announced today that on December 31, 2020 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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`David W. Karp, Chairman of the Alaska Communications Board of Directors, said,
`"Today's announcement is the product of a comprehensive process that
`demonstrates what a strong business the team at Alaska Communications has built.
`The agreement with ATN is a great result for our stockholders, who will receive
`significant near-term value."
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`Bill Bishop, President and Chief Executive Officer of Alaska Communications,
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 7 of 21
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`stated, "This transaction represents an exciting opportunity to augment our market
`position, as well as, expand our capabilities to better serve our customers. ATN has
`extensive telecommunications expertise, a strong track record of successfully
`investing in and operating capital-intensive businesses and has a strong financial
`position highlighted by its net cash position. These are critical attributes that will
`support our strategy to deliver superior customer service utilizing our fiber-based
`network solutions. We firmly believe this transaction will allow us to enhance our
`expanded fiber network services and drive long-term value for our employees and
`customers in Alaska."
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`Michael Prior, Chairman and Chief Executive Officer of ATN, stated, “This
`investment and merger allows us to enter a new market with many similar
`characteristics to our existing operations in the U.S. and elsewhere. Further, it
`aligns with our strategy to leverage the broad capabilities of our operating platform
`to enhance and augment leading providers of facilities-based communications
`services in distinctive markets. ATN has a long history of enabling its subsidiaries
`to gain and maintain strong market positions by investing in high quality
`infrastructure, the latest technologies and creative solutions to give customers a
`superior experience. We recognize the same determination and customer-centric
`approach in the Alaska Communications team. Our industry is rapidly changing,
`and communications requirements have never been more essential and critical than
`they are today. We look forward to combining our resources and experience with
`Alaska Communications’ market knowledge and reputation for superior service to
`provide industry-leading communications products and services to customers in
`Alaska and beyond.”
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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,
`TAR Holdings, LLC may sell shares of the Company’s stock in the open market
`through a broker dealer.
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 8 of 21
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`23.
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`The Merger Consideration represents inadequate compensation for Alaska
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`Communications shares. Indeed, the Company announced positive financial results for all three
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`quarters of 2020. Moreover, when announcing the third quarter results, the Company stated that,
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`after years in development, it finally went live with its new business and operating systems, which
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`are expected to improve nearly all aspects of the business and drive operational excellence for
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`years to come. It is therefore imperative that shareholders receive the material information
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`(discussed in detail below) that Defendants have omitted from the Proxy, which is necessary for
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`shareholders to properly exercise their corporate suffrage rights and cast an informed vote on the
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`Proposed Merger.
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`II.
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`The Proxy Omits Material Information
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`24.
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`On January 25, 2021, Defendants filed the materially incomplete and misleading
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`Proxy with the SEC. The Individual Defendants were obligated to carefully review the Proxy
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`before it was filed with the SEC and disseminated to the Company’s shareholders to ensure that it
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`did not contain any material misrepresentations or omissions. However, the Proxy misrepresents
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`and/or omits material information that is necessary for the Company’s shareholders to make an
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`informed decision in connection with the Proposed Merger.
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`A. The Misleadingly Incomplete Financial Projections
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`25.
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`First, the Proxy omits critical financial projections, including the net income
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`projections for Alaska Communications (the “Net Income Projections”). Defendants elected to
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`summarize the Company’s financial projections, but they excised and failed to disclose the Net
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`Income Projections. The Net Income Projections were used to calculate the Adjusted EBITDA
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`projections and, thus, were readily available for disclosure. By disclosing certain projections in the
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`Proxy and withholding the Net Income Projections, Defendants render the tables of projections on
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 9 of 21
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`page 62 of the Proxy materially incomplete and provide a misleading valuation picture of Alaska
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`Communications. Simply put, net income projections are irreplaceable when it comes to fully,
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`fairly, and properly understanding a company’s projections and value.
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`26.
