Greenlight Capital Inc. sued to try to block Apple Inc. from adopting a measure at its Feb. 27 shareholder meeting that would amend the company's charter to eliminate preferred stock.
Greenlight asked a federal court in Manhattan to bar Apple from certifying votes cast on behalf of Proposal No. 2, claiming the company improperly combined the measure with two other proposals, forcing shareholders to vote to accept or reject all three at once. Greenlight claims the action violates “unbundling rules” issued by the U.S. Securities and Exchange Commission.
Greenlight, which said it held more than 1.3 million shares of Apple, said the move is part of its effort to change the company's capital allocation strategy.
“We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders,” David Einhorn, Greenlight's president, said in a statement today. “Over the past several months, we have had an ongoing dialog with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apple's existing shareholders.”
Colleen Patterson, a spokeswoman for Cupertino, California- based Apple, didn't immediately return a voice-mail message seeking comment on the suit.
The case is Greenlight Capital LP v. Apple Inc., 13-cv-900, U.S. District Court, Southern District of New York (Manhattan).Copyright © 2013 Paddock Publications, Inc. All rights reserved.