ANR Accuses Coastal Corp. of Insider Trading : Former Governor of Texas Named in Suit
American Natural Resources Co. on Monday claimed in federal court that Houston-based Coastal Corp. and former Texas Gov. John B. Connally illegally used inside information to profit on deals in ANR stock.
The lawsuit, filed in U.S. District Court in Detroit, alleged that multimillion-dollar stock transactions were made illegally in connection with Coastal’s $2.2-billion attempt to win control of ANR.
ANR also claimed in its lawsuit that Coastal violated federal regulations in soliciting votes from shareholders for its candidates for the ANR board of directors.
Houston-based Coastal last week offered $60 per share of ANR common stock in a bid to gain control of ANR, a Detroit-based energy company. Connally has been nominated by Coastal for a seat on the ANR board should the takeover succeed.
‘Disgorge Profits’
ANR asked the court to prevent Coastal from acquiring ANR shares, offering to buy ANR shares or from voting the shares it already owns. The company also asked the court to order Connally to “disgorge profits obtained from his trading in ANR shares” and to prevent him from serving as an ANR director.
Coastal spokesman R. W. Welles said: “We have reviewed the ANR petition in the Michigan federal court, and we find it wholly without merit. We think it is unfortunate that ANR is persisting in engaging in inflammatory and expensive defensive tactics and not focusing on the primary issue, which is a bona fide cash tender offer of $60 per share for any and all ANR shares.”
Connally was out of town and unavailable for comment, a secretary at his Houston law office said.
Coastal Chairman Oscar Wyatt Jr. on Monday sent to each ANR director a memorandum in which he deplored “tactics designed to remove from shareholders without their consent their fundamental right to obtain the best price for their shares.”
The memorandum also said Coastal officials have “heard and read a great deal about the possibility of ANR management organizing a ‘leveraged buy-out’ of the company in an attempt to defeat the Coastal offer.” A leveraged buy-out would effectively take ANR shares out of public hands.
Wyatt said that “a leveraged buy-out could leave ANR with massive debt, which would restrict cash flow and require the sale of assets.”
ANR spokesman Jim Bailey confirmed that a leveraged buy-out of ANR stock was an option that company directors would consider at their meeting today.
