Shareholders Try to Block Pacific Gulf Sale

Pacific Gulf Properties Inc., a Newport Beach real-estate-investment trust, said Monday that a shareholder lawsuit has been filed to block the proposed $78-million cash acquisition of the company.

The company said in a press release that the lawsuit, which seeks class-action status, alleges that directors breached their fiduciary duties by approving the sale to FountainGlen Properties LLC for inadequate consideration.

Pacific Gulf denied the allegations and said it plans to defend itself vigorously against the lawsuit.

Besides the cash payment, FountainGlen Properties, an affiliate of Prudential Insurance Co. of America, also would assume $65 million in Pacific Gulf debts.

The company said it still believes the proposed merger with FountainGlen is in the best interests of Pacific Gulf and its shareholders. The transaction is expected to close midyear.

In November, Pacific Gulf shareholders approved a plan to dissolve the company.