Hastings Entertainment, Inc. Announces Order Denying Motions For Expedited Discovery And Preliminary Injunction In Connection With Agreement And Plan Of Merger With Affiliate Of Joel Weinshanker
AMARILLO, Texas, June 20, 2014 /PRNewswire/ -- Hastings Entertainment, Inc. (NASDAQ: HAST), a leading multimedia entertainment retailer ("Hastings"), today reported that the United States District Court for the Northern District of Texas, Amarillo Division, has issued an Order Denying Motions for Expedited Discovery and for a Preliminary Injunction (the "Order") with respect to the potential merger transaction involving Hastings and an affiliate of Mr. Joel Weinshanker. As Hastings first disclosed on March 17, 2014, Hastings entered into an Agreement and Plan of Merger (the "Merger Agreement") on such date with Draw Another Circle, LLC ("Parent") and Hendrix Acquisition Corp. ("Merger Sub"), which are each wholly-owned, directly or indirectly, by Mr. Weinshanker. Mr. Weinshanker is the President and sole shareholder of National Entertainment Collectibles Association, Inc., which holds approximately 12% of Hastings' outstanding shares ("NECA"). Pursuant to the Merger Agreement, Merger Sub will be merged with and into Hastings, with Hastings surviving the merger as a wholly-owned subsidiary of Parent, and each share of Hastings common stock held by a shareholder of Hastings (other than Mr. Weinshanker and his affiliates) will, upon completion of the merger, be converted into the right to receive a cash payment of $3.00 per share.
On March 28, 2014, a lawsuit challenging the merger, captioned CV-00072-J— Andreas Oberegger and David A. Capps, directly and derivatively on behalf of Hastings Entertainment, Inc., v. Danny W. Gurr, Ann S. Lieff, Frank O. Marrs, John H. Marmaduke, Jeffrey G. Shrader, Draw Another Circle, LLC, Hendrix Acquisition Corp., Joel Weinshanker and National Entertainment Collectibles Association, Inc., as defendants, and Hastings Entertainment, Inc., as a nominal defendant, was filed in the United States District Court for the Northern District of Texas, Amarillo Division. The plaintiffs are purported shareholders of Hastings and are alleging, among other things, that the merger contemplated in the Merger Agreement provides for insufficient consideration to be paid to Hastings' shareholders in exchange for their shares of Hastings' common stock, that the officers and directors of Hastings breached their respective fiduciary duties in the course of negotiating and approving the Merger Agreement and that the other defendants aided and abetted such breach of fiduciary duties. The lawsuit seeks to enjoin the merger or rescind the merger if it is consummated and compensatory damages in an unspecified amount.
On May 28, 2014, the plaintiffs filed a motion for expedited discovery and a motion for entry of a temporary restraining order to enjoin the proposed transaction from closing. On May 30, 2014, two days after the plaintiffs filed this motion, the Court issued its Order Granting Motion for Temporary Restraining Order and Setting Hearing on Request for a Preliminary Injunction (the "Initial Order"), which restricted the consummation of the Merger prior to the hearing scheduled for June 12, 2014. On June 12, the Court conducted a hearing on the plaintiffs' requests for leave to amend their complaint to allege disclosure violations under the federal securities law, for expedited discovery and for a preliminary injunction. On June 19, 2014, the Court issued an order granting the plaintiffs' motion to amend, and then issued the separate Order denying the plaintiffs' motions for expedited discovery and for preliminary injunction. Under the terms of the Order, the restrictions on consummating the merger contained in the Initial Order, as subsequently extended, are vacated, and Hastings is holding a special meeting of its shareholders on July 15, 2014 for the purpose of obtaining shareholder approval of the Merger Agreement and certain related matters.
Hastings believes that the lawsuit was improperly and prematurely filed under Texas law and that the claims alleged therein are factually incorrect and deficient as a matter of law. Hastings intends to vigorously dispute these claims throughout the life of this litigation.IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
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