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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 1 of 25
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`
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`Case No.: _________________
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`COMPLAINT
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`DEMAND FOR JURY TRIAL
`
`
`CHRISTINE ZILCH,
`
`
`
`
`-against-
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`Plaintiff,
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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,
`
`
`Defendants.
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`
`
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`Plaintiff, Christine Zilch (“Plaintiff”), by her undersigned attorneys, for this complaint
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`against Defendants, alleges upon personal knowledge with respect to Plaintiff, and upon
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`information and belief based upon, inter alia, the investigation of counsel, as to all other
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`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), 78t(a)
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`respectively, and United States Securities and Exchange Commission (“SEC”) Rule 14a-9, 17
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`C.F.R. § 240.14a-9. Plaintiff’s claims arise in connection with the proposed acquisition of Alaska
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`Communications by affiliates of ATN International, Inc. (“ATN”) and Freedom 3 Capital LLC
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`(“Freedom 3” and together with ATN, the “Buyers”).
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 2 of 25
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`2.
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`On November 3, 2020, Alaska Communications, Macquarie Capital and GCM
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`Grosvenor (together, “Macquarie”) announced that they had entered into an agreement and plan
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`of merger, pursuant to which Alaska Communications would merge with and into Macquarie.
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`Pursuant to the terms of the original Merger Agreement, Alaska Communications’ shareholders
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`would be entitled to receive $3.00 per share in cash.
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`3.
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`On January 4, 2021, Alaska Communications and the Buyers announced that they
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`had agreed upon an alternative transaction (the “Proposed Transaction”), pursuant to which Alaska
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`Communications would terminate the merger agreement with Macquarie and GCM Grosvenor in
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`favor of an agreement and plan of merger with the Buyers, pursuant to which Alaska
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`Communications would merge with and into the Buyers (the (“Merger Agreement”) and Alaska
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`Communications’ shareholders would be entitled to receive $3.40 per share in cash (the “Merger
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`Consideration”).
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`4.
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`On January 25, 2021, in order to convince Alaska Communications’ public
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`common stockholders to vote in favor of the merger with the Buyers, the Defendants authorized
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`the filing of a second materially incomplete and misleading Schedule 14(a) Preliminary Proxy
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`Statement (the “Proxy”) with the SEC.
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`5.
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`In particular, the Proxy contains materially incomplete and misleading information
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`concerning the background of the Proposed Transaction and the valuation analyses performed by
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`Alaska Communications’ financial advisors, B. Riley Securities, Inc. (“B. Riley” or the “Financial
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`Advisors”) regarding the Proposed Transaction.
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`6.
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`The Proposed Transaction is expected to close in the second half of 2021 and the
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`special meeting of the Company’s shareholders to vote on the Proposed Transaction will be
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`scheduled in the coming weeks. Therefore, it is imperative that the material information that has
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 3 of 25
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`been omitted from the Proxy is disclosed prior to the special meeting, so Plaintiff can properly
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`exercise her corporate voting rights.
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`7.
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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 Rule 14a-9.
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`Plaintiff seeks to enjoin Defendants from taking any steps to consummate the Proposed
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`Transaction unless and until the material information discussed below is disclosed to Alaska
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`Communications’ public common shareholders sufficiently in advance of the upcoming
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`shareholder vote or, in the event the Proposed Transaction is consummated, to recover damages
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`resulting from the Defendants’ violations of the Exchange Act.
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`JURISDICTION AND VENUE
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`8.
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`This Court has jurisdiction over all claims asserted herein pursuant to Section
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`27 of the 1934 Act because the claims asserted herein arise under Sections 14(a) and 20(a) of the
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`1934 Act and Rule 14a-9.
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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 each Defendant by this Court permissible
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`under the 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.
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`Inv’r Prot. Corp. v. Vigman, 764 F.2d 1309, 1315 (9th Cir. 1985). “[S]o long as a defendant has
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`minimum contacts with the United States, Section 27 of the Act confers personal jurisdiction over
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`the defendant in any federal district court.” Id. at 1316.
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 4 of 25
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`10.
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`Venue is proper in this District under Section 27 of the Exchange Act, 15 U.S.C.
