SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
JULY 18, 1997
_________________________________
(Date of earliest event reported)
SAVANNAH FOODS & INDUSTRIES, INC.
______________________________________________________
(Exact name of Registrant as specified in its charter)
DELAWARE 1-11420 58-1089367
______________ _____________________ __________________
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
P.O. BOX 339, SAVANNAH, GEORGIA 31402
____________________________________________________________
(Address of principal executive offices, including zip code)
(912) 234-1261
____________________________________________________
(Registrant's telephone number, including area code)
NOT APPLICABLE
_____________________________________________________________
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
Three purported class action lawsuits
(collectively, the "Actions") were filed on or about July
18, 1997 in the Court of Chancery of the State of
Delaware in and for New Castle County by purported
stockholders (the "Plaintiffs") of Savannah Foods &
Industries, Inc. (the "Company") against the Company,
current members and a former member of the Board of
Directors of the Company and Flo-Sun Incorporated
(collectively, the "Defendants") in connection with the
proposed merger of a subsidiary of XSF Holdings, Inc., a
newly formed corporate holding company, with and into the
Company, and certain related transactions (the
"Transactions"). The Actions allege, among other things,
that certain of the Defendants have breached the
fiduciary duties they owe the stockholders of the Company
and that the value of the common stock of the Company is
materially greater than the consideration being offered
pursuant to the Transactions. The Actions are captioned
Fredric Michael Boyk v. William W. Sprague III et al.,
C.A. 15815 (Del. Ch.), Steven Horowitz and Dina Horowitz
v. R. Eugene Cartledge et al., C.A. 15819 (Del. Ch.) and
Achimon Louis v. R. Eugene Cartledge et al., C.A. 15816
(Del. Ch.), and each seeks, among other things, a
preliminary and permanent injunction enjoining the
Defendants from consummating the Transactions, and
damages, including attorneys' fees and expenses. The
Company believes that the Plaintiffs' claims are without
merit and the Company intends to defend vigorously
against the Actions. A copy of each of the Actions is
filed as an exhibit to this Form 8-K and is incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF THE BUSINESSES ACQUIRED.
Not Applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not Applicable.
(c) EXHIBITS:
EX. NO. DESCRIPTION
99.5 Complaint filed by Fredric Michael Boyk
in the Delaware Court of Chancery on or
about July 18, 1997.
99.6 Complaint filed by Steven Horowitz and
Dina Horowitz in the Delaware Court of
Chancery on or about July 18, 1997.
99.7 Complaint filed by Achimon Louis in the
Delaware Court of Chancery on or about
July 18, 1997.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: July 24, 1997
SAVANNAH FOODS & INDUSTRIES,
INC.
By: /s/ Gregory H. Smith
----------------------
Gregory H. Smith
Senior Vice President,
Chief Financial Officer and
Treasurer
EXHIBIT INDEX
EX. NO. DESCRIPTION
99.5 Complaint filed by Fredric Michael Boyk in
the Delaware Court of Chancery on or about
July 18, 1997.
99.6 Complaint filed by Steven Horowitz and
Dina Horowitz in the Delaware Court of
Chancery on or about July 18, 1997.
99.7 Complaint filed by Achimon Louis in the
Delaware Court of Chancery on or about
July 18, 1997.
EXHIBIT 99.5
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - x
FREDRIC MICHAEL BOYK,
:
Plaintiff,
: Civil Action No. 15815
-against-
:
WILLIAM W. SPRAGUE III, R. EUGENE
CARTLEDGE, LEE B. DURHAM, JR., : CLASS ACTION COMPLAINT
ROBERT L. HARRISON, JAMES M.
REED, DALE C. CRITZ, ARTHUR M. :
GIGNILLIAT, JR., ROBERT S.
JEPSON, ARNOLD TENENBAUM, W. :
WALDO BRADLEY, JOHN D. CARSWELL,
F. SPRAGUE EXLEY, HUGH M. :
TARBUTTON, SAVANNAH FOODS &
INDUSTRIES, INC. and FLO-SUN :
INC.,
:
Defendants.
- - - - - - - - - - - - - - - - - x
Plaintiff, by his attorneys, alleges the following
upon information and belief, except for those allegations
which pertain to plaintiff, which allegations are based upon
personal knowledge:
THE PARTIES
1. Plaintiff, Fredric Michael Boyk, is and has
been, at all relevant times, the owner of shares of the
common stock of Savannah Foods & Industries Inc. ("Savannah
Foods" or the "Company").
2. Savannah Foods is a corporation organized and
existing under the laws of the State of Delaware with its
principal executive offices located at 2 East Bryan Street,
Savannah, Georgia. It refines and markets bulk and liquid
sugars and sugar products and produces and markets a line of
packaged sugars and portion control items.
3. Defendant William Sprague III ("Sprague") is
the President, Chief Executive Officer and Chairman of the
Board of Directors of Savannah Foods. Defendant F. Sprague
Exley is the Senior Vice President of Human Resources and
Administration, Assistant Secretary and a director of
Savannah Foods.
