SAN DIEGO- LAWFUEL – Law News Network -June 5, 2006–Lerach Coughlin Stoia Geller Rudman & Robbins LLP (“Lerach Coughlin”) (http://www.lerachlaw.com) today announced that a class action has been commenced in the District Court of Harris County, Texas on behalf of holders of Kinder Morgan, Inc. (“Kinder Morgan” or the “Company”) (NYSE:KMI) common stock.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, William Lerach or Darren Robbins of Lerach Coughlin at 800/449-4900 or 619/231-1058, or via e-mail at wsl@lerachlaw.com. (From Europe, 001-619-231-1058.)
The complaint charges certain of the officers and directors of Kinder Morgan with violations of applicable state law on behalf of the Company’s shareholders. Specifically, the stockholder class action is brought on behalf of the holders of Kinder Morgan common stock against Kinder Morgan’s senior officers and directors arising out of their efforts to complete a management-led buyout of Kinder Morgan via an unfair process at a grossly inadequate and unfair price of $100 per share (the “Acquisition”).
The complaint alleges that, in pursuing the unlawful plan to cash out Kinder Morgan’s public stockholders for grossly inadequate consideration and without full and fair disclosure of all material information, each of the defendants violated applicable law by directly breaching and/or aiding other defendants’ breaches of their fiduciary duties of loyalty, due care, independence, candor, good faith and fair dealing. Instead of attempting to obtain the highest price reasonably available for the Company’s stockholders, the Complaint alleges defendants spent a substantial effort tailoring the structural terms of the Acquisition to meet the specific needs of the Management Buyout Group, which includes the Company’s top officers and directors as well as a group of private equity funds.
The Complaint explains that because defendants dominate and control the business and corporate affairs of Kinder Morgan, and are in possession of private corporate information concerning Kinder Morgan’s assets, business and future prospects, there exists an imbalance and disparity of knowledge and economic power between them and the public shareholders of Kinder Morgan which makes it inherently unfair for them to pursue any proposed transaction wherein they will reap disproportionate benefits to the exclusion of maximizing stockholder value.
The Complaint provides examples of such disparities. For example, the Complaint describes how Kinder Morgan Energy Partners, L.P. (“KMP”) and its partner Sempra Energy are moving forward on the $4.4 billion Rockies Express Pipeline project after obtaining binding commitments from creditworthy shippers for all 1.8 billion cubic feet (Bcf) of transportation capacity on the 1,323-mile pipeline that will move natural gas from the Rocky Mountain region to the eastern United States. KMP also has binding commitments with major oil companies to support the $500 million Kinder Morgan Louisiana Pipeline project, which will transport regasified liquefied natural gas from the Gulf Coast into the country’s pipeline network. Combined, these two projects alone are expected to result in an increase of $0.50 to $0.60 in earnings per share at Kinder Morgan once they are fully completed in 2009, and will be substantially accretive prior to that as certain segments of each project come online.
The Complaint further alleges in detail how these investments were made on the backs of the Company’s public shareholders. Defendants now wish to squeeze the Company’s public shareholders out of their shares in the Company so that they, and they alone, can enjoy the fruits of these strategic investments. In addition, once the Acquisition is completed, the defendants will also have the opportunity to acquire the Trans Mountain Pipeline system in British Columbia from the Company on terms which they, and they alone, can and will dictate. Thus, the Complaint claims that not only will defendants’ personal profits generated from the Acquisition be affected by their paying the lowest price to shareholders in connection therewith, but also, defendants will profit from these piecemeal projects by selling various parts of the Company to themselves. Thus, collectively, as alleged in the Complaint, it is in defendants’ interests to conceal the true value of the Company, including various methods of extracting further profits from these future “side deals,” which defendants are already negotiating for themselves.
In short, the Complaint alleges that the Acquisition is designed to unlawfully divest Kinder Morgan’s public stockholders of a large portion of the valuable assets of the Company — assets defendants know will continue to produce substantial revenue and earnings — for grossly inadequate consideration. Although the Company has formed a so-called “Special Committee” to evaluate the Acquisition, the decision is essentially a fait accompli, as the Special Committee is dominated and controlled by various members of the Management Buyout Group, many of whom are the Company’s top executives and private equity firms, and all of whom have structured the Acquisition to share in the Company’s spoils to the exclusion of the minority shareholders, who for years have shouldered these very investments/benefits which they are being squeezed out of benefiting from.
Plaintiff seeks to enjoin the Acquisition of Kinder Morgan on behalf of the Company’s minority shareholders (the “Class”). The plaintiff is represented by Lerach Coughlin, which has expertise in prosecuting investor class actions and extensive experience in actions involving mergers and acquisitions on terms detrimental to the interests of minority shareholders.
Lerach Coughlin, a 180-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Washington, D.C., Houston, Philadelphia and Seattle, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. Lerach Coughlin lawyers have been responsible for more than $20 billion in aggregate recoveries. The Lerach Coughlin Web site (http://www.lerachlaw.com) has more information about the firm.
