Tuesday, January 25, 2011

Todd Shipyards Finds No 3rd Party Buyer, Class Action Suit Filed By Shareholders

The Todd Shipyards Corporation, being pursued as a purchase target by Vigor Industrial, announced Tuesday that it has not found an alternate buyer and will not extend an option to continue seeking a third-party purchaser.

In December, the Portland, Oregon-based Vigor entered into an agreement to purchase the 94-year-old Todd, which operates ship building, maintenance and repair facilities in Bremerton, Everett and Seattle.

Part of the agreement allowed Todd to solicit acquisition proposals from alternative purchasers. This so-called "go shop" period expires on Jan. 28. However, Todd had the option under the agreement to ask for a 14-day extension past the expiration of the "go shop" period at 11:59 p.m. EST on Jan. 28.

Under the terms of the agreement, the current all-cash tender offer by Vigor of $22.27 per share for the nearly 5.8 million shares of outstanding Todd stock, or approximately $130 million, expires at one minute after the "go shop" period on Jan. 28.

A stockholder vote will still have to be taken to accept the Vigor's tender offer, however, the Todd board of directors unanimously approved the Vigor agreement in December 2010. Todd’s directors and officers and certain other stockholders who own an aggregate of approximately 15.3 percent of Todd’s outstanding stock also entered into agreements at the time pursuant to which they agreed to transfer their Todd shares to Vigor and to vote their shares in favor of a merger if a vote is required by law. Two weeks ago Vigor obtained antitrust approval from the federal government to move forward with the Todd purchase.

Under the terms of the tender offer, Todd will merge with Nautical Miles, Inc., a Vigor subsidiary. Nautical will merge with and into Todd following completion of the deal, with Todd surviving as a wholly owned-subsidiary of Vigor.

“Todd is Puget Sound’s leading shipyard and the combination of Vigor and Todd will create the largest and most capable marine services company in the Pacific Northwest,” said Frank Foti, the President of Vigor in December following the signing of the agreement with Todd. “The combination of resources and capabilities will allow the combined companies to expand both the scope and capacity of their ship repair and new construction business.”

Vigor officials have stated that the firm has obtained enough financing to purchase all 5.78 million outstanding Todd shares as well as refinance all existing Todd debt.
The terms of the agreement set 67 percent of outstanding Todd stock as the minimum Vigor must purchase for the deal to close. In the event that the minimum condition is not met, and in certain other circumstances, the parties have agreed to complete the transaction through a one-step merger after receipt of shareholder approval.
As of the end of 2010, at least a half-dozen shareholder-representing law firms have said they were investigating the agreement and how the Todd board may have abrogated its fiduciary responsibility and short-changed certain shareholders.

On January 20, the Maryland law firm of Brower Piven announced it had begun a class action lawsuit in the Washington Superior Court, King County, on behalf of all shareholders of Todd.

The suit alleges that Todd's directors and officers have breached their fiduciary duties to the company's stockholders, "including the duties of good faith, loyalty, and due care." The suit also alleges that Vigor and Woodbourne Partners, L.P., a private investment company that holds Todd shares, aided and abetted the alleged breaches of fiduciary duties by the Todd officers and directors cited in the suit.