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Costa Mesa Firm ARV Sued Over Buyout Bid

September 27, 2002|From Bloomberg News

WILMINGTON, Del. — ARV Assisted Living Inc., which operates 59 communities for the elderly in 11 states, on Thursday was facing three lawsuits filed by investors who want a higher price for their shares in a proposed buyout by a rival company.

It was on Monday that an offer was made by an affiliate of Lazard. New York-based Lazard, the world's largest private investment bank, owns 47% of ARV.

The affiliate, Prometheus Assisted Living, offered to pay up to $3.60 in cash for the outstanding shares, a 41% premium over Monday's closing price of $2.55, valuing the company at $62.8 million.

In one of three lawsuits filed in Delaware Chancery Court, ARV shareholder Mark Levy says the directors of the Costa Mesa-based company have a duty to get a better price for shareholders.

"The consideration to be paid is unconscionable, unfair and grossly inadequate" considering ARV's "earnings power, present and future," the suit says. Levy asks a judge to stop the transaction and award damages and legal fees.

Shares of ARV, which reported $145.4 million in fiscal 2001 sales, rose 1 cent to $3.16 in American Stock Exchange trading. The shares fell to a 52-week low of $1.10 in November.

An ARV board of directors committee is evaluating the proposal.

"We haven't seen the lawsuit," said Abdo Khoury, ARV's president and chief financial officer. "Our special committee and advisors haven't established if it's fair or not, so we have no comment."

If the buyout is completed, Prometheus plans to combine ARV with two other assisted-living companies, Atria Inc. and Kapson Senior Quarters Corp., both of New York state.

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