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`§ 78aa, as well as 28 U.S.C. § 1391, because Defendants are found or are inhabitants or transact
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`business in this District. Indeed, the Company’s common stock trades on the NASDAQ
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`Composite exchange (the “Nasdaq”), which is headquartered in this District rendering venue in
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`this District appropriate. See, e.g., United States v. Svoboda, 347 F.3d 471, 484 n.13 (2d Cir.
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`2003) (collecting cases).
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`PARTIES
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`11.
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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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`12.
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`Defendant Alaska Communications is a Delaware corporation with its principal
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`executive offices located at 600 Telephone Avenue, Anchorage, Alaska. The Company is a
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`telecommunications fiber, broadband, and managed IT services provider, offering technology and
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`customer solutions to residential, business, and wholesale customers in and out of Alaska. The
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`Company’s common stock trades on the Nasdaq under the ticker symbol “ALSK”.
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`13.
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`Defendant William H. Bishop (“Bishop”) is, and has been at all relevant times, the
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`Company’s President and Chief Executive Officer, and a director of the Company.
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`14.
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`Defendant David W. Karp (“Karp”) is, and has been at all relevant times, the Chair
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`of the Company’s Board of Directors.
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`15.
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`Defendant Peter D. Aquino (“Aquino”) is, and has been at all relevant times, a
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`director of the Company.
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`16.
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`Defendant Wayne Barr, Jr. (“Barr”) is, and has been at all relevant times, a director
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`of the Company.
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`17.
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`Defendant Benjamin C. Duster, IV (“Duster”) is, and has been at all relevant times,
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 5 of 25
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`a director of the Company.
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`18.
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`Defendant Shelly Lombard (“Lombard”) is, and has been at all relevant times, a
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`director of the Company.
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`19.
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`The Defendants identified in paragraphs 14 through 18 are collectively referred to
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`herein as the “Board” or the “Individual Defendants,” and together with the Company, the
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`“Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`I.
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`Background of the Company and the Proposed Transaction
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`20.
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`Alaska Communications is a publicly traded Delaware corporation that provides
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`telecommunications fiber, broadband, and managed IT services, offering technology and customer
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`solutions to residential, business, and wholesale customers in and out of Alaska, and provides
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`telecommunication services to consumers in the most populated communities throughout the state.
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`The Company’s common stock trades on the Nasdaq under the ticker symbol “ALSK.”
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`21.
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`The Company’s facilities-based communications network extends through the
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`economically significant portions of Alaska and connects to the contiguous states via Alaska
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`Communications’ two diverse undersea fiber optic cable systems. Its network is among the most
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`expansive in Alaska and forms the foundation of service to its customers. Alaska Communications
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`operates in a largely two-player terrestrial wireline market.
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`22.
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`Prior to the announcement of the Proposed Transaction, Alaska Communications
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`had excellent growth prospects. Although Alaska Communications estimates its market share to
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`be less than 25% statewide, its revenue performance relative to its largest competitor suggests that
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`Alaska Communications is gaining market share in the markets that it serves, with third-party
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`market studies indicating that Alaska Communications’ market share close to 40% for “near net”
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 6 of 25
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`opportunities, that is, within one mile of its fiber network.
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`23.
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`On November 4, 2020, the same day the original merger with Macquarie was
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`announced, Alaska Communications issued a press release entitled Alaska Communications
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`Reports Third Quarter 2020 Results, which announced a strong quarter, stating in part:
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`“Our results for the third quarter reflect execution of our strategic initiatives to
`deliver industry-leading telecommunications products and services. Prioritizing
`superior customer service and fiber-based network solutions, we have established
`Alaska Communications as a premier provider. We continue to strengthen our fiber
`infrastructure, to facilitate our multiyear transition to IP-based services, and to
`evaluate means to increase our access and core network. This includes optical
`transport network upgrades to our subsea Northstar fiber resulting in a capacity
`increase of over five times, as well as securing CBRS spectrum in 135 cities ranging
`from southeast Alaska to the North Slope. Our biggest strengths in 2020 have been
`to manage the unexpected, quickly offer customers solutions, and continue to drive
`ahead adding many route miles of fiber. In addition to benefiting our customers, we
`are creating opportunities.
`
`“Also, after years in development, in October, we went live with our new business
`and operating systems that will enhance the customer experience through
`streamlined ordering process; improve business analytics and reporting; and
`simplify operations that we expect to yield expense savings and drive operational
`excellence in coming years. We are committed to connecting the people and
`businesses of Alaska and beyond, investing in our future and driving growth to
`benefit our constituents. We are very excited about the future,” said Bill Bishop,
`president & CEO.
