Dr. Patrick Soon-Shiong, the Los Angeles billionaire battling for control of Chicago Tribune owner Tronc, is pressuring the company’s board to allow him to buy more stock now that Chairman Michael Ferro has been allowed to up his stake.
In a letter sent Monday to Tronc executives and obtained by the Los Angeles Times, John Quinn, an attorney for Soon-Shiong, said the company should immediately allow the biotech entrepreneur and his investment firm to own as much as 30 percent of Tronc stock. For now, he is limited to holding 25 percent under an agreement signed when he invested in the company last year.
The letter was made public in a regulatory filing Tuesday afternoon.
Ferro, a Chicago entrepreneur who bought into Tronc last year through his firm Merrick Media, had also been limited to holding no more than 25 percent. But Tronc’s board last week approved bumping that figure up to 30 percent in a move made public by a Securities and Exchange Commission filing.
The company did not offer an explanation as to why the terms of Ferro’s deal were amended. Earlier this month, the company noted in a different filing that Soon-Shiong, who has been Tronc’s vice chairman since last summer, had not been nominated to serve on the board in the coming year.
In Monday’s letter, Quinn said that Tronc’s treatment of the doctor and his investment firm, Nant Capital, has been “egregious” and demanded that the board allow Soon-Shiong to boost his stake in Tronc, which also owns the Los Angeles Times and seven other major newspapers.
Tronc spokeswoman Dana Meyer said the company rejects the claims in the letter.
“We have reviewed it, have found it to be filled with misstatements and baseless innuendo, and intend to respond to Nant Capital as promptly as possible,” she said.
The letter lays out several corporate actions that Quinn said have unfairly benefited Ferro and represent poor corporate governance, including the board’s decision to not renominate Soon-Shiong for his seat.
“We were therefore doubly surprised and troubled by recent actions by the company … all of which we believe are contrary to principles of good governance and to shareholders’ best interests,” the letter said.
Quinn also sent a demand for access to corporate documents, including communication between board members, management and company attorneys over Soon-Shiong’s seat on the board, Ferro’s increased stake in the company and the recently announced buyback of more than 3 million Tronc shares from investment firm Oaktree Capital Management.
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