Shareholders File Suit Against Lorimar Telepictures
LOS ANGELES (AP) _ Four disgruntled shareholders filed a class-action lawsuit against Lorimar Telepictures Corp. alleging the company overstated its income and net worth, causing investors to pay more for stock.
The federal suit filed Wednesday also alleges that Lorimar misled investors to believe that problems in the company’s videocassette division were cleared up and would cause no further financial problems, the suit said.
Lorimar spokeswoman Sue Binford said there would be no comment because company officials have not yet seen the suit.
Last June, Lorimar reported in a letter to shareholders that the company had suffered substantial losses of $31.5 million, but said the problems in the videocassette division were resolved, the suit alleged.
However, a recent company announcement indicated that additional problems in the videocassette division could cost another $22 million, the suit said.
The suit, which asks for general damages, seeks to represent an estimated hundreds of thousands of shareholders who traded on 30 million shares between Aug. 14, 1986, and Feb. 12 of this year.
The plaintiffs, all from Westchester County, N.Y., are identified as Ted Streit, Eli Berman, Shirley Sichel, and Louis Haber. They bought Lorimar stock between September 1987 and December 1987.
Earlier this week, Lorimar said it is discussing the possibility of being acquired by Warner Communications Inc. That information sent the firm’s stock price up $2.50 a share to $15.
And Lorimar said today it has received an unsolicited $780.3 million takeover bid from investor Marvin Davis.
The Culver City-based company was formed in February 1986 by the stock-swap combination of Lorimar Inc., best known as the producer of ″Dallas″ and ″Knot’s Landing,″ and New York-based Telepictures Corp., which made most of its revenue from animated shows and other programs such as ″People’s Court.″
The company is producing 12 hours of prime-time shows for the 1987-88 television season, including ″Mama’s Family,″ ″It’s a Living″ and ″She’s the Sheriff.″