DETROIT, Dec. 23 /PRNewswire/ -- Herrick Foundation prevailed today in a lawsuit in Lenawee County (Mich.) Court in its effort to seek preliminary injunctive relief from the decision by Tecumseh Products Company to declare a 3-for-1 stock split effective December 31, 2008. Lenawee County Judge Timothy P. Pickard granted the injunction against the stock split that would have reduced all of the company's Class B shareholders' voting rights from 100% to 27% -- without the consent or vote of Tecumseh's Class B shareholders.
"The judge's decision has vindicated the Herrick Foundation's position that it is Tecumseh's illegal and inequitable acts wasting valuable company resources, and not the Herrick Foundation as the company has advocated," said Herrick Foundation spokesman Jeff Caponigro.
The Court Order found that there "was a substantial likelihood of Plaintiff's claims that Tecumseh declared a stock split inequitably, without compelling justification, and in violation of Tecumseh's Restated Articles of Incorporation, Article IV(C)." And "that the issuance would significantly dilute Plaintiff's (Herrick Foundation's) voting rights as a shareholder in Tecumseh and would cause substantial confusion in the market and for shareholders."
At today's hearing, Judge Pickard indicated that this is clearly another effort by Tecumseh's Board to entrench itself in a manner that conflicts with the best interest of Tecumseh shareholders.
The proposed stock split, which two Board members voted against, was the Tecumseh Board's third unlawful effort to interfere with voting rights, according to Herrick Foundation spokesman Jeff Caponigro. He said the Foundation was gratified that the Court prevented the unfair immediate dilution of Class B voting rights by action of the directors alone.
Herrick Foundation wasn't the only shareholder disputing Tecumseh's actions. Alan Kahn, a Tecumseh shareholder filed a Class Action Complaint on December 10, 2008, against the five Directors of Tecumseh who approved the stock split.
"Tecumseh likes to portray Herrick Foundation's dispute as simply a vendetta against the company when, in reality, it is the company's own vendetta toward the Herrick's that has led it to repeatedly take improper actions that are negatively impacting all company shareholders," Caponigro said.
Herrick Foundation's Caponigro added, "It is unfortunate that Tecumseh's Board is obsessed with the past, when the real focus should be on the present and future."
Herrick Foundation, based in Detroit, Mich., is one of the largest charitable foundations in the State of Michigan.
