Judge Orders Apple to Respond to Greenlight Capital Lawsuit by Wednesday
New York District Court Judge Richard Sullivan accelerated Apple’s case with Greenlight Capital, agreeing that the issue would be resolved as soon as possible given the affect an outcome could have on the company’s upcoming shareholder meeting.
For those of you who don’t know, Apple is being sued by Greenlight Capital in a bid to have the company mete out a portion of its vast $137 billion cash hoard with investors. According to Apple, the request had the support of Greenlight’s legal counsel, reports Reuters
. Behind the suit is Greenlight’s David Einhorn, one of Apple’s most prominent shareholders, who is suing to block a proxy proposal that could see the issuance of preferred stock eliminated from the company’s character.
The Cupertino California company’s so-called “Proposal 2” argues that a higher level of governance can be achieved by stripping the board’s ability to issue preferred stock, instead leaving the matter to the purview of shareholders. Einhorn countered, saying that Apple should return more of its $137 billion in cash to investors in the form of perpetual preferred shares that carry attractive dividends. He asks Apple to task over how the proposal is bundled together with two others in the company’s proxy statement, which is headed for debate at the annual shareholder meeting on February 27.
As far as its part, Apple said it is holding “active discussions” on what to do with the cash hoard and denies that the passage of Proposal 2 would hinder the issuance a preferred stock. Apple is scheduled to respond in the Greenlight suit by Wednesday, with Greenlight slated to file subsequent documents by Friday. Both parties have been called to appear in front of Judge Sullivan for arguments on February 19th. We’ll have to wait and see what happens.