Shari Redstone’s National Amusements has filed a new complaint urging the court to block CBS’s proposal to dilute NAI’s voting shares, an action that NAI called “unlawful.”
In its complaint, NAI alleged that CBS’s proposed dividend, which would dilute NAI’s voting shares from 80% to about 20%, is invalid because it does not adhere to the company’s bylaws. The day before CBS’s board conditionally approved the dividend, NAI changes CBS’s bylaws to require a 90% super majority vote to approve actions such as the dividend.
NAI also alleged that the dividend is invalid because it violates CBS’s charter and because it is based on the recommendation of CBS’s special committee, which NAI said was formed only to consider the potential remerger of CBS and Viacom.
“As NAI’s complaint makes clear there was no ‘threat’ or ‘interference,’ and indeed there was no action that could possibly warrant the CBS directors’ unprecedented, unjustified, and unlawful efforts to unilaterally dilute NAI’s voting rights. Unlike CBS’ complaint, NAI’s complaint is based on actual facts. Those facts demonstrate that CBS’ allegations are false, and that the CBS board and special committee took their actions not in response to any genuine threat, but instead because Les Moonves has tired of having a controlling shareholder. While Les Moonves is an extremely capable television executive, neither he, nor the board acting at his behest, is entitled to strip NAI of its voting control,” NAI said in a statement.
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NAI said it does not intend to force a recombination of CBS and Viacom, and that Redstone had already determined and advised a special committee of Viacom’s board that NAI no longer supported a merger. If the merger had happened, NAI said that Redstone told Moonves that NAI would consider relinquishing its controlling interest.
Last week, CBS told the Delaware Court of Chancery that NAI’s bylaw amendments were not effective at the time of the special meeting of the CBS board of directors. According to CBS, NAI’s written consent toward the bylaw amendments, which was submitted the day before the special meeting, needs at least 20 days before it can become effective.
“The existing controversy regarding the effectiveness of the Purported Bylaw Amendments is substantial, justiciable, and of sufficient immediacy to warrant the issuance of a declaratory judgment. The judgment will terminate the controversy and remove an uncertainty regarding the enforceability of the Purported Bylaw Amendments,” CBS wrote.