Kinder Morgan Agrees to Settlement In Shareholder Class Action
September 2010 - Please be advised that your rights may be affected by a class action lawsuit pending in this Court if you held the common stock of Kinder Morgan, Inc. (“KMI”) between May 29, 2006 and May 30, 2007, or are the transferee, successor or assign of any such holder.
Please be advised that your rights may be affected by the proposed settlement (the “Settlement”) of this lawsuit, on behalf of the Class , and the Defendants have reached for $200,000,000 in cash. This proposed Settlement, which is subject to Court approval, would resolve all claims in the Action
This case was brought as a proposed class action alleging that Defendants’ conduct in connection with the Merger constituted a breach of fiduciary duties by certain of the Defendants, including that the $107.50 per share price was unfair and represented insufficient consideration for KMI’s public shareholders, and that other of the Defendants aided and abetted those breaches of fiduciary duties. Lead Plaintiff also alleges that Defendants failed to provide KMI’s shareholders with material information relating to the transaction. Defendants have denied any and all allegations of wrongdoing, fault, liability, or damages to Lead Plaintiff and/or the Class, and believe that they have acted at all times properly, in good faith and in a manner consistent with their legal duties and 3 obligations. Defendants further deny the allegations that the Class Members suffered damages as a result of any actions they have or have not taken
During August 2010, a Mediator contacted the Parties and discussed various methods and means for the resolution of the Action. After consulting with counsel for the Parties, the Mediator submitted to the Parties a proposal to settle the Action for $200,000,000 (the “Proposal”). The designated Class Representatives were informed of the Mediator’s Proposal and provided with the Mediator’s separate explanation of why the Mediator believed that the Proposal was in the best interests of the Class. The Mediator explained that in his opinion the timing for such a proposal was optimal; that the Proposal, if accepted, would be for an amount that provided a significant benefit for the Class; and that he believed that the Parties would not be able to come to a resolution on better terms at some later point. The Mediator further noted that, in his view, the risks associated with Defendants’ Summary Judgment Motions were substantial and that Justice Walsh’s view regarding the business judgment rule could easily be adopted by the Court, resulting in potentially zero recovery for the Class.
On August 12, 2010, Defendants, Geiger, on behalf of himself and the Class, and Class counsel formally accepted the
Mediator’s Proposal and agreed to present the proposed Settlement to the Court for its approval. The Court was informed on August
25, 2010 that there was a resolution of the Action that would be presented to it for its review and approval.
According to a press release a Law firm represents stockholders of Kinder Morgan, Inc. (KMI) in actions that initially challenged the proposed acquisition of Kinder Morgan by a buyout group lead by its largest stockholder and Chairman, Richard Kinder. The KMI Buyout is one of the largest management-led buyouts in corporate history. Richard Kinder’s group announced a $100 per share merger proposal on May 28th, 2006. The Law Firm filed Petitions in the District Court of Shawnee County, Kansas (Kinder Morgan’s state of incorporation) on June 9th, 2006 seeking to require that the Kinder Morgan board of directors fulfill its fiduciary duties and obligations to the Company’s public shareholders in the face of the “going-private” takeover proposal.
On August 1st, 2006, the District Court of Shawnee County, Kansas appointed Plaintiffs Land and Geiger as Co-Lead Plaintiffs.
On August 28th, 2006, KMI announced that it had agreed with the Buyout Group to be acquired in a going private transaction for $107.50 per share. Plaintiffs filed their Consolidated and Amended Class Action Petition on August 28th, 2006 and on October 2nd, 2006, Plaintiffs filed their Second Consolidated and Amended Class Action Petitions. Both Amended Petitions allege that the value of KMI’s shares is materially in excess of the $107.50 agreed to in connection with the Buyout, that the consideration is inadequate and represents an attempt by the Buyout Group to wield its control to force out the public shareholders in order to reward itself with the profits rightfully belonging to the Plaintiffs and KMI’s public shareholders, and that the proposed offer was timed to take advantage of a slump in the share price of KMI that immediately preceded the initial Buyout offer.
The case was then assigned to former Delaware Supreme Court Justice Joseph T. Walsh as Special Master and expedited discovery commenced. During the course of extensive document and deposition discovery, Plaintiffs filed their Third Consolidated and Amended Class Action Petition under seal of confidentiality on November 21, 2006. Plaintiffs sought a preliminary injunction to halt the Buyout. Although no injunction was issued, the Special Master noted that the Buyout process was flawed from the date that Kinder and other members of the management and Goldman Sachs Investment Banking made plans to take KMI private. Discovery is ongoing.
On January 25, 2008, Plaintiffs filed a Motion for Class Certification. Briefing on Plaintiffs’ Motion is scheduled to be completed on July 25, 2008. Plaintiffs’ Motion seeks an order certifying a plaintiff Class consisting of:
All holders of Kinder Morgan, Inc. common stock, during the period August 28, 2006 through May 30, 2007 and their transferees, successors and assigns. Excluded from the Class are defendants and any person, firm, trust, corporation or other entity related to or affiliated with any defendant.Copies of the Petitions, as filed, and Court Orders are linked below.