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`24.
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`Indeed, after the original merger with Macquarie was announced the Buyers,
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`recognizing Alaska Communications’ excellent prospects, engaged in a hostile bidding war with
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`Macquarie.
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`25.
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`Thus, the Proposed Transaction comes at a time when Alaska Communications’
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`future success was not fully reflected by its share price. As a result, the Proposed Transaction will
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`“compensate” Alaska Communications’ stockholders with cash that fails to adequately
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`compensate them for the intrinsic value of their shares.
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`26.
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`Despite Alaska Communications’ intrinsic value and growth prospects, the
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 7 of 25
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`Individual Defendants are agreeing to a merger that cashes out Alaska Communications’
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`stockholders and deprives them the ability to partake in Alaska Communications’ growth. The
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`Individual Defendants breached their fiduciary duties owed to the Company’s stockholders by
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`agreeing to the original merger agreement with Macquarie, which contemplated a grossly
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`inadequate merger consideration, and further breached their fiduciary duties by agreeing to the
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`Proposed Transaction for the unfair Merger Consideration and allowing the unfair and flawed sales
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`process to unfold in the manner that it did rather than restarting the strategic review process, which
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`will cause Plaintiff and the Class to receive an inadequate Merger Consideration.
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`II.
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`The Proposed Transaction
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`27.
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`On November 3, 2020, Alaska Communications and Macquarie issued a joint press
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`release announcing their merger agreement:
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`ALASKA COMMUNICATIONS ANNOUNCES DEFINITIVE
`AGREEMENT TO BE ACQUIRED BY MACQUARIE CAPITAL AND
`GCM GROSVENOR IN $300 MILLION TRANSACTION
`
`
`ANCHORAGE, Alaska—(BUSINESS WIRE)—Nov. 3, 2020—Alaska Communications
`Systems Group, Inc. (NASDAQ: ALSK) (“Alaska Communications” or the “Company”),
`together with Macquarie Capital (“Macquarie”), and GCM Grosvenor (“GCM”), through
`its Labor Impact Fund, L.P., announced today that they have entered into a definitive
`agreement pursuant to which the Company will be acquired by an affiliate of Macquarie
`and GCM in an all cash transaction valued at approximately $300 million, including debt.
`The transaction will result in Alaska Communications becoming a privately held company
`and is expected to close in the second half of 2021.
`
`the
`features multimedia. View
`release
`press
`This
`https://www.businesswire.com/news/home/20201103005202/en/
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`full
`
`release
`
`here:
`
`Under the terms of the agreement, an affiliate of Macquarie and GCM will acquire all the
`outstanding shares of Alaska Communications common stock for $3.00 per share in cash.
`This represents a premium of approximately 57% over the closing per share price of $1.91
`on November 2, 2020, the last trading day prior to the date the merger agreement was
`executed, and a premium of approximately 50.8% over the 30-day volume weighted
`average price as of November 2, 2020.
`
`David W. Karp, Chairman of the Alaska Communications Board of Directors, said, "After
`carefully evaluating Macquarie Capital’s and GCM’s offer, we are confident that this
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 8 of 25
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`transaction is in the best interest of Alaska Communications and its stockholders.
`Macquarie Capital has a proven track record of delivering large and complex transactions
`globally on accelerated timelines, and GCM’s Labor Impact Fund provides strategy driven
`capital that we expect will generate real value for our customers and the Alaska
`Communications workforce."
`
`Bill Bishop, President and Chief Executive Officer of Alaska Communications, stated,
`"This transaction with Macquarie Capital and GCM represents an exciting opportunity to
`enhance our financial position and expand our resources to better serve our customers.
`Macquarie Capital has extensive experience navigating the complexities and issues
`associated with public-to-private transactions, as well as addressing the various regulatory
`regimes associated with communications infrastructure transactions. It also has deep
`telecommunications expertise and a strong track record of investing in capital intensive
`businesses, which will be critical as we deliver on our strategy to utilize our superior
`customer service and fiber-based network solutions in providing industry-leading
`telecommunications products and services. Finally, GCM’s Labor Impact Fund provides
`strategic value to our business both through its experience in the telecommunications sector
`and in fostering partnerships with a unionized workforce. We firmly believe this
`transaction will allow us to enhance our expanded fiber network services and drive long-
`term value for our customers in Alaska and the Lower 48."
