Shareholder litigation over Blackstone-led buyout

• Deal page
• Initial strike suit focused on quick flip of AmeriSuites by Blackstone for a substantial gain

• As part of settlement company sent a proxy supplement
• Proxy statement supplement (9.24.04)
• Litigation settled (9.24.04)

• Subsequent litigation attacked this settlement

• Plaintiffs maintained that if Prime's directors were indeed uninformed, defendants' supplemental disclosures would not be adequate or fair consideration for the release of litigable Revlon/Macmillan claims
• Plaintiff's claims

• Delaware Chancery ruled in May 2005

• Court refused to approve settlement
• See Opinion below

Opinion 5.04.05

Chancellor Chandler

Hyperlinked Index

Introduction +

Background I

• Prime Hospitality I.A.
• Blackstones Interest In Prime I.B.
• La Quinta Expresses Interest in Prime I.C.
• Blackstone Re-emerges I.D.
• Blackstone Acquires Prime I.E.
• The Objectors Contentions I.F.
• Defenses to the Objectors claims I.G.

Analysis II.

• Standard Applied to Settlement Proposals II.A.
• Weighing the Claims vs. the Defenses II.B.

• Primes 102(b)(7) Defense II.B.1.
• Shareholder Ratification II.B.2.

• The Strength of the Record II.C.

• Primes Market Check II.C.1.
• After February 2004 II.C.2.
• Primes Deal Protections II.C.3.
• Petrocelli II.C.4.

• Supplemental Disclosures are Inadequate ConsiderationII.D.

Conclusion III.

Delaware General Corporation Law

Prime Hospitality / Blackstone Group LBO