Stockholder sues Hammons Hotels Inc.

A complaint has been filed in the Court of Chancery of the State of Delaware against John Q. Hammons Hotels Inc. (AMEX: JQH) and members of its board of directors. The complaint, purportedly filed by a Hammons stockholder, alleges that Barcelo Crestline Corp.’s buyout offer of $13 per share of Hammons Hotels’ class A common stock is inadequate and that Hammons Hotels board members have breached their fiduciary duties in connection with the proposed transaction.

The suit seeks to block Hammons Hotels from completing the proposed deal, according to a Hammons Hotels news release.

A newly formed special committee, created to evaluate Barcelo Crestline’s buyout offer, is responding to the complaint.

“The company has not reached any agreement with Barcelo Crestline with respect to their proposal,” said David D. Sullivan, the committee’s chairman, in the release. “We are fully committed to ensuring that any transaction that occurs is the product of a fair process that maximizes value to the holders of the class A common stock. We believe the lawsuit … is premature, and we encourage shareholders to allow us the opportunity to respond to this proposal in an appropriate and thoughtful manner.”

Sullivan and fellow independent directors Donald H. Dempsey and James F. Moore were appointed to the special committee Oct. 18. The special committee is responsible for evaluating the proposal, negotiating the terms of the deal and making a recommendation to the board on behalf of the shareholders.

The committee has retained Lehman Brothers to act as its financial advisor in reviewing the Barcelo Crestline proposal. Law firm Katten Muchin Zavis Rosenman will represent the committee and assist in the review.

The proposal, made on Oct. 18, would pay Hammons Hotels shareholders approximately $64 million, or $13 per share, for the company’s outstanding Class A common stock.

Founder and CEO John Q. Hammons, who is majority shareholder, said he is in favor of the offer. A board decision is expected in January.