EXHIBIT 99.5
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - x
FREDRIC MICHAEL BOYK,
:
Plaintiff,
: Civil Action No. 15815
-against-
:
WILLIAM W. SPRAGUE III, R. EUGENE
CARTLEDGE, LEE B. DURHAM, JR., : CLASS ACTION COMPLAINT
ROBERT L. HARRISON, JAMES M.
REED, DALE C. CRITZ, ARTHUR M. :
GIGNILLIAT, JR., ROBERT S.
JEPSON, ARNOLD TENENBAUM, W. :
WALDO BRADLEY, JOHN D. CARSWELL,
F. SPRAGUE EXLEY, HUGH M. :
TARBUTTON, SAVANNAH FOODS &
INDUSTRIES, INC. and FLO-SUN :
INC.,
:
Defendants.
- - - - - - - - - - - - - - - - - x
Plaintiff, by his attorneys, alleges the following
upon information and belief, except for those allegations
which pertain to plaintiff, which allegations are based upon
personal knowledge:
THE PARTIES
1. Plaintiff, Fredric Michael Boyk, is and has
been, at all relevant times, the owner of shares of the
common stock of Savannah Foods & Industries Inc. ("Savannah
Foods" or the "Company").
2. Savannah Foods is a corporation organized and
existing under the laws of the State of Delaware with its
principal executive offices located at 2 East Bryan Street,
Savannah, Georgia. It refines and markets bulk and liquid
sugars and sugar products and produces and markets a line of
packaged sugars and portion control items.
3. Defendant William Sprague III ("Sprague") is
the President, Chief Executive Officer and Chairman of the
Board of Directors of Savannah Foods. Defendant F. Sprague
Exley is the Senior Vice President of Human Resources and
Administration, Assistant Secretary and a director of
Savannah Foods.
4. Defendants R. Eugene Cartledge, Lee B.
Durham, Jr., Robert L. Harrison, James M. Reed, Dale C.
Critz, Arthur M. Gignilliat, Jr., Robert S. Jepson, Arnold
Tenenbaum, W. Waldo Bradley, John D. Carswell and Hugh M.
Tarbutton are directors of Savannah Foods.
5. The above-named individual defendants
(collectively, the "Individual Defendants") owe fiduciary
duties of good faith, loyalty, fair dealing, due care, and
candor to plaintiff and the other members of the Class (as
defined below).
CLASS ACTION ALLEGATIONS
6. Plaintiff brings this action pursuant to Rule
23 of the Rules of this Court, on behalf of himself and all
other stockholders of the Company similarly situated and
their successors in interest (the "Class"). Excluded from
the Class are the defendants herein, members of their
immediate families, and any subsidiary, firm, trust,
corporation, or other entity related to or affiliated with
any of the defendants.
7. This action is properly maintainable as a
class action for the following reasons:
(a) the Class is so numerous that joinder of
all members is impracticable. There are millions of shares
of Savannah Foods common stock outstanding held by hundreds
of shareholders of record and many more beneficial owners;
(b) there are questions of law and fact
which are common to the Class including, inter alia, the
following:
(i) whether the Individual Defendants,
aided and abetted by Flo-Sun, have breached their fiduciary
duties owed to plaintiff and the other members of the Class;
and
(ii) whether plaintiff and the other
members of the Class would be irreparably damaged were
defendants not enjoined from the conduct described herein;
(c) the claims of plaintiff are typical of
the claims of the other members of the Class and plaintiff
has no interest that are adverse or antagonistic to the
interests of the Class;
(d) the plaintiff is committed to
prosecuting this action and has retained counsel competent
and experienced in litigation of this nature. Plaintiff is
an adequate representative of the Class and will fairly and
adequately protect the interests of the Class;
(e) the prosecution of separate actions by
individual members of the Class would create the risk of
inconsistent or varying adjudications with respect to
individual members of the Class which would establish
incompatible standards of conduct for defendants, or
adjudications with respect to individual members of the
Class which would as a practical matter be dispositive of
the interests of the other members not parties to the
adjudications or substantially impair or impede their
ability to protect their interests; and
(f) the defendants have acted, or refused to
act, on grounds generally applicable to, and causing injury
to, the Class and, therefore, preliminary and final
injunctive relief on behalf of the Class as a whole is
appropriate.
SUBSTANTIVE ALLEGATIONS
8. (a) On July 15, 1997, Savannah Foods
announced that it had entered into an agreement whereby a
new entity would be created in which the present
shareholders of Savannah Foods would have a 41.5% equity
interest, Flo-Sun would have a 39.4% interest, and Florida
Crystals Inc., a unit of Flo-Sun, would have a 19.1%
interest. Flo-Sun, however, would have eight votes per
share and therefore 83% of the voting power of the shares of
the new entity (the proposed transaction will be referred to
as the "Sale of Control").
