WASHINGTON—A Delaware court rejected Highland Capital Management L.P.’s suit to gain access to Motient Corp.’s books and records, but the Dallas-based hedge fund claims it got a major boost from two independent advisors in its proxy fight to have the mobile satellite holding company’s board overhauled at next week’s annual shareholders meeting.
“We are pleased with the court’s finding that Highland has ‘reasonable grounds to suspect corporate misconduct’ by Motient’s management,” said Highland. “However, we view the court’s refusal to require Motient to produce certain non-public corporate records as a clear legal error and have filed an appeal. As a stockholder, Highland has a right to the requested information, and we will continue our efforts to shed light on the misconduct of Motient’s board of directors and management. If Motient’s current management were truly acting in the stockholders’ best interests, it would not need to take extraordinary steps to block stockholders’ access to information about Motient’s affairs.”
Highland holds a 14-percent stake in Motient, making it the largest single shareholder in the Lincolnshire, Ill., company. Other suits Highland and Motient have filed against each other are pending in various courts.
Meantime, Highland and Motient each found something they liked in the Institutional Shareholder Services’ recommendation to shareholders ahead of Motient’s July 12 annual meeting.
“We are extremely pleased and gratified that ISS, a highly respected independent advisor, has recognized the serious corporate governance issues and questionable practices occurring at Motient. The recommendation from ISS is consistent with our determination that Motient’s current board of directors is not acting in stockholders’ best interests,” stated Highland.
Motient also reacted favorably to the ISS recommendation, but for different reasons.
“We are pleased ISS confirmed what has been our view all along: that Highland Capital Management does not have a strategic plan for Motient,” said Christopher Downie, Motient’s chief operating officer. “This lack of a strategic plan, in ISS’ view, disqualifies the dissidents from seeking majority representation on a board, and therefore should be perceived by Motient shareholders as a rejection of Highland’s proposal to take control of Motient. Furthermore, consistent with what Motient has been saying for some time now, ISS noted that Highland President James Dondero participated in many of the transactions he is now calling into question while he served on Motient’s board of directors. We believe this fact alone should call into question the real agenda behind Dondero’s proposals to replace our board: to take control of Motient’s assets. The inconsistencies in his comments on the strategic direction of the company cannot be ignored.”
Highland said its plan to shake up Motient’s board and management also received a favorable recommendation from Glass Lewis & Co. L.L.C.
In May, Motient announced a series of transactions whereby SkyTerra Communications Inc. would own 70 percent of Mobile Satellite Ventures L.P., an MSS licensee with Federal Communications Commission approval to combine L-band (1.5 GHz) satellite operations with land-based cellular networks.
Under the plan, Motient would increase to 74 percent its stake in TerreStar Networks Inc., an S-band (2 GHz) MSS licensee also planning to construct and operate a hybrid satellite-terrestrial communications system.
The ownership realignment requires federal approval.
Motient currently owns a 49-percent stake in MSV and a 61-percent stake in TerreStar.
More recently, Motient sold its legacy terrestrial wireless business to Logo Acquisition Corp.
