LOS ANGELES -- Times Mirror Co. has settled shareholder lawsuits aimed at blocking the sale of its cable television operation by giving shareholders an opportunity to reap higher dividends for three years.
The proposed settlement, which still must be approved in court, would end all litigation related to Times Mirror's complex $2.3 billion transaction with Cox Enterprises Inc., announced in June.
The plaintiffs alleged that stock in a new combined TV cable operation controlled by Cox was not enough to compensate for a sharp dividend reduction planned for their Times Mirror shares after the sale. In addition to its cable holdings, Times Mirror owns newspapers including the Los Angeles Times, The Sun, The Evening Sun and Newsday, and magazines such as Field & Stream, Skiing, Outdoor Life and Sporting News.
The pact, announced yesterday, would give Times Mirror shareholders the right to exchange newly issued Times Mirror common shares for a new class of preferred stock yielding at least 6.5 percent. Each share of the new stock -- called preferred equity redemption cumulative stock, or PERCs -- would convert to a share of common stock after three years.
Shareholders who don't exchange their shares would be guaranteed an annual dividend of at least 24 cents a share, slightly less than one quarter the current payout, for three years.
The proposed settlement stems from a rash of suits filed in Delaware state court and federal court in California. The complaints alleged the cable sale shortchanged them by favoring Times Mirror's controlling shareholders, members of the Chandler family of Los Angeles. The proposed settlement announced yesterday would not change terms received by the Chandlers.
A hearing on the settlement is scheduled for Nov. 30 in Delaware Chancery Court.