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Concerned Shareholders of Rocky Mountain File Lawsuit to Hold Rocky Mountain Chocolate Factory Board Accountable for Acts to Disenfranchise Shareholders
Rhea-AI Impact
(Low)
Rhea-AI Sentiment
(Negative)
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Rhea-AI Summary
AB Value Management LLC and its affiliates, representing approximately 14.59% of the outstanding shares of Rocky Mountain Chocolate Factory (NASDAQ: RMCF), have filed a lawsuit in Delaware against the Company and certain Board members. The lawsuit seeks to invalidate the Board's decision to reduce the number of seats available for election at the upcoming 2021 Annual Meeting. This action has led to accusations of breaching fiduciary duties and attempts to block shareholder voting rights. Shareholders are urged to vote FOR the Concerned Shareholders on the BLUE proxy card to enhance value.
Positive
Concerned Shareholders represent 14.59% of RMCF shares, indicating significant backing.
The lawsuit aims to restore shareholder voting rights for seven Board seats.
Negative
The Board's action to reduce seats is viewed as an attempt to entrench themselves.
There are accusations of breaches of fiduciary duty against the Board members.
WESTFIELD, N.J.--(BUSINESS WIRE)--
AB Value Management LLC, collectively with its affiliates (“AB Value”), and the other participants in this solicitation (collectively, the “Concerned Shareholders of Rocky Mountain”) representing approximately 14.59% of the outstanding shares of Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) (the “Company”), today announced that AB Value has filed a lawsuit in the Court of Chancery of the State of Delaware against the Company and certain members of its Board of Directors (the “Board”), seeking to rescind and declare invalid the Board’s resolutions shrinking the number of Board seats up for election from seven to six right before the Company’s 2021 Annual Meeting of Shareholders (the “2021 Annual Meeting”).
Absent the Board’s last minute reduction in size, shareholders would have had the opportunity to choose who would be best suited to fill Mary Kennedy Thompson’s seat from the Concerned Shareholders of Rocky Mountain’s slate of candidates at the 2021 Annual Meeting.
Commenting on the complaint, Andrew T. Berger, Managing Member of AB Value stated: “The Board’s attempt to block one of our director candidates from being elected by shareholders is the latest in a series of crude efforts by Board members to thwart the shareholder franchise, further entrenching themselves in order to safeguard their own Board seats. As part of the Company’s largest shareholder group, we plan to defend the rightful owners of the Company by fighting these egregious acts in court.”
In its lawsuit, AB Value asks the Court to find that the defendant Board members breached their fiduciary duties by voting to shrink the Board without legal analysis from Delaware counsel and without making a reasonable inquiry as to the effect such an act would have on all of the Company’s shareholders. Unless the Board’s invalid actions are overturned by the Court, the Concerned Shareholders of Rocky Mountain believe that these Board members have deprived shareholders of the full and fair opportunity to exercise their right to vote for seven directors at the 2021 Annual Meeting, less than two weeks away.
With two competing slates vying over the Company’s fate, it will be up to shareholders to decide who should lead the Company—and it should be up to shareholders to decide on seven Board seats, not six. If elected, the Concerned Shareholders of Rocky Mountain’s nominees—Andrew T. Berger, Mark Riegel, Sandra Elizabeth Taylor and Rhonda J. Parish—will consider the full impact of their decisions as fiduciaries and take the steps necessary to enhance value for all shareholders. We strongly encourage all shareholders to act now and vote FOR the Concerned Shareholders of Rocky Mountain on the BLUE proxy card.
Important Additional Information
AB Value Partners, LP and AB Value Management LLC, Andrew T. Berger, Bradley Radoff, Rhonda J. Parish, Mark Riegel, and Sandra Elizabeth Taylor (collectively, the “Participants”) have filed a definitive proxy statement and an accompanying BLUE proxy card with the SEC to solicit proxies from shareholders of the Company for use at the 2021 Annual Meeting. THE PARTICIPANTS STRONGLY ADVISE ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Such proxy materials are available at no charge on the SEC’s website at http://www.sec.gov. In addition, the Participants in this proxy solicitation will provide copies of the proxy statement without charge, upon request. Requests for copies should be directed to the Participants’ proxy solicitor.
Certain Information Regarding the Participants
The Participants in the proxy solicitation are: AB Value Partners, LP, AB Value Management LLC, Andrew T. Berger, Bradley Radoff, Rhonda J. Parish, Mark Riegel, and Sandra Elizabeth Taylor. As of the date hereof, AB Value Partners, LP directly owns 224,855 shares of common stock, $0.001 par value per share of the Company (“Common Stock”). As of the date hereof, AB Value Management LLC beneficially owns 460,189 shares of Common Stock. As of the date hereof, Mr. Radoff directly owns 433,624 shares of Common Stock. As of the date hereof, none of Mr. Berger, Ms. Parish, Mr. Riegel, or Ms. Taylor directly own any shares of Common Stock.
What is the lawsuit filed by AB Value Management regarding RMCF?
AB Value Management has filed a lawsuit to invalidate the Board's decision to reduce the number of seats available for election at the 2021 Annual Meeting.
What percentage of shares does AB Value Management represent in RMCF?
AB Value Management and its affiliates represent approximately 14.59% of the outstanding shares of RMCF.
What are the concerns raised by AB Value Management in their lawsuit?
Concerns include breaching fiduciary duties and efforts to block shareholder voting rights.
What actions are shareholders encouraged to take regarding RMCF?
Shareholders are urged to vote FOR the Concerned Shareholders on the BLUE proxy card.
When is the 2021 Annual Meeting of Shareholders for RMCF?
The 2021 Annual Meeting is set to take place less than two weeks from the filing of the lawsuit.