4. Defendants R. Eugene Cartledge, Lee B.
Durham, Jr., Robert L. Harrison, James M. Reed, Dale C.
Critz, Arthur M. Gignilliat, Jr., Robert S. Jepson, Arnold
Tenenbaum, W. Waldo Bradley, John D. Carswell and Hugh M.
Tarbutton are directors of Savannah Foods.
5. The above-named individual defendants
(collectively, the "Individual Defendants") owe fiduciary
duties of good faith, loyalty, fair dealing, due care, and
candor to plaintiff and the other members of the Class (as
defined below).
CLASS ACTION ALLEGATIONS
6. Plaintiff brings this action pursuant to Rule
23 of the Rules of this Court, on behalf of himself and all
other stockholders of the Company similarly situated and
their successors in interest (the "Class"). Excluded from
the Class are the defendants herein, members of their
immediate families, and any subsidiary, firm, trust,
corporation, or other entity related to or affiliated with
any of the defendants.
7. This action is properly maintainable as a
class action for the following reasons:
(a) the Class is so numerous that joinder of
all members is impracticable. There are millions of shares
of Savannah Foods common stock outstanding held by hundreds
of shareholders of record and many more beneficial owners;
(b) there are questions of law and fact
which are common to the Class including, inter alia, the
following:
(i) whether the Individual Defendants,
aided and abetted by Flo-Sun, have breached their fiduciary
duties owed to plaintiff and the other members of the Class;
and
(ii) whether plaintiff and the other
members of the Class would be irreparably damaged were
defendants not enjoined from the conduct described herein;
(c) the claims of plaintiff are typical of
the claims of the other members of the Class and plaintiff
has no interest that are adverse or antagonistic to the
interests of the Class;
(d) the plaintiff is committed to
prosecuting this action and has retained counsel competent
and experienced in litigation of this nature. Plaintiff is
an adequate representative of the Class and will fairly and
adequately protect the interests of the Class;
(e) the prosecution of separate actions by
individual members of the Class would create the risk of
inconsistent or varying adjudications with respect to
individual members of the Class which would establish
incompatible standards of conduct for defendants, or
adjudications with respect to individual members of the
Class which would as a practical matter be dispositive of
the interests of the other members not parties to the
adjudications or substantially impair or impede their
ability to protect their interests; and
(f) the defendants have acted, or refused to
act, on grounds generally applicable to, and causing injury
to, the Class and, therefore, preliminary and final
injunctive relief on behalf of the Class as a whole is
appropriate.
SUBSTANTIVE ALLEGATIONS
8. (a) On July 15, 1997, Savannah Foods
announced that it had entered into an agreement whereby a
new entity would be created in which the present
shareholders of Savannah Foods would have a 41.5% equity
interest, Flo-Sun would have a 39.4% interest, and Florida
Crystals Inc., a unit of Flo-Sun, would have a 19.1%
interest. Flo-Sun, however, would have eight votes per
share and therefore 83% of the voting power of the shares of
the new entity (the proposed transaction will be referred to
as the "Sale of Control").
(b) Flo-Sun is a privately-owned company
controlled by the Fanjul family. Thus, if the Sale of
Control is consummated, control of Savannah Foods and its
valuable assets and affairs will pass from its present
shareholders to Flo-Sun and the Fanjul family.
9. Defendant Sprague will serve as president of
the new entity's refining division. The new entity's Chief
Executive Officer will be the present Chief Executive
Officer of Flo-Sun, Alfonso Fanjul.
10. Following the announcement of the Sale of
Control, the price of Savannah Foods' common stock dropped
more than 15% from $18 11/16 to $14 7/8.
11. Commentators had nothing but negative things
to say about the Sale of Control. Patricia Row, a manager
at Kennedy Capital Management, was quoted as stating,
"Savannah Foods is throwing in the towel and it's not
getting cash or anything." Robert Buettner, a manager at
Ryback Management, was quoted as stating, "This company has
dramatically increased the quality of its balance sheet and
now it seems ready to just give it away. It is likely that
if Savannah Foods were for sale, there would be a higher
bidder."
12. The Sale of Control is wrongful, unfair and
harmful to Class members because, among other things:
(a) the intrinsic value of Savannah Foods'
stock is materially in excess of the consideration which
Savannah Foods' shareholders will receive in the Sale of
Control, giving due consideration to the Company's future
earnings potential, cash flow and profitability;
(b) the directors of Savannah Foods 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 Foods' directors have failed to
conduct a market check to ascertain the highest price that
could be attained for Savannah Foods in a change of control
transaction;
(d) Savannah Foods' directors have failed to
negotiate for an adequate premium for the Sale of Control of
Savannah Foods to Flo-Sun and the Fanjul family. Indeed,
not only will Savannah Foods' shareholders be deprived of a
premium for transferring control of Savannah Foods, but
instead they will suffer a diminution in the value of their
investment, evidenced by the investment community's reaction
to the announcement of the Sale of Control. In essence, if
the Sale of Control is consummated, Savannah Foods'
shareholders will sell control of the Company for no
consideration whatsoever.