`
`The transaction is subject to the approval of Alaska Communications' stockholders,
`regulatory approvals and other customary closing conditions. The transaction has fully
`committed debt and equity financing and is not subject to any condition with regard to
`financing. Equity financing will be provided by Macquarie Capital and GCM. Alaska
`Communications’ Board of Directors has unanimously approved the agreement with
`Macquarie 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.
`
`Under the terms of the agreement, Alaska Communications may solicit superior proposals
`from third parties for a period of 30 calendar days (the “Go-Shop”) continuing through
`December 3, 2020. In accordance with the merger agreement, Alaska Communications’
`Board of Directors, with the assistance of its advisors, intends to solicit superior proposals
`during this Go-Shop period.
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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 Macquarie and
`GCM, 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.
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`Conference Call
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 9 of 25
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`The Company will host a conference call and live webcast on Thursday, November 5, 2020
`at 2:00 p.m. Eastern Time to discuss the transaction and the third quarter of 2020 results.
`Parties in the United States and Canada can access the call at 1-800-430-8332 and enter
`code 1313142. All other parties can access the call at 1-323-289-6581 using the same code.
`
`The live webcast of the conference call will be accessible from the "Events Calendar"
`section of the company's investor website (www.alsk.com). The webcast will be archived
`for 30 days. A replay of the conference call will also be available two hours after the call
`ends and will run until December 5, 2020 at 5 p.m. ET. To hear the replay, parties in the
`U.S. and Canada can call 1-888-203-1112 and enter code 1313142. All other parties can
`call 1-719-457-0820 and enter code 1313142.
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`Advisors
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`Macquarie Capital is serving as financial advisor to Macquarie Capital and GCM
`Grosvenor in connection with the transaction.
`
`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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`Goodwin Procter LLP and Morgan Lewis & Bockius LLP are serving as legal advisors to
`Macquarie and GCM, respectively, in connection with the transaction.
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`28.
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`On December 4, 2020, Alaska Communications issued another press release,
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`entitled Alaska Communications Announces Expiration of “Go-Shop” Period, Receipt of Superior
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`Proposal and Qualification of Excluded Parties.
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`29.
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`On December 10, 2020, Alaska Communications issued another press release,
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`entitled Alaska Communications Announces Entry into Amended and Restated Merger Agreement
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`with Macquarie Capital and GCM Grosvenor to Increase Consideration to $3.20 per Share.
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`30.
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`On December 15, 2020, Alaska Communications issued another press release,
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`entitled Alaska Communications Announces Receipt of Superior Proposal.
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`31.
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`On December 22, 2020, Alaska Communications issued another press release,
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`entitled Alaska Communications Announces Amendment of Amended & Restated Merger
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`Agreement with Macquarie Capital and GCM Grosvenor to Increase Consideration to $3.26 per
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`Share.
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`
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`32.
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`On December 24, 2020, Alaska Communications issued another press release,
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 10 of 25
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`entitled Alaska Communications Announces Receipt of Superior Proposal.
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`33.
`
`On January 4, 2021, Alaska Communications issued the press release announcing
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`the Proposed Transaction:
`
`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
`
`
`January 4, 2021
`
`ANCHORAGE, Alaska—(BUSINESS WIRE)—Jan. 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.
`
`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.
`
`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.
`
`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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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 11 of 25
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`Bill Bishop, President and Chief Executive Officer of Alaska Communications, 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."
`
`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.”
`
`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.
`
`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.
`
`Advisors
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 12 of 25
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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.
`
`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.
`
`III.
`
`The Preclusive Deal Protection Devices
`
`34.
`
`To the detriment of the Company’s shareholders, the Individual Defendants agreed,
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`in the Merger Agreement, to certain onerous and preclusive deal protection devices that operate
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`conjunctively to make the Proposed Transaction a fait accompli and all but ensure that the
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`Proposed Transaction is consummated and that no competing offers emerge for the Company.
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`35.
`
`The Merger Agreement is protected by “no-shop” provisions that prohibit, except
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`under extremely limited circumstances, the Individual Defendants from engaging in discussions
`
`or negotiations relating to proposals regarding alternative acquisitions or business combinations.
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`36.
