Jan. 13, 2006 — Jeffrey Prosser and his Innovative Communication Company have lost a civil judgment in the Delaware courts for in excess of $89 million.
The case against ICC was filed by minority stockholders of ICC‛s predecessor company, Emerging Communications Inc., on the grounds that they had not been properly compensated when ICC went private in 1998.
The plaintiffs are three associated Greenlight Companies, Delaware-based investment firms.
ICC moved quickly in response to the Jan. 9 judgement of the Chancery Court and appealed it to the Delaware State Supreme Court on Jan. 12.
The case has a long and convoluted history; among the highlights were these:
On May 3, 2004, the presiding judge issued a decision — not yet a judgement — indicating that Prosser and ICC owed more than $100 million to the plaintiffs. Though the decision was published, it did not become an order as the judge held matters open, hoping for a settlement among the parties; a settlement would preclude the possibility of an appeal by either side.
On Nov. 16 of that year the various parties agreed to a more than $85 million settlement, with the payments to be stretched over a period of more than four years. But while the parties agreed to terms, the judge did not accept them.
One problem was that much of the security for the payments related to a lease that ICC was said to hold in Belize and ICC‛s control of the phone company in that Central American country was in dispute. See ICC Agrees to Pay More than $85 Million in Stockholder Suit.
It later turned out, as a by-product of a totally different set of court that the Government of Belize asserted that the lease did not exist.
Then, in August 2005, another set of mainland plaintiffs, Brickell Partners, also one-time minority stockholders in Emerging Communications, split from their earlier allies, the Greenlight companies, and settled separately with ICC and Prosser. A dollar value for that settlement was never announced but it was generally agreed by observers that the Brickell case was for considerably less money than the Greenlight case.
The Brickell interests said at the time that they were worried that if the court‛s decision were carried out it would bankrupt ICC. See Possibility of ICC Bankruptcy Becomes A Factor in Settlement of Delaware Case.
On Jan. 9 of this year the presiding judge augmented his earlier, lengthy decision with the two-page judgement saying that ICC and Prosser owed the minority stockholders $56,341,843 as of Oct. 19, 1998, in addition to interest at the rate of 6.27 percent compounded monthly since that date. The judgement, unlike the earlier proposed settlement, made no provisions for payments to be made over a period of time; the entire sum is due immediately, and delayed payment will simply increase the amount of interested owed.
The Source estimates that the accrued interest from October 1998 until now is on the order of $33 million, so that total owed is in excess of $89 million.
There will be a further complication on appeal, as the presiding judge in Delawares Chancery Court was Justice Jack Jacobs of the State Supreme Court, who was sitting on assignment in the Chancery Court. Justice Jacobs, lawyers tell the Source, will not sit on the appeal of his own case, but it will be heard by his colleagues on the states Supreme Court.
Meanwhile, there is another set of court battles ongoing, those between ICC and its long-time lender, the Rural Telephone Finance Cooperative. One of the ICC arguments in those cases is that RTFC, a non-profit entity specializing in loans to rural phone companies, has an obligation to ICC to help finance any court decision, such as the one in Delaware, regarding compensating the minority stockholders. RTFC disagrees.
It has been reported in the St. Croix Avis that ICC sued RTFC earlier this week for failing to help ICC financially with the Greenlight obligation. This would be consistent with earlier ICC statements, but the Source was unable to secure a copy of the legal papers to confirm the earlier report or to provide any details on the ICC position on the matter.
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