LOS ANGELES--(BUSINESS WIRE)--Represented by Robertson & Associates, LLP, Whitney Tilson and Jonathan Glaser, on behalf of numerous investment funds they manage, intervened today in a lawsuit filed on June 12, 2015, by James J. Cotter, Jr. against the directors of Reading International, Inc. (NASDAQ:RDI) and over his termination as President and CEO. The intervenors, Tilson and Glaser, seek to protect the interests of all Reading shareholders by halting and reversing alleged unacceptable behavior and corporate waste by RDI’s board.
Reading International, Inc., a Nevada corporation based in Los Angeles, operates 58 multiplex cinemas in the U.S., Australia and New Zealand, and develops real estate and the rental of retail, commercial and live theater assets. RDI recently reported revenue of $72 million and net income of $16 million for the second quarter of 2015.
“Plaintiffs bring this derivative action to police the behavior of RDI's board of directors, who have breached their fiduciary duties of due care and loyalty to the shareholders by allowing (1) family disputes between directors Margaret and Ellen Cotter, on the one hand, and their brother James J. Cotter, Jr., on the other hand, to spill over into the boardroom, infecting the corporate governance of this publicly-traded company, imperiling the immediate and long term prospects of the Company; (2) self-dealing by Cotter family members; and (3) corporate waste through excessive compensation for the directors and the payment of personal expenses of Cotter family members from the Company's treasury,” according to the intervenors’ Complaint, filed in Nevada's Clark County District Court on August 11, 2015.
“I purchased the stock of Reading International because I see enormous value in the company’s unique theater and real estate assets that isn’t reflected in the stock price, which I believe is significantly undervalued,” said Whitney Tilson, whose funds, Kase Fund, Kase Qualified Fund and Tilson Offshore Fund, Ltd., together own shares of Class A non-voting stock in RDI. “However, since the passing of James Cotter, Sr., I am very concerned about the conflict among and self-serving actions by the Cotter children and certain conflicted board members that could jeopardize this value.”
“I'm a long standing shareholder of Reading because it has extremely valuable assets,” added Jonathan Glaser, whose funds, JMG Capital Management, LLC and Pacific Capital Management, LLC, have owned RDI Class A non-voting shares for many years. “While I am pleased that second quarter earnings were strong, I'm concerned by the actions of the board and the ongoing family dispute. Both the board and the family must recognize that this is a public company, and as such, they have a duty as fiduciaries to all shareholders.”
According to court filings, since the death of James J. Cotter, Sr., the siblings have been embroiled in trust and estate litigation over control of RDI’s Class B voting shares that control the company. James J. Cotter, Jr. alleges that, when he refused to accept a “take-it-or-leave-it” demand by his sisters and certain directors to settle the siblings’ trust and estate litigation, these directors -- specifically, Margaret Cotter, Ellen Cotter, Edward Kane, Guy Adams and Douglas McEachern -- improperly voted to fire him as President and CEO of RDI on June 12, 2015, and then appointed Ellen Cotter as interim CEO.
The derivative lawsuit filed by Tilson and Glaser alleges that the board breached its duties to all shareholders by taking sides in a family dispute. In addition, it alleges that the directors of RDI wasted corporate assets by approving lavish compensation of directors, rubber stamping a “golden coffin” deferred retirement and death plan for James Cotter, Sr. and his estate, and paying expenses for out-of-town family, friends and celebrities to attend and participate in James Cotter, Sr.'s memorial.
The shareholders are represented by Alexander Robertson, IV, Esq., of Robertson & Associates, LLP in Westlake Village, CA.
Intervenors' Complaint can be found at: www.tilsonfunds.com/RDIinterventionsuit.pdf
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copy of James J. Cotter, Jr.'s Complaint can be found at: www.tilsonfunds.com/Cottersuit.pdf