`
`These no-shop provisions also require the Board to provide the Buyers with written
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`notice of any Acquisition Proposal and further requires the Board to provide prior written notice
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`of its intention to terminate the Merger Agreement in favor of any Superior Proposal and negotiate
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`with the Buyers following receipt of the notice, so that they may adjust the terms and conditions
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`of the Merger Agreement so that the Acquisition Proposal ceases to be a Superior Proposal.
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`37.
`
`In addition, the Merger Agreement provides that the Company will be required
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`to pay a termination fee of $4,800,000.00 with respect to any termination under the no-shop
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`provision. Indeed, this $4,800,000.00 payable to the Buyers would, of course, be paid in addition
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`to the $6.8 million that Alaska Communications has already paid in connection with the
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`termination of the Macquarie merger.
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`38.
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`Ultimately, these preclusive deal protection devices restrained and continue to
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`restrain the Company's ability to solicit or engage in negotiations with any third party regarding a
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 13 of 25
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`proposal to acquire all or a significant interest in the Company. The aggregate effect of these
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`preclusive deal protection devices, viewed in light of the materially inadequate consideration
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`offered for the Company’s shares in the Proposed Transaction and the flawed and conflicted
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`negotiations process, supports an inference that the Board was not acting in good faith in approving
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`the terms of the Merger Agreement.
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`39.
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`Accordingly, Plaintiff seeks injunctive and other equitable relief to prevent the
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`irreparable injury that the Company’s shareholders will continue to suffer absent judicial
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`intervention.
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`IV.
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`The Proxy Omits Material Information
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`40.
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`On or about January 25, 2021, in order to convince Alaska Communications’ public
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`common shareholders to vote in favor of the Proposed Transaction, the Defendants authorized the
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`filing of the materially incomplete and misleading Proxy with the SEC, in violation of Sections
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`14(a) and 20(a) of the Exchange Act.
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`41.
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`Specifically, the Proxy omits two types of material information: (i) information
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`regarding the background of the Proposed Transaction that implicate the Individual Defendants’
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`conflicts of interests; and (ii) financial information that renders the Financial Advisors’ fairness
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`analysis materially false, misleading, or incomplete.
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`A.
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`The Proxy Omits Material Information Regarding the Background of
`the Proposed Transaction
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`42.
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`The Proxy fails to provide material information regarding the background of the
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`merger that implicates the possibility that the Merger Consideration is inadequate.
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`43.
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`The March 13, 2020 press release announcing the Proposed Transaction quotes
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`Defendant Karp:
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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
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`Case 1:21-cv-00890-AT Document 1 Filed 02/01/21 Page 14 of 25
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`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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`44.
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`However, the Proxy fails to describe the “comprehensive process” that the Board
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`employed. Indeed, the Merger Consideration contemplated by the Proposed Transaction greatly
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`exceeds the consideration contemplated in the original merger agreement with Macquarie; thus,
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`the shareholders are left uncertain whether Alaska Communications’ “comprehensive process”
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`was to execute a merger agreement that contemplated grossly inadequate consideration and hope
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`that a potential counterparty would engage in a hostile bidding war to avoid grossly
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`undercompensating the Company’s public investors. Given that many potential acquirors tend to
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`avoid hostile bidding wars when possible, the Proxy fails to explain whether the “comprehensive
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`process” that Defendant Karp was referring to was the process that was employed during the lead-
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`up to the Macquarie merger (which clearly did not ensure maximum value to the shareholders),
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`the go-shop process employed after the original merger was signed, or the post-go-shop “process”
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`employed during the hostile bidding war, which apparently was used instead of a strategic review
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`reset on the grounds that further outreach would not further maximize value to the Company’s
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`public shareholders.
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`B.
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`The Proxy Omits Material Financial Information that Renders the
`Company’s Financial Advisors’ Fairness Analysis Materially
`Misleading
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`45.
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`The Proxy also omits material information that renders the Financial Advisors’
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`Fairness Analysis materially misleading.
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`46.
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`The Proxy describes the Fairness Opinion and the various valuation analyses that
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`the Financial Advisors performed to render its opinion but fails to provide enough information
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`regarding the necessary data, support for conclusions, or the existence of, or basis for, the
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`underlying assumptions that underpin the fairness opinion. Specifically, the Proxy does not
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`Case 1:21-cv-00890-AT Document 1 Fi