Green Mountain Coffee Roasters Inc. said Monday that it is extending the cash tender offer tied to its proposed acquisition of coffee roaster and wholesaler Diedrich Coffee Inc.

About 2.3 million shares had been tendered in the $35 per share offer as of Friday.

The tender offer by Green Mountain subsidiary Pebbles Acquisition Sub Inc. will now be extended 20 business days to March 8. All other terms and conditions of the offer remain the same.

Irvine-based Diedrich has recommended that its stockholders tender their shares in the offer.

Last month Green Mountain said antitrust authorities requested more information about the proposed deal. It was the second request for information from the U.S. Federal Trade Commission.

Peet’s Coffee and Tea had agreed to buy Diedrich before Green Mountain stepped in, but Green Mountain paid Peet’s an $8.5 million termination fee.

Green Mountain has been on a buying spree of late, purchasing the Tully’s Coffee brand and wholesale coffee business from Tully’s Coffee Corp. in March 2009 for $40.3 million. It also bought Toronto specialty coffee company Timothy’s in November 2009 for $157 million, including the Timothy’s World Coffee brand and wholesale business but not the retail operations.

Related stories:

Green Mountain, Peet’s continue fight for Diedrich Coffee is a post from: OC Business News

The judgment stems from a suit filed by Acacia’s Internet Advertising Corp. against Yahoo over a patent for messaging.

Last year a federal jury in Texas found Yahoo’s messenger program with IMVironments infringed Internet Advertising’s patent.

Internet Advertising won $6.6 million in damages. In a final judgment signed this week, a federal judge for U.S. District Court for the Eastern District of Texas also awarded the company $4.5 million for willful infringement and $1.1 million in prejudgment interest plus supplemental damages.

Yahoo will also have to pay a post-verdict on-going royalty rate of 23 percent for all of Yahoo’s IMVironment sales.

Acacia and its subsidiaries acquire and license patented technologies.  It controls a diverse array of 140 patent portfolios ranging from advertising to digital media and wireless.

Did you miss these other recent business court stories …

O.C. firm wins $12.4 million from Yahoo is a post from: OC Business News

Via AP NEWS:

Peet’s Coffee & Tea said Monday it is extending the expiration date to acquire coffee wholesaler Diedrich Coffee.

It is competing with Green Mountain Coffee Roasters for Irvine-based Diedrich.

Green Mountain has offered $35 per share, a higher offer than Peet’s. Peet’s offered to purchase all outstanding shares of Diedrich for a combination of cash and stock valued at $26 per share.

That values the deal at about $148.9 million, since the company had about 5.7 million shares outstanding as of Dec. 9, according to a filing with the Securities and Exchange commission.

But Green Mountain’s offer could run into regulatory difficulties. Last month antitrust authorities requested more information about the deal.

Related stories:

Peet’s goes after Diedrich Coffee, again is a post from: OC Business News

The show will be hosted by Lisa Hart, a longtime local TV personality, and is being produced by two local television veterans, Michelle Merker and Dan Donley.

“We are delighted to have “Discover Orange County” join the quality programs on KOCE-TV,”  Merker said. “We can’t think of a better time to remind people of all the wonderful things they have available to them right in their own backyard.”

The show will air on KOCE-TV’s family of stations, including KOCE/HD and the OC Channel, a partnership between KOCE-TV and Chapman University. Please check your local listings for air times and channels in your area.

For more information, go to the show’s website or visit the KOCE site.

Did you miss these other recent media stories …

New show to air on KOCE is a post from: OC Business News

US Airways is cutting back on the Las Vegas hub it inherited in a merger with America West. The latest move will end OC-Vegas non-stop service

US Airways ends OC-Vegas non-stops is a post from: OC Business News

Nicholas cleared of federal drug charges is a post from: OC Business News

$10M ships O.C. tech firm up north is a post from: OC Business News

According to the complaint, Omaha-based Securities America knew — but failed to tell customers and its own salespeople — that MedCap had no audited financial statements and was investing in areas outside its core expertise.

The Securities and Exchange Commission sued MedCap for fraud in July 2009. A court-appointed receiver subsequently reported that most of the accounts receivable on MedCap’s books — billings with a face value of $543 million — did not exist.

MedCap sold investments in unpaid medical bills, or receivables. It branched out into movie production (a film about Mexican Little Leaguers), a yacht and mortgages on hospitals in New York and Atlanta that have since closed.

MedCap also holds an $81 million mortgage on Santa Ana-based Integrated Healthcare Holdings Inc., which operates four central O.C. hospitals. As we reported Monday, the receiver plans to sell the mortgage to controversial Hemet orthopedist Kali P. Chaudhuri.

Securities America was one of the biggest sellers of MedCap notes, Massachusetts regulators alleged. It sold $697 million in MedCap investments from 2003 through 2009, 37 percent of the $1.7 billion that MedCap issued.