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`Second, the Company management originally prepared a set of financial
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`projections in the first quarter of 2020 in connection with its annual, normal course five-year
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`planning process that were presented to the Board at the March 25, 2020 meeting (the “March
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`2020 Projections”). However, Defendants withheld those projections from the Proxy, and instead
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`only disclosed the set of financial projections prepared in July 2020 in connection with the sales
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`process. When officers and directors prepare and review multiple sets of projections leading up to
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`the sale of a company, each of those sets of projections are material to shareholders. The original
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`projections are important, especially when prepared in the ordinary course of business, so that
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`shareholders can understand how (and by how much) the Company’s management has changed its
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`mind about the future financial performance of the Company and judge for themselves whether
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`those adjustments are reasonable. This is especially true when a new, potentially lower set of
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`projections is made for the purposes of a sales process and then used by the Company’s financial
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`advisor to find the Merger Consideration “fair” to shareholders.
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`27.
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`Unlike poker where a player must conceal his unexposed cards, the object of a
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`proxy statement is to put all one’s cards on the table face-up. In this case only some of the cards
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`were exposed—the others were concealed. If a proxy statement discloses financial projections and
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`valuation information, such projections must be complete and accurate. The question here is not
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`the duty to speak, but liability for not having spoken enough. With regard to future events,
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`uncertain figures, and other so-called soft information, a company may choose silence or speech
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`elaborated by the factual basis as then known—but it may not choose half-truths. Accordingly,
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 10 of 21
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`Defendants have disclosed some of the projections relied upon by B. Riley and the Board but have
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`omitted the Net Income Projections and the March 2020 Projections. These omissions render the
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`summary of the projection tables and the Company’s financial picture in the Proxy misleadingly
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`incomplete.
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`B. The Misleadingly Incomplete Summary of B. Riley’s Fairness Opinion
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`28.
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`The Proxy describes B. Riley’s fairness opinion and the various valuation analyses
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`performed in support of their opinion. Defendants concede the materiality of this information in
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`citing B. Riley’s fairness opinion and their valuation analyses among the “material” factors the
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`Board considered in making its recommendation to Alaska Communications shareholders. Proxy
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`at 56; see also Proxy at 65 (“The following is a summary of the material financial analyses
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`presented by B. Riley to the Board on December 31, 2020 in connection with its consideration of
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`the proposed merger contemplated by the merger agreement.”). However, the summary of B.
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`Riley’s fairness opinion and analyses provided in the Proxy fails to include key inputs and
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`assumptions underlying the analyses. Without this information, as described below, Alaska
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`Communications shareholders are unable to fully understand these analyses and, thus, are unable
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`to determine what weight, if any, to place on B. Riley’s fairness opinion in determining how to
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`vote on the Proposed Merger. This omitted information, if disclosed, would significantly alter the
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`total mix of information available to Alaska Communications’ shareholders.
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`29.
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`First, in summarizing the Discounted Cash Flow Analysis prepared by B. Riley, the
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`Proxy fails to disclose the following key information used in the analyses: (i) the actual unlevered
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`free cash flows used in the analysis; (ii) the inputs and assumptions underlying the 11.5% to 12.5%
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`discount rate range (including the values of the company-specific WACC/CAPM components);
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`and (iii) the actual terminal values calculated for each analysis.
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 11 of 21
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`30.
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`These key inputs are material to Alaska Communications shareholders, and their
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`omission renders the summary of the Discounted Cash Flow Analysis incomplete and misleading.
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`As a highly-respected professor explained in one of the most thorough law review articles
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`regarding the fundamental flaws with the valuation analyses bankers perform in support of fairness
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`opinions, in a discounted cash flow analysis a banker takes management’s forecasts, and then
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`makes several key choices “each of which can significantly affect the final valuation.” Steven M.
