LAMPERS v. Fertitta

CONCLUDED

Hearing
06/09/09 – 06/09/09

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Summary

Landry's owns restaurant chains, including Rain Forest Cafe and Chart House, as well as the Golden Nugget Hotel and Casino.

Landry's CEO Tilman Fertitta proposed to take the company private and offered $21 per share (a significant premium) to buy the company. A special committee of disinterested outsiders eventually recommended that Landry's approve the sale, the terms of which also provided for refinancing Landry's $400M debt obligation.

After the 2008 financial dislocation impaired market conditions, and Hurricane Ike damaged Landry's property, Fertitta contacted the bank providing financing for the deal, and the bank subsequently suggested that a Material Adverse Event had occurred, and financing became unavailable. According to the plaintiff, Landry's financial performance remained strong, and the hurricane damage was rapidly repaired, so there was no obvious reason why the deal's financing collapsed. Fertitta went on to purchase additional shares at the lower market price.

Plaintiffs alleged that Fertitta breached his duty of loyalty by undermining the deal's financing, failing to recover a $15M termination fee, and failing to defend against Fertitta's gaining control by adopting a poison pill.

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