2 suits filed to halt sale of Hughes unit

February 25, 1997|By BLOOMBERG NEWS

WILMINGTON, Del. -- General Motors Corp. stockholders have filed lawsuits to stop the $9.5 billion sale of GM's Hughes defense unit to Raytheon Co.

The stockholders claim the purchase will cheat Class H shareholders of a 20 percent premium they were promised by GM if Hughes was sold, according to two lawsuits filed in Delaware Chancery Court on Feb. 6. The court makes filings public only once all parties are served.

The lawsuits, which seek class-action status, claim GM is coercing shareholders to surrender their rights by conditioning the the sale on shareholders' waiving the 20 percent premium.

The automaker's charter requires it to give the investors six shares of GM common stock for every five of their Class H shares if Hughes is sold, the lawsuits say.

GM, however, doesn't want to allow the exchange, and instead is asking shareholders to approve the sale without the premium to Class H shareholders.

GM is worried that converting Class H shares into its common stock would greatly expand the number of shares outstanding and lower the stock's price, the lawsuits say.

The automaker wants to pay Class H shareholders in Raytheon stock, with the amount to be determined this summer.

Class H stock, which both plaintiffs own, represents all Hughes Electronics Corp. businesses. Besides the defense unit, Hughes operates a telecommunications business and makes Delco auto parts. Detroit-based GM plans to bring Delco under its fold and make the Class H stock represent only the telecommunications operation.

Pub Date: 2/25/97

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