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`Davidoff, Fairness Opinions, 55 Am. U.L. Rev. 1557, 1576 (2006). Such choices include “the
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`appropriate discount rate, and the terminal value…” Id. As Professor Davidoff explains:
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`There is substantial leeway to determine each of these, and any change can
`markedly affect the discounted cash flow value. For example, a change in the
`discount rate by one percent on a stream of cash flows in the billions of dollars can
`change the discounted cash flow value by tens if not hundreds of millions of
`dollars….This issue arises not only with a discounted cash flow analysis, but with
`each of the other valuation techniques. This dazzling variability makes it difficult
`to rely, compare, or analyze the valuations underlying a fairness opinion unless full
`disclosure is made of the various inputs in the valuation process, the weight
`assigned for each, and the rationale underlying these choices. The substantial
`discretion and lack of guidelines and standards also makes the process vulnerable
`to manipulation to arrive at the “right” answer for fairness. This raises a further
`dilemma in light of the conflicted nature of the investment banks who often provide
`these opinions.
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`Id. at 1577-78.
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`31. Without the above-omitted information, especially the unlevered free cash flows,
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`Alaska Communications shareholders are misled as to the reasonableness or reliability of B.
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`Riley’s analysis, and unable to properly assess the fairness of the Proposed Merger. As such, these
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`material omissions render the summary of the Discounted Cash Flow Analysis included in the
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`Proxy misleadingly incomplete.
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`32.
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`Second, in summarizing B. Riley’s Selected Public Company Analysis and Selected
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`Precedent Transactions Analysis, the Proxy fails to disclose the individual multiples for each
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 12 of 21
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`company or transaction utilized in the analyses. A fair summary of a comparable companies or
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`transactions analysis requires the disclosure of the individual multiple for each company or
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`transaction used in the analysis. Merely providing the range of the multiples that a banker
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`calculated without any further information is insufficient, as shareholders are unable to assess
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`whether the banker applied appropriate multiples, or, instead, applied unreasonably low multiples
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`in order to present the Merger Consideration in the most favorable light. Accordingly, the omission
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`of this material information renders the summary of this analyses provided in the Proxy
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`misleading.
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`33.
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`Similarly, in summarizing B. Riley’s Premiums Paid Analysis, the Proxy fails to
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`disclose the identity of each company and premium utilized in the analysis. A fair summary of a
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`premiums analysis requires the disclosure of the individual premium for each transaction involved
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`in the analysis. Without this information, shareholders are unable to assess whether the Proxy
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`summarized fairly, or, instead, summarized in order to present the Merger Consideration in the
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`most favorable light. The disclosure here is insufficient and renders the summary provided in the
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`Proxy misleadingly incomplete.
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`C. B. Riley’s Conflicts of Interest
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`34.
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`The Proxy fails to disclose any historical relationships, or compensation received
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`or expected to be received therefrom, between B. Riley, on the one hand, and the Company, ATN,
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`FC3, or any affiliates thereof, on the other.
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`35.
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`Disclosure of any compensation received or to be received as a result of the
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`relationship between a financial advisor issuing a fairness opinion and the subject company is
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`required pursuant to federal securities regulations. Moreover, it is important for shareholders to be
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`able to understand what factors might influence the financial advisor’s analytical efforts. A
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 13 of 21
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`financial advisor’s own proprietary financial interest in a proposed transaction must be carefully
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`considered when assessing how much credence to give its analysis. A reasonable shareholder
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`would want to know what important economic motivations that the advisor, employed by a board
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`to assess the fairness of the transaction to the shareholders, might have.
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`36.
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`On page 69 the Proxy states that “B. Riley and its affiliates are engaged in a broad
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`range of securities activities and financial advisory services. B. Riley and its affiliates may in the
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`future provide investment banking and other financial advice and services to the Company, Parent
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`and their respective affiliates for which advice and services B. Riley and its affiliates would expect
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`to receive compensation.” However, the Proxy fails to state whether they have provided services
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`in the past, or are aware of compensation they expect to receive. Therefore, the omission of the
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`above information renders the statements provided on page 69 of the Proxy, and potentially the B.
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`Riley fairness opinion, misleadingly incomplete, and in violation of federal securities regulations.
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`D. The Misleadingly Incomplete Background of the Proposed Merger
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`37.