(b) Flo-Sun is a privately-owned company
controlled by the Fanjul family. Thus, if the Sale of
Control is consummated, control of Savannah Foods and its
valuable assets and affairs will pass from its present
shareholders to Flo-Sun and the Fanjul family.
9. Defendant Sprague will serve as president of
the new entity's refining division. The new entity's Chief
Executive Officer will be the present Chief Executive
Officer of Flo-Sun, Alfonso Fanjul.
10. Following the announcement of the Sale of
Control, the price of Savannah Foods' common stock dropped
more than 15% from $18 11/16 to $14 7/8.
11. Commentators had nothing but negative things
to say about the Sale of Control. Patricia Row, a manager
at Kennedy Capital Management, was quoted as stating,
"Savannah Foods is throwing in the towel and it's not
getting cash or anything." Robert Buettner, a manager at
Ryback Management, was quoted as stating, "This company has
dramatically increased the quality of its balance sheet and
now it seems ready to just give it away. It is likely that
if Savannah Foods were for sale, there would be a higher
bidder."
12. The Sale of Control is wrongful, unfair and
harmful to Class members because, among other things:
(a) the intrinsic value of Savannah Foods'
stock is materially in excess of the consideration which
Savannah Foods' shareholders will receive in the Sale of
Control, giving due consideration to the Company's future
earnings potential, cash flow and profitability;
(b) the directors of Savannah Foods have
failed to maximize the value of its shareholders' equity by
"shopping" the Company or conducting an auction of the
Company or seeking other alternatives to maximize
shareholder value;
(c) Savannah Foods' directors have failed to
conduct a market check to ascertain the highest price that
could be attained for Savannah Foods in a change of control
transaction;
(d) Savannah Foods' directors have failed to
negotiate for an adequate premium for the Sale of Control of
Savannah Foods to Flo-Sun and the Fanjul family. Indeed,
not only will Savannah Foods' shareholders be deprived of a
premium for transferring control of Savannah Foods, but
instead they will suffer a diminution in the value of their
investment, evidenced by the investment community's reaction
to the announcement of the Sale of Control. In essence, if
the Sale of Control is consummated, Savannah Foods'
shareholders will sell control of the Company for no
consideration whatsoever.
13. The decisions of the defendants are not
protected by the business judgment rule because the
transaction at issue is a sale of control to Flo-Sun. Under
these circumstances, the Individual Defendants have a
fiduciary duty to Savannah Foods' shareholders to:
(a) secure the best value available to the
Savannah Foods' shareholders;
(b) evaluate critically and in an informed
manner whether or not all material aspects of the Sale of
Control are reasonable and in the best interest of Savannah
Foods' shareholders;
(c) determine whether the Sale of Control
(i) adversely affects the value provided to the Savannah
Foods' shareholders; (ii) inhibits or encourages alternative
bids; and (iii) advances or retards the defendants' duty to
secure for Savannah Foods' shareholders the best value
available under the circumstances; and
(d) ensure that mechanisms are in place to
protect the interests of Savannah Foods' shareholders if
they become minority shareholders of the new entity by
restricting the unfettered exercise of voting control of
Flo-Sun and the Fanjul family in significant corporate
transactions.
14. The Individual Defendants have failed to
discharge their obligations in the proposed Sale of Control
transaction as described in paragraph 13. As a consequence,
the Individual Defendants have violated their fiduciary
duties to the stockholders of Savannah Foods in that they
have failed to maximize shareholder value (including failing
to actively pursue the acquisition of Savannah Foods by
other companies or conducting an adequate market check) and
have otherwise failed to take other steps to protect the
interests of the Class.
15. Flo-Sun has knowingly aided and abetted the
breaches of fiduciary duty committed by the Individual
Defendants complained of herein. Indeed, the proposed Sale
of Control could not take place without the knowing
participation of Flo-Sun.
16. Plaintiff and the Class will suffer
irreparable damage unless the Individual Defendants are
enjoined from breaching their fiduciary duties and from
pursuing the proposed Sale of Control.
17. Plaintiff and the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. Declaring this action to be a proper class
action and certifying plaintiff as the representative of the
Class;
B. Granting preliminary and permanent injunctive
relief against consummation of the Sale of Control as
described herein;
C. In the event the Sale of Control is
consummated, rescinding the Sale of Control and/or awarding
rescissory damages to the Class;
D. Ordering defendants, jointly and severally,
to account to plaintiff and other members of the Class for
all damages suffered and to be suffered by them as the
result of the acts and transactions alleged herein;
E. Awarding plaintiff the costs and
disbursements of the action including allowances for
plaintiff's reasonable attorneys' and experts' fees; and
F. Granting such other and further relief as the
Court may deem just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:______________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
WOLF POPPER LLP
845 Third Avenue
New York, New York 10022
(212) 759-4600