13. The decisions of the defendants are not
protected by the business judgment rule because the
transaction at issue is a sale of control to Flo-Sun. Under
these circumstances, the Individual Defendants have a
fiduciary duty to Savannah Foods' shareholders to:
(a) secure the best value available to the
Savannah Foods' shareholders;
(b) evaluate critically and in an informed
manner whether or not all material aspects of the Sale of
Control are reasonable and in the best interest of Savannah
Foods' shareholders;
(c) determine whether the Sale of Control
(i) adversely affects the value provided to the Savannah
Foods' shareholders; (ii) inhibits or encourages alternative
bids; and (iii) advances or retards the defendants' duty to
secure for Savannah Foods' shareholders the best value
available under the circumstances; and
(d) ensure that mechanisms are in place to
protect the interests of Savannah Foods' shareholders if
they become minority shareholders of the new entity by
restricting the unfettered exercise of voting control of
Flo-Sun and the Fanjul family in significant corporate
transactions.
14. The Individual Defendants have failed to
discharge their obligations in the proposed Sale of Control
transaction as described in paragraph 13. As a consequence,
the Individual Defendants have violated their fiduciary
duties to the stockholders of Savannah Foods in that they
have failed to maximize shareholder value (including failing
to actively pursue the acquisition of Savannah Foods by
other companies or conducting an adequate market check) and
have otherwise failed to take other steps to protect the
interests of the Class.
15. Flo-Sun has knowingly aided and abetted the
breaches of fiduciary duty committed by the Individual
Defendants complained of herein. Indeed, the proposed Sale
of Control could not take place without the knowing
participation of Flo-Sun.
16. Plaintiff and the Class will suffer
irreparable damage unless the Individual Defendants are
enjoined from breaching their fiduciary duties and from
pursuing the proposed Sale of Control.
17. Plaintiff and the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. Declaring this action to be a proper class
action and certifying plaintiff as the representative of the
Class;
B. Granting preliminary and permanent injunctive
relief against consummation of the Sale of Control as
described herein;
C. In the event the Sale of Control is
consummated, rescinding the Sale of Control and/or awarding
rescissory damages to the Class;
D. Ordering defendants, jointly and severally,
to account to plaintiff and other members of the Class for
all damages suffered and to be suffered by them as the
result of the acts and transactions alleged herein;
E. Awarding plaintiff the costs and
disbursements of the action including allowances for
plaintiff's reasonable attorneys' and experts' fees; and
F. Granting such other and further relief as the
Court may deem just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:______________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
WOLF POPPER LLP
845 Third Avenue
New York, New York 10022
(212) 759-4600
EXHIBIT 99.6
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
_________________________________
x
STEVEN HOROWITZ and DINA :
HOROWITZ, on behalf of themselves
and all others similarly :
situated,
:
Plaintiffs, C.A. No. 15819
:
-against-
:
R. EUGENE CARTLEDGE, LEE B.
DURHAM, JR., ROBERT L. HARRISON, :
JAMES M. REED, DALE C. CRITZ, CLASS ACTION
ARTHUR M. GIGNILLIAT, JR., ROBERT : COMPLAINT
S. JEPSON, JR., ARNOLD TENENBAUM,
W. WALDO BRADLEY, JOHN D. :
CARSWELL, F. SPRAGUE EXLEY,
WILLIAM W. SPRAGUE, III, HUGH M. :
TARBUTTON, FLO-SUN, INC. and
SAVANNAH FOODS & INDUSTRIES, INC. :
Defendants. :
x
_________________________________
Plaintiffs allege upon information and belief except
as to paragraph 1, which is alleged on knowledge, as follows:
THE PARTIES
1. Plaintiffs are and at all times relevant hereto
have been the owners 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 new 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 formerly served as Union Camp's 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. Gignilliat, Jr.
("Gignilliat") 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 F. 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. Plaintiffs bring this case on their 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) Plaintiffs are committed to prosecuting
this action and have retained competent counsel experienced in
litigation of this nature. The claims of plaintiffs are
typical of the claims of other members of the class and
plaintiffs have the same interests as the other members of the
class. Accordingly, plaintiffs are adequate representatives
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. Plaintiffs and the other members of the Class
have no adequate remedy at law.
WHEREFORE, plaintiffs demand judgment as follows:
(a) declaring this to be a proper class
action;
(b) ordering the individual defendants to
carry out their fiduciary duties to plaintiffs 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 plaintiffs 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 plaintiffs the costs and
disbursements of the action, including a reasonable allowance
for plaintiffs' 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 Plaintiffs
OF COUNSEL:
LOWEY DANNENBERG BEMPORAD
& SELINGER, P.C.
The Gateway
One North Lexington Avenue
White Plains, NY 10601
Tel: (914) 997-0500
Fax: (914) 997-0035
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
100 Park Avenue
New York, NY 10017
Tel: (212) 907-0700
Fax: (212) 818-0477
EXHIBIT 99.7
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - - - - - -X
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.
:
- - - - - - - - - - - - - - - - - - - - - -X
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
