QVT Financial’s QVT Fund has tendered approximately 60 per cent of its shareholding in Galatasaray Sportif in connection with the tender offer for Sportif’s shares by its majority shareholder, Futbol, and realised the economic value under its existing swap arrangements based on the tender offer price.
Dan Gold, chief executive officer of QVT Financial, says: “Our decision to make a partial tender into the offer by Futbol for Sportif was made with great reluctance. However, given the grievous harm already inflicted on minority shareholders in Sportif, the failure of the Turkish regulators and courts to protect minority shareholders by preventing a tender offer that is clearly coercive in light of the proposed merger, and other illegal acts by Sportif’s board and management, we felt compelled by our fiduciary duties to partially accept Futbol’s significantly undervalued offer so as to limit further damage to our investors.”
QVT will retain a holding of approximately seven per cent of the public stock in Sportif and believes it will continue to be Sportif’s largest minority shareholder.
QVT intends to continue to attempt to block Sportif’s planned merger with Futbol and seek any and all available civil, and potentially criminal, remedies available in the Turkish courts and other international forums, against all responsible persons and entities.
On 15 March, QVT sought an injunction against the Capital Markets Board of Turkey in relation to the CMB’s decision to authorize the tender offer at a price of TRY155.77. QVT separately requested that the CMB exercise its authority to protect minority shareholders from the coercive and illegal acts of Sportif.
In its response dated 22 March, the CMB agreed with QVT on the need for repayment of the related-party loans by the CMB-mandated 28 March deadline and that Sportif must comply with its own Articles of Association with regard to the financing of the tender offer. However, the CMB declined to suspend or extend the coercive tender offer.
In a ruling made yesterday, the Ankara Administrative Court granted the CMB five days to respond to QVT’s injunction request, effectively nullifying QVT’s efforts to engage the Turkish courts in the protection of its and other minority shareholders’ rights, given that the tender offer was scheduled to expire yesterday.
QVT says these actions have provided no alternative for significant minority shareholders, like QVT, other than to tender their shares or face the prospect of continued value destruction from the proposed merger.
Gold adds: “We are very disturbed both by the blatant and outrageous conduct of Sportif and the complacency of those who have a duty to protect shareholders in the public markets. Their inaction has forced QVT to tender a portion of its holdings in order to reduce its exposure to a situation in which the regulatory authorities and the courts have left minority investors without the most basic protections afforded under international norms.”
