Time Warner faces more headaches over an old problem -–
disgruntled shareholders.
The law firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP, today
announced a multi-billion-dollar lawsuit over the takeover of AOL by Time
Warner in 2001. The firm said it is representing approximately 100
institutional investors around the globe who have “opted-out” of the AOL
Time Warner class action settlement.
These clients, which the firm said have suffered losses of almost
$1.6 billion, including pre-judgment interest, will be pursuing individual
suits designed to maximize the recovery of the losses
they suffered due to violations of federal and state securities laws in
connection with the AOL Time Warner merger in January 2001.
These new “opt-out” clients are in addition to several other institutions
that the firm has been representing in individual suits arising out of
the AOL Time Warner merger.
The Ohio and California cases are scheduled to go to trial
later in 2006.
“We applaud the Minnesota State Board of Investment for stepping forward
to lead the class action for AOL Time Warner investors,” said William S.
Lerach in a statement. “The $2.6 billion class-action settlement is one of the highest recoveries ever for shareholders.
“The institutions that are filing their actions individually have decided to
pursue a different strategy that has the objective of obtaining a higher
percentage recovery of their losses than is possible in the class action
context,” he said.
In the years immediately following the 2001 merger, which saw AOL Time Warner stock
plummet, the company had to restate financial results for eight prior quarters, resulting in a reduction of $190
million in revenues and $97 million less in cash earnings.
The media giant
lost nearly
$100 billion in value in 2002.
In January 2003, AOL founder and CEO Steve Case, one of the main
architects of the merger with Time Warner, resigned.
And this may only be part of the suits Lerach, et al. is planning. In
addition to the “opt-out” suits, the law firm said there are many other
existing or contemplated “opt-out” suits on behalf of other institutions
involving additional billions of dollars of claims against AOL Time Warner.
AOL has been transitioning from its original proprietary dial up,
premium content services, to a Web portal, and broadband services provider.
But it’s had to play catch up with such broadband providers as
Comcast, as well as myriad free content on the Web.
