EXHIBIT 99.7
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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ACHIMON LOUIS, on behalf of himself :
and all others similarly situated,
:
Plaintiff,
:
- against - C.A. No. 15816
:
R. EUGENE CARTLEDGE, LEE B. DURHAM, JR.,
ROBERT L. HARRISON, JAMES M. REED, :
DALE C. CRITZ, ARTHUR M. GIGNILLIAT, JR.,
ROBERT S. JEPSON, JR., ARNOLD :
TENENBAUM, W. WALDO BRADLEY, CLASS ACTION
JOHN D. CARSWELL, F. SPRAGUE EXLEY, : COMPLAINT
WILLIAM W. SPRAGUE, III, HUGH M.
TARBUTTON, FLO-SUN, INC. and SAVANNAH :
FOODS & INDUSTRIES, INC.,
:
Defendants.
:
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Plaintiff alleges upon information and belief except as to
paragraph 1, which is alleged on knowledge, as follows:
THE PARTIES
1. Plaintiff is and at all times relevant hereto has been the
owner of shares of the common stock of Savannah Foods & Industries, Inc.
("Savannah" or the "Company").
2. Savannah is a corporation organized and existing under the
laws of the State of Delaware with offices in Savannah, Georgia. Savannah
is one of the largest sugar refiners in the Country, best known for Dixie
Crystals, which has a 20% market share. Savannah has approximately 28.7
million shares of common stock issued and outstanding which trade on the
New York Stock Exchange.
3. (a) Defendant R. Eugene Cartledge ("Cartledge") is and was
at all relevant times Chairman of the Board of Savannah.
(b) Defendant Lee B. Durham, Jr. ("Durham") is and was at
all relevant times a director of Savannah and is of counsel to Clark Hill
P.L.C., a law firm which serves as general counsel to Michigan Sugar Co., a
wholly-owned subsidiary of Savannah.
(c) Defendant Robert L. Harrison ("Harrison") is and was at
all. relevant times a director of Savannah and President of Stevens
Shipping & Terminal Co., a company which conducts business with Savannah
related to port activities associated with the importation of raw sugar.
(d) Defendant James M. Reed ("Reed") is and was at all
relevant times a director of Savannah and Vice Chairman and Chief Financial
Officer of Union Camp Corporation, a company which provides packaging
supplies to Savannah (in 1996, amounting to $7.7 million). Defendant
Cartledge served as Union Camp's former Chairman and Chief Executive
Officer for approximately 8 years.
(e) Defendant Dale C. Critz ("Critz") is and was at all
relevant times a director of Savannah.
(f) Defendant Arthur M. Gignillast, Jr. ("Gignillast") is
and was at all relevant times a director of Savannah.
(g) Defendant Robert S. Jepson, Jr. ("Jepson") is and was at
all relevant times a director of Savannah.
(h) Defendant Arnold Tenenbaum ("Tenenbaum") is and was at
all relevant times a director of Savannah.
(i) Defendant W. Waldo Bradley ("Bradley") is and was at all
relevant times a director of Savannah.
(j) Defendant John D. Carswell ("Carswell") is and was at
all relevant times a director of Savannah.
(k) Defendant F. Sprague Exley ("Exley") is and was at all
relevant times a director of Savannah and a senior executive of the
Company.
(l) Defendant William W. Sprague, III ("Sprague") is and was
at all relevant times President and Chief Executive Officer of the Company.
(m) Defendant Hugh M. Tarbutton ("Tarbutton") is and was at
all relevant times a director of Savannah.
4. The individual defendants are in a fiduciary relationship
with plaintiff and the other public stockholders of Savannah and owe to
plaintiff and other members of the class the highest obligations of good
faith, fair dealing and full disclosure.
5. The individual defendants are long-time social and/or
business acquaintances. For example, in addition to serving as Savannah
directors:
(a) Defendants Harrison, Gignilliat. Exley and Tarbutton all
serve together as directors of Nationsbank, N.A. (South):
(b) Defendants Gignilliat and Tenenbaum serve as directors
of Savannah Electric and Power Company; and
(c) Defendants Tenenbaum and Bradley serve as directors of
First Union corporate entities.
6. Defendant Flo-Sun, Inc. ("Flo-Sun") is a private company in
Palm Beach, Florida and is one of the largest producers of sugar in
Florida. Flo-Sun is named herein as an aider and abettor of the breaches of
fiduciary duty described herein.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this case on his own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all public stockholders of Savannah, and their successors in
interest, who are or will be threatened with injury arising from
defendants' actions as more fully described herein (the "Class"). Excluded
from the Class are defendants herein and any person, firm, trust,
corporation, or other entity related to or affiliated with any of the
defendants.
