RCN Corporation Board of Directors Under Investigation

An investigation on behalf of current long term shareholders in RCN Corporation (Public, NASDAQ:RCNI) over potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover was announced.

The investigation by la aw firm focuses on potential breaches of fiduciary duty and other violations of state law by the Board of Directors of RCN Corp. arising out of their attempt to sell RCN Corporation to an investment fund managed by ABRY Partners. RCN Corporation, located in Herndon, VA, is a broadband services provider, that offers all-digital and definition video, high-speed Internet and voice services primarily to residential and small and medium business. On March 05, 2010 RCN Corporation (NASDAQ: RCNI) and ABRY Partners announced that they entered into an agreement for an investment fund managed by ABRY Partners to acquire RCN Corp. for total consideration of approximately $1.2 billion, including the assumption of debt. Under the proposed agreement each share of RCN common stock issued and outstanding immediately prior to the effective time of the merger will be entitled to receive $15 in cash.
According to RCN Corporation the offer represents a 43% premium over RCN Corp.'s average closing share price during the past 30 trading days and a 22% premium over the closing share price on March 4, 2010.

But according to one investigation by a law firm “the transaction appears to be unfair” to current investors of RCN Corporation (NASDAQ:RCNI) because the “offer to purchase RCN Corporation (RCNI) at $15.00 per share appears opportunistically timed to take advantage of the current economic downturn” and is “grossly unfair, inadequate, and substantially below the fair or inherent value of RCNI”.
Shares of RCN Corporation (NASDAQ:RCNI) traded after the announcement at $15.06 per share, and at $12.20 per share before the news. RCNI shares were down from over $30 in 2007.
The investigation “concerns whether the RCN Corp. Board of Directors breach their fiduciary duties to RCN Corp. (NASDAQ:RCNI) shareholders by failing to adequately shopped RCN Corporation before entering into the proposed transaction and whether the investment fund managed by ABRY Partners may be underpaying for RCN Corporation (RCNI), thus unlawfully harming RCNI shareholders”.

RCN Corporation reported in 2007 Total Revenue of $636.10million and in 2008 Total Revenue of $739.24million.