DALLAS (CN) - Silverleaf Resorts, a timeshare operator, is selling itself too cheaply through an unfair process to Cerberus Capital Management, a shareholder says in a derivative complaint. The $94.4 million deal "blatantly and significantly undervalues Silverleaf at a mere $2.50 per share," though the company reported its book value at $5.47 per share, according to the complaint.
"The proposed acquisition blatantly and significantly undervalues Silverleaf at a mere $2.50 per share, while Silverleaf's book value - the representation by the company of the worth of Silverleaf's assets in the event of a sale - is $5.47," according to the complaint in Dallas County Court.
Based in Dallas, Silverleaf Resorts (listed as SVLF on the Nasdaq) operates and markets 13 timeshare resorts in Texas, Missouri, Illinois, Georgia, Massachusetts and Florida. Its shares closed Friday at a 52-week high of $2.46 a share, after trading at less than one-third of that value one year ago.
Named plaintiff Shaun Stacks claims that Silverleaf director-defendant J. Richard Budd III, a current and longtime Cerberus employee, gave Cerberus the "inside track."
"Additionally, the company's largest shareholder, Robert E. Mead ('Mead'), who controls 24.5% of Silverleaf, has voted his shares in favor of the transaction," the complaint states. "Mead will receive over $23 million for approving the sale of the company to Budd's employer, Cerberus. As a voting bloc, the company insiders already own 47 percent of the stock - enough to stop any deal not favorable to their personal interests."
Stacks wants the purchase enjoined and the director-defendants compelled to exercise their fiduciary duties to shareholders. Alternatively, he seeks damages in the event the purchase is consummated.
He is represented by Charles Branham with Goldfarb Branham of Dallas.