Avalon Correctional Services Derivative Lawsuit Settled
OKLAHOMA CITY, Nov. 16, 2012 /PRNewswire/ -- Avalon Correctional Services, Inc. (CITY.PK) and Donald and Tiffany Smith announce that they and The Ravenswood Investment Company, L.P. and Ravenswood Investments III, L.P. have entered into a definitive settlement of the derivative lawsuit titled Ravenswood Investment Company, L.P. and Ravenswood Investments III, L.P. v. Avalon Correctional Services, Inc., Tiffany Smith and Donald E. Smith, 09-CV-00070-R (W.D. Okla.).
Under the terms of the settlement, Avalon will submit an offer to purchase the common shares of Avalon held by all of Avalon's non-management minority shareholders for $4.05 in cash plus the pro rata portion of the remaining amount of a fee and expense pool, if any, that is not used to pay any fees and expenses that may be awarded by the Court (an amount between $0 and $0.30 per share inclusive) and, subject to certain exceptions, a callable three-year, non-voting new preferred share of Avalon with a $1.75 face amount and an annual dividend of 7%, paid quarterly.
The settlement which will resolve all claims in the litigation is not an admission of wrongdoing or liability by any of the defendants. The settlement is subject to the approval of the United States District Court for the Western District of Oklahoma following notice to all shareholders and a hearing as well as certain other conditions. A motion for such Court approval was filed on November 16, 2012 and it is anticipated that any Avalon shareholders who object to the settlement will have the opportunity to be heard. It is further anticipated that the approval process will take between 90 to 120 days although it could be longer. If approved, the offer to purchase will be made and shareholders will have 90 days in which to accept the offer.
Given the potential cost and burden of continued litigation, Avalon believes that settling this lawsuit is in the best interest of all Avalon stakeholders. The Company is pleased to resolve this matter and put the Ravenswood derivative litigation behind it.
The purpose of this press release is to make a general public announcement concerning the settlement and does not contain all of the terms and conditions of the settlement. The definitive settlement documents are attached to the motion filed in the litigation pending in the Western District of Oklahoma on November 16, 2012. This communication shall not constitute an offer to sell or buy or the solicitation of an offer to sell or buy any securities.
SOURCE Avalon Correctional Services, Inc.