By PETER HUSSMANN
Iowa Telecom late this afternoon announced that it reached a tentative settlement in the six class-action lawsuits filed by shareholders over the Newton-based company's proposed merger with Windstream Corporation.
Shareholders in both federal and Iowa district court filed lawsuits claiming the board of directors of Iowa Telecom breached their fiduciary duty in agreeing to the financial terms of the buyout. The shareholders claimed the company was being undervalued and that certain directors had conflicts of interest in supporting the takeover measure.
In announcing the settlement in a Securities and Exchange Commission filing this afternoon, Iowa Telecom said "it acted in good faith and in the best interests of Iowa Telecom and its shareholders in approving the merger and the merger agreement."
"Iowa Telecom and its directors believe that the merger consideration is fair and that the merger is in the best interests of Iowa Telecom and its shareholders," the company said in the press release SEC filing. "Iowa Telecom, its directors and Windstream deny that any of them violated any law or breached any duty to shareholders of Iowa Telecom or anyone else and have vigorously defended the lawsuits."
Under the proposed settlement, Iowa Telecom and Windstream have "agreed to make certain revisions to the disclosure in the proxy statement" set to be mailed to Iowa Telecom shareholders. The revisions, the announcement states, were proposed by counsel for the plaintiffs in the class action lawsuits.
Iowa Telecom said that no changes in the merger agreement or the terms of the merger will be made. Further, no payments will be made to shareholders in addition to those provided by the merger agreement. In exchange for those revised disclosures - which were not included in the announcement of the settlement - the plaintiffs will agree to dismiss their lawsuits.
Iowa Telecom, its directors and Windstream have all agreed that they will not oppose "certain requests for attorney fees by counsel for the plaintiffs."
The settlement was entered into, Iowa Telecom's announcement said, "in order to eliminate the uncertainty, distraction, burden and expense of future litigation and to permit the merger to proceed without possible delays from litigation..."
The settlement is subject to certain conditions, including due diligence confirmation by attorneys for the plaintiffs, court approval, certification of class and the consummation of the merger.
Iowa Telecom does not expect that the pendancy of the litigation or the settlement process will cause a delay in the closing of the merger, which is expected to occur in the middle of the year.
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