Sheet Metal Workers Local No. 292 Pension Fund, Troy, Mich., is suing to gain access to the books and records of Howard Hughes Corp. in connection with a private stock offering to a hedge fund firm.
The suit, filed Sept. 23 in chancery court in Delaware, said that in March, HHC offered 10 million shares of common stock to Pershing Square Capital Management, while concurrently offering 2 million shares to the public.
HHC Chairman William A. Ackman is Pershing Square's founder, CEO and portfolio manager.
Not only did Mr. Ackman and Pershing Square increase their ownership of HHC to 29.8% from 14.8% as part of the deal, the suit said, but the transaction also diluted the interests of the firm's other shareholders who could only participate in the smaller public offering, which included the pension fund.
The pension fund also said in the suit that HHC and Mr. Ackman "provided conflicting information" regarding who agreed to the deal, saying in some places it was approved by HCC's board while disclosing elsewhere that it was OK'd by "independent directors" of the board.
"Based upon the limited and conflicting public disclosures, the approval process for the transaction appears to have violated the company's policies on related-party transactions," the suit said.
Mary S. Thomas, counsel for the plaintiff from the law firm Prickett, Jones & Elliott, and Cristina Carlson, a spokeswoman for Howard Hughes Corp., could not be reached for comment.
Sheet Metal Workers Local No. 292 Pension Fund had $110 million in assets as of Dec. 31, 2018, according to its latest Form 5550.