Costa Brava Partnership III L.P., Greenwood Capital L.P., and Greenwood Investors, L.P. filed a lawsuit seeking to recover damages for “breaches of fiduciary duty” from Sport Supply Group’s controlling shareholder, Collegiate Pacific, Inc. The individuals named as defendants include Geoffrey P. Jurick, Thomas P. Triechler, Peter Bunger, and Terry Babilla, CEO of SSG.
The lawsuit stems from events that took place last July, when Collegiate Pacific acquired a controlling interest in SSG from its former majority shareholder, Emerson Radio, in a transaction valued at $6.74 a share, representing an 80% premium to the then-current stock price.
According to the suit, Geoffrey P. Jurick, an officer and director for SSG and Emerson Radio, manipulated negotiations in order to further his own interests by selling shares of SSG to Collegiate Pacific. The suit alleges that he did this in order to repay a $16 million short-term personal loan from the Seng Heng Bank Ltd. of Macau.
The suit also accuses Collegiate Pacific of “knowingly aiding and abetting” this action in order to obtain control of SSG. As a result, Costa Brava and Greenwood believe they were prevented from benefiting from the premium transaction for all of SSG that Collegiate had originally desired, and were denied their right to participate in this transaction.
Collegiate Pacific issued a statement claiming that this lawsuit is “without merit” and the company intends to seek prompt dismissal of the claims made against it.