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No 'Good Cause' Found to Stop Interest Accrual On Value of CKx
CKx Inc., the entertainment company that holds the rights to American Idol and other TV programs, and is involved in litigation over its acquisition by Apollo Global Management LLC, cannot order the challenging shareholder to accept the undisputed portion of the purchase price of its stock, the Delaware Court of Chancery ruled. The court held the company did not meet the “good cause” standard necessary to order the unhappy stock owner to agree to a partial sales price and for the court to stop the accrual of interest on the value of that stock.
Vice Chancellor Sam Glasscock III issued the letter opinion in Huff Fund Investment Partnership v. CKx Inc., 6844. The case made headlines last year when Vice Chancellor Glasscock broke from the Delaware court's tradition of using discounted cash flow (DCF) to determine a company's value. He ruled instead that the $509 million sale price for CKx (now known as CORE Media Group) was the most relevant evaluation because no comparable transactions or reliable cash-flow projections existed.
Last year, an affiliate of Apollo Global Management LLC submitted a bid to purchase CKx for $5.50 per share, while a second suitor, identified in court documents as Party B, offered a $5.60 per share purchase price. Although Party B offered a marginally higher purchase price, CKx's board selected the Apollo offer because its financing was more secure, according to the court's opinion.
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