Facing three class-action suits, Eastern Insurance Holdings is postponing a special shareholders meeting to vote on selling the company...
Facing three class-action suits, Eastern Insurance Holdings is postponing a special shareholders meeting to vote on selling the company.
Eastern had called a Wednesday meeting at its 25 Race Ave. headquarters for shareholders to vote on an offer from ProAssurance.
ProAssurance said in September it was offering $24.50 a share for Eastern, a deal worth a total of $205 million.
A majority of votes cast at the meeting is needed for approval of the all-cash deal.
But Eastern said Monday it will delay the vote to allow a special litigation committee to evaluate the claims in the suits. The delay also will let the committee facilitate ongoing discussions with plaintiffs to resolve or dismiss the actions. Eastern, with 152 employees here, did not set a new meeting date.
The three suits allege various shortcomings in ProAssurance's offer and Eastern's negotiations with the Alabama firm. In a suit filed in Lancaster County Court of Common Pleas last month, shareholder Fundamental Partners claims that Eastern president Michael L. Boguski was "conflicted" in evaluating the ProAssurance deal.
The suit claims Boguski was swayed because he stands to make $3.2 million if it goes through. Eastern's directors were conflicted too, because they would get extra pay as well, the suit alleges.
In another suit filed in county court last month, shareholder Harry Kupnik claims Eastern failed to seek other bidders or outside advice before signing a letter of intent with ProAssurance.
An October suit filed in Philadelphia federal court by shareholder Rudy Rosenberg takes aim at the proxy statement issued by Eastern for the shareholder vote, claiming it's "false and materially misleading." This suit likewise criticizes Eastern's sale process and the extra pay that Boguski would receive.