Atlanta Firefighters' Pension Fund filed a lawsuit against Arconic Inc., New York, claiming the firm published false information in an 8-K filing with the SEC to frighten shareholders from electing new board members.
The suit, filed Wednesday in U.S. District Court in New York, alleges that Arconic falsely threatened that the election of four new members on a 13-member board could potentially constitute a change in control of the company, triggering a trust agreement that would mandate payments totaling $500 million to the company's pension plan and other benefit trusts.
According to the lawsuit filing, activist hedge fund Elliott Management, the company's largest investor, had previously worked with Arconic to expand the number of company board seats to 13. Elliott had filed its definitive proxy statement March 16 that “it would seek to replace a minority of the board by running a consent solicitation against four incumbent members of the 13-member board who were up for re-election at the next annual meeting,” according to the filing.
On April 12, Arconic filed its 8-K with the Securities and Exchange Commission saying the election of four new board members could constitute a “potential change in control” and the terms of the trust agreement “provide for the funding of the trust by the company in connection with a 'change in control' (as defined in the trust agreement) under certain circumstances. The estimated aggregate amount of the required funding based upon the liabilities of the related plans is approximately $500 million,” according to that 8-K filing.
As of Dec. 31, Arconic had $4.67 billion in defined benefit plan assets, compared to $7.03 billion in projected benefit obligations, for a funding ratio of 66.4%, according to the company's most recent 10-K filing.
Shona Sabnis, Arconic spokeswoman, said the company does not comment on pending litigation.