8. This action is properly maintainable as a class action
because:
(a) The class is so numerous that joinder of all members is
impracticable. As of September 30, 1996 there were approximately 3,000
stockholders of record located throughout the United States.
(b) There are questions of law and fact which are common to
the class and which predominate over questions affecting any individual
class member.
(c) Plaintiff is committed to prosecuting this action and
has retained competent counsel experienced in litigation of this nature.
The claims of plaintiff are typical of the claims of other members of the
class and plaintiff has the same interests as the other members of the
class. Accordingly, plaintiff is an adequate representative of the class
and will fairly and adequately protect the interests of the class.
CLAIM FOR RELIEF
9. On or about July 15, 1997, Savannah announced that it would
merge with the domestic sugar operations of Flo-Sun, a privately-held
company run by the Fanjul family, and Florida Crystals, a unit of Flo-Sun.
10. Pursuant to the terms of the transaction, Flo-Sun and
affiliated shareholders will own 58.5% of the new entity, while Savannah
public stockholders will own the remaining 41.5%.
11. In addition, defendant Sprague will remain as president of
Savannah's sugar refining business.
12. Flo-Sun shareholders, pursuant to the terms of the
transaction, will receive supermajority voting rights and, thus, will
control 83% of the vote of the new entity.
13. It is impossible to value the transaction at this time.
However, in response to the announcement, the price of Savannah common
stock fell $2.94 or 16%, to $15.75 per share. Thus, it is evident that
Savannah's public stockholders will not receive a premium over Savannah's
market price although they will lose control over Savannah and its valuable
assets.
14. According to a July 16, 1997 article in the Sun-Sentinel,
the founding families of both Savannah and Flo-Sun have worked together for
years.
15. In fact, none of the Individual Defendants own any
substantial amount of stock in Savannah and thus have no interests to
protect as shareholders of the Company.
16. Flo-Sun is a privately held company owned by the Fanjul
family. If the transaction is consummated, the Fanjul family and affiliates
will have control of the new company. Thus, control of Savannah will have
passed from its public shareholders to the Fanjuls.
17. The consideration to be paid to class members is unfair and
grossly inadequate because, among other things:
(a) the intrinsic value of Savannah's common stock is
materially in excess of the consideration to be received by Savannah's
public shareholders in the transaction giving due consideration to the
Company's recent operating results, the recent market price of the
Company's stock and Savannah's present and projected cash flow, and
profitability:
(b) the directors of Savannah 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's directors have failed to conduct a market
check to ascertain the highest price that could be attained for Savannah
stock in a change of control transaction; and
(d) Savannah's directors have failed to negotiate for an
adequate premium for the sale of control of Savannah.
18. As a result of the foregoing, the Individual Defendants
have breached their fiduciary duties owed to Savannah's stockholders in a
change of control transaction. Defendant Flo-Sun, without whom this
transaction could not occur, has aided and abetted the breaches of
fiduciary duty.
19. Unless enjoined by this Court, the individual defendants
will continue to breach their fiduciary duties owed to plaintiff and the
other members of the Class to the irreparable harm of Class members who
will be denied their right to maximize the value of their investment in
Savannah in a change of control transaction.
20. Plaintiff and the other members of the Class have no
adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) ordering the Individual Defendants to carry out their
fiduciary duties to plaintiff and the other members of the Class by
announcing their intention to:
(i) undertake an appropriate evaluation of alternatives
designed to maximize value for Savannah's public stockholders; and
(ii) adequately ensure that no conflicts of interests
exist between defendants' own interests and their fiduciary obligations to
Savannah's public stockholders or, if such conflicts exist, ensure that all
conflicts would be resolved in the best interests of Savannah's public
stockholders.
(c) preliminarily and permanently enjoining the proposed
transaction or awarding rescissory damages to the Class;
(d) ordering defendants, jointly and severally, to account
to plaintiff and the other members of the Class for all damages suffered
and to be suffered by them as a result of the acts and transactions alleged
herein;
(e) awarding plaintiff the costs and disbursements of the
action, including a reasonable allowance for plaintiff's attorney's fees
and experts' fees; and
(f) granting such other and further relief as this Court may
deem to be just and proper.
ROSENTHAL, MONHAIT, GROSS &
GODDESS, P.A.
By: _________________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
100 Park Avenue
New York, NY 10017
Tel: (212) 907-0700
Fax: (212) 818-0477
LOWEY DANNENBERG BEMPORAD
& SELINGER, P.C.
The Gateway
One North Lexington Avenue
White Plains, NY 10601
Tel: (914) 997-0500
Fax: (914) 997-0035