HOUSTON - The Delaware Court of Chancery has granted Boots Capital Management LLC expedited discovery in its case against Crown Castle Inc. (NYSE: NYSE:CCI), alleging the telecom infrastructure company's board breached fiduciary duties by expanding its number of directors amidst a proxy fight.
During a hearing on Monday, Vice Chancellor J. Travis Laster stated that Boots Capital presented a "colorable claim" suggesting Crown Castle's board acted against shareholder interests by increasing board seats from 12 to 13 following the appointment of a new CEO on April 10, without prior notice to Boots Capital. This action contravened an earlier court directive from March 8 requiring Crown Castle to inform Boots Capital of significant corporate changes.
The court will hold a preliminary injunction hearing in early May to consider delaying the company's annual meeting, scheduled for May 22, to address the claim. Boots Capital, which supports new CEO Steven J. Moskowitz, has criticized the board for not reducing its size upon his appointment, thus affecting the proxy contest's fairness.
Crown Castle's decision to retain director and interim CEO Anthony Melone, while also paying former CEO Jay Brown as a consultant, has been highlighted as part of the governance issues raised by Boots Capital.
Ted B. Miller, co-founder of Crown Castle and part of the Boots Capital slate, has called for shareholder action against the board's "self-serving behavior." Boots Capital's nominees have proposed a plan to optimize Crown Castle's assets, aiming to improve operations and shareholder value, including the potential sale of fiber assets before year-end tax benefits expire.
Legal advisors for Miller include Heyman Enerio Gattuso & Hirzel LLP, Woolery & Co. PLLC, and Equity Litigation Group LLP. The case number is 2024-0176-JTL.
This article is based on a press release statement.
InvestingPro Insights
As Crown Castle Inc. (NYSE: CCI) faces legal challenges, investors may be weighing the company's financial health and future prospects. According to real-time data from InvestingPro, Crown Castle has a market capitalization of $41.24 billion and a price-to-earnings (P/E) ratio of 27.52, which adjusts to a slightly lower 25.67 when looking at the last twelve months as of Q4 2023. Despite a minor revenue decline of 0.07% during the same period, the company maintains a robust gross profit margin of 71.64%.
An InvestingPro Tip points out that Crown Castle has been consistent in rewarding its shareholders, having raised its dividend for 10 consecutive years, which is reflected in a current dividend yield of 6.25%. This could be particularly attractive to income-focused investors considering the company's performance amidst the ongoing proxy fight and corporate governance issues.
Investors should note that while the company is trading at a high Price / Book multiple of 6.51, analysts predict Crown Castle will be profitable this year, which may provide some reassurance against the backdrop of the legal proceedings. Moreover, with the next earnings date slated for April 17, 2024, shareholders and potential investors should closely monitor the outcomes for any impact on the company's financial trajectory.
For those seeking deeper insights, there are additional InvestingPro Tips available for Crown Castle, including analysis on earnings revisions and liquidity concerns. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable tips and make more informed investment decisions.
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