Roy Disney’s Investment Fund Sues Software Firm
Roy Disney’s investment company sued network software maker IPass Inc. after failing to force the ouster of IPass Chief Executive Kenneth D. Denman.
Shamrock Activist Value Fund, part of Disney’s Burbank-based Shamrock Holdings Inc., asked a court in Wilmington, Del., to force IPass to turn over boardroom records. Shamrock said it wanted to determine whether IPass executives lied to investors and mismanaged the takeover of rival GoRemote Internet Communications Inc. last year.
“The company’s chief executive officer, Ken Denman, made representations that the merger would result in immediate and substantial savings to IPass,” said Shamrock’s lawsuit, filed Tuesday. “These cost savings had not materialized as of June 30, 2006.”
Shamrock has been at odds with Redwood Shores, Calif.- based IPass since at least June, when Shamrock executives met with the IPass board, according to documents filed with the Securities and Exchange Commission. In August, Shamrock demanded that the IPass board replace Denman, who is also the company’s chairman, SEC documents show.
Denman said in an e-mailed statement Wednesday that Shamrock’s lawsuit would not stop him from implementing a plan to improve profit and shore up the stock price, both of which have suffered in recent years.
“We simply can’t be distracted at this important juncture, and many of our large and small shareholders reiterate this to me every day,” Denman said.
Shamrock is IPass’ biggest shareholder, with 14% of the company’s stock. In the last three years, IPass shares have fallen from a high of $25.29 to a low of $4.20 on Aug. 23.
On Wednesday, shares of IPass fell 6 cents to $4.98.
Shamrock spokesmen Clifford Miller and Igal Litovsky didn’t return phone calls seeking comment. A spokesman for IPass referred all questions to the company’s SEC filings.
Roy Disney and Shamrock Chief Executive Stanley Gold spent two years battling to oust former Disney CEO Michael Eisner. During the battle, Disney and Gold resigned from Disney’s board. Eisner stepped down last year.