Judge Waives $500 Million Bond for Burlington Injunction
GREENSBORO, N.C. (AP) _ An investment group pursuing a hostile takeover bid for Burlington Industries Inc. agreed to the waiver today of a requirement for Burlington to post a $500 million bond, allowing the group to appeal the injunction.
U.S. District Judge Eugene Gordon issued the injunction two weeks ago to block action on the takeover attempt led by financier Asher B. Edelman while Burlington pursues a lawsuit charging the investment group with basing its $2.13 billion bid on illegally obtained insider information.
Burlington’s management is supporting a rival takeover offer of $2.16 billion from an investment group led by Morgan Stanley & Co., a New York investment bank.
Gordon ruled that Burlington would have to post a $500 million bond for the injunction to take effect, but he dropped that requirement today. Court Clerk Joe Creekmore said the waiver came with the consent of the investment group led by Edelman and Dominion Textile Inc. of Canada, because it could not appeal the injunction until the order took effect.
After Gordon waived the bond, the Edelman group immediately appealed the injunction to the 4th U.S. Circuit Court of Appeals in Richmond, Va.
The Edelman-Dominion group, which holds 12.3 percent of Burlington’s 27.6 million common shares, has offered $77 a share for the remaining stock but has indicated it might be willing to raise its bid above $78 a share.
Morgan Stanley raised its bid last Wednesday to $78 a share from its initial $76 a share.
Burlington attorneys have argued that the proposed buyout by Edelman and Dominion was based on insider information obtained illegally from James Ammeen, a former Burlington executive.
Attorneys for Edelman have denied the investor had used insider information.
The Edelman group said separately today it was extending its tender offer to June 23. The investors said 319,092 shares of stock, or a little more than 1 percent of Burlington’s common shares, had been tendered for sale by Burlington stockholders.