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`The Proxy contains a misleadingly incomplete summary of the events leading up
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`to the Proposed Merger that omits material facts. Once a company travels down the road of partial
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`disclosure of the history leading up to a merger, they had an obligation to provide shareholders
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`with an accurate, full, and fair characterization of those historic events. Even a non-material fact
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`can trigger an obligation to disclose additional, otherwise non-material facts in order to prevent
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`the initial disclosure from materially misleading the stockholders.
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`38.
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`The Proxy states that during the sales process the Company entered into
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`confidentiality agreements with multiple parties, including Party B, which contained standstill and
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`non-solicitation provisions. However, the summary provided in the Proxy fails to disclose whether
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`these standstill provisions contained “don’t ask don’t waive” (“DADW”) provisions, including
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`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 14 of 21
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`whether those provisions had fallen away upon the execution of the original Macquarie/GCM
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`merger agreement or were still in effect during the go-shop period.
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`39.
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`The express communication of the existence of these provisions is material to
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`Alaska Communications’ shareholders, as it bears directly on the ability of parties that expressed
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`interest in acquiring the Company to offer them a better deal. The failure to plainly disclose the
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`existence of DADW provisions creates the false impression that any of the parties who signed non-
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`disclosure agreements could have made a superior proposal. However, if those non-disclosure
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`agreements contained DADW provisions, then those parties could only make a superior proposal
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`by breaching the agreement—since in order to make the superior proposal, they would have to ask
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`for a waiver, either directly or indirectly. Thus, the omission of this material information renders
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`the summary provided in the Background of the Merger section of the Proxy misleading. Any
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`reasonable shareholder would deem the fact that the most likely potential topping bidders in the
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`marketplace may be precluded from making a superior offer to significantly alter the total mix of
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`information.
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`40. Moreover, the Proxy states that during the go-shop period, representatives of B.
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`Riley contacted more than 50 strategic parties and financial sponsors, including ATN, on behalf
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`of the Company to determine whether they had an interest in making a proposal to acquire the
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`Company. However, the Proxy fails to state whether Party B was contacted. Given that Party B
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`was one of the most interested bidders prior to the original Macquarie/GCM merger agreement,
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`Alaska Communications’ shareholders need to know whether they were contracted or excluded
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`from the go-shop period. The failure of the Proxy to include this information renders the summary
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`provided therein misleadingly incomplete.
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`41.
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`In sum, the omission of the above-referenced information renders the Proxy
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`
`
`14
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`

`

`Case 1:21-cv-00887-UA Document 1 Filed 02/01/21 Page 15 of 21
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`materially incomplete and misleading, in contravention of the Exchange Act and the Individual
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`Defendants’ duty of candor/disclosure. Absent disclosure of the foregoing material information
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`prior to the forthcoming Shareholder Vote, Plaintiff will be unable to cast an informed vote
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`regarding the Proposed Merger, and is thus threatened with irreparable harm, warranting the
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`injunctive relief sought herein.
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`COUNT I
`Against All Defendants for Violations of Section 14(a) of the Exchange Act
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`Plaintiff incorporates each and every allegation set forth above as if fully set forth
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`42.
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`herein.
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`43.
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`Section 14(a)(1) of the Exchange Act makes it “unlawful for any person, by the use
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`of the mails or by any means or instrumentality of interstate commerce or of any facility of a
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`national securities exchange or otherwise, in contravention of such rules and regulations as the
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`Commission may prescribe as necessary or appropriate in the public interest or for the protection
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`of investors, to solicit or to permit the use of his name to solicit any proxy or consent or
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`authorization in respect of any security (other than an exempted security) registered pursuant to
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`section 78l of this title.” 15 U.S.C. § 78n(a)(1).
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`44.
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`Rule 14a-9, promulgated by the SEC pursuant to Section 14(a) of the Exchange
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`Act, provides that proxy communications shall not contain “any statement which, at the time and
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`in the light of the circumstances under which it is made, is false or misleading with respect to any
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`material fact, or which omits to state any material fact necessary in order to make the statements
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`therein not false or misleading.” 17 C.F.R. § 240.14a-9.
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`45.
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`The omission of information from a proxy will violate Section 14(a) if other SEC
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`regulations specifically require disclosure of the omitted information.
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`46.