MedCap treated top Securities America officers to trips to Las Vegas and Pebble Beach — airfare, hotel and golf included.

A due-diligence analyst hired by MedCap warned both MedCap and Securities America that investors should be told more about the risks. Securities America decided not to share the analyst’s worries with investors or even with its own salespeople.

Thomas Cross, a Securities America senior vice president, explained in testimony to Massachusetts regulators that if the company provided the due diligence reports to salespeople, one of them would “hit the print screen. Then they can take that document to the investor, and that’ s just a bad thing.”

It was Cross who, after the first MedCap defaults in mid 2008, warned in an internal e-mail, “This is beyond alarming for us. I honestly fear a panicked run on the bank.”

Massachusetts is seeking restitution for 60 Securities America customers in that state who bought MedCap investments.

Securities America issued a statement complaining of  “numerous inaccuracies” in the Massachusetts complaint.

“We take the safety and security of our clients very seriously and make risk management a cornerstone of our business,” the company said.  “Securities America conducted considerable due diligence and met all industry standards for such due diligence.”

Read the Massachusetts complaint (48 pages).

Read our past coverage of MedCap.

Massachusetts cites broker over MedCap deals is a post from: OC Business News

Irvine-based Diedrich Coffee, Inc. announced that, effective February 1, 2010, Paul C. Heeschen will assume the role of Executive Chairman and Sean M. McCarthy will be promoted to President of the Company in connection with the previously announced departure of the Company’s Chief Executive Officer, J. Russell Phillips.

Paul Heeschen has served on the Company’s Board of Directors since 1996 and has been the non-executive Chairman since 2001. By transitioning to the role of Executive Chairman, he will assume a more active role at the Company working collaboratively with Mr. McCarthy.

Diedrich Coffee names new president is a post from: OC Business News

WILMINGTON – A federal bankruptcy court judge  today approved a deal between Freedom Communications,  its  unsecured creditors and its lenders that could allow the owner of The Orange County Register to emerge from bankruptcy by  the end of March.

The arduously negotiated deal provides for about eight times more money for the company’s unsecured creditors – including a group of longtime current and former employees – than the company had originally proposed.

“This is a great day – for our employees, for our customers,’’ said  Chief Financial Officer Mark McEachen, who was at the hearing where federal Bankruptcy Court Judge Brendan Shannon approved the Irvine-based company’s disclosure statement and set March 9 as the date for confirmation of the company’s bankruptcy plan.

Under the new plan,  Freedom’s secured debt would be reduced from $770 million to $325 million.

Company officials will now send out ballots to Freedom’s creditors and if they approve the plan, it will go before Shannon on March 9.  The lenders, who will take over the company, will name a new board to take over when the company emerges from bankruptcy. The names of the new board members are expected to be released sometime before March 9.

Today’s agreement, reached after what Freedom’s lawyer Robert Klyman called the most intense negotiations he’s ever had, includes several pots of money that will be set aside for those with unqualified pensions, for trade creditors and for a disputed $29.5 million claim stemming from a class-action suit by the Register’s newspaper carriers.

The company originally offered all the unsecured creditors a total of $5 million. Under the revised plan filed today, that number has swelled to an estimated $32.2 million.

The group left out in the cold under this deal is the current owners, including members of the founding Hoiles family and two private equity firms. Under the original plan, they would have gotten a 2 percent share of the company once it emerged from bankruptcy and the option to buy up to 10 percent more. Now they will get nothing.

McEachen said management will still be able to get a 10 percent share in the new company.

About 100 highly-paid current and former Freedom employees, whose unqualified pensions were terminated by the bankruptcy, will have their pensions reinstated at a 70 percent level.

Robert Feinstein, lawyer for the unsecured creditors, estimated that will net the pensioners about $12.2 million.

“We’re thrilled with the plan, ’’ said Feinstein, who participated in the hearing by phone. “This was as intense an arms length negotiation as one could imagine.’’

Alan Bell, a former Freedom chief executive and spokesman for the unsecured creditors committee called it a fair outcome that balanced all the interests.

“Anyone would like to get 100 cents on the dollar,” said Bell. “The test is whether all the parties are a little displeased. Everyone had to throw something into the pot that they all will grouse about, so I guess that makes it fair.”

In addition to the pension settlement, $14.5 million will be put into a litigation trust that will be used to settle any general unsecured claims and allow the plaintiffs in the newspaper carrier lawsuit to attempt to recoup some of their settlement.

“I’m really pleased on behalf of the class (carriers) we represent — it means a lot to them,” said Dan Callahan, the attorney who represented the carriers in the class action suit.

He estimated the $14.5 million litigation trust would give the carriers $1,000 to $4,000 each. If the trust sues and collects from the board’s insurance companies, he projected it would mean $5,000 to $12,000 per carrier.

Richard Marshack, a bankruptcy attorney with Marshack Hays LLP in Irvine, who has no involvement in the case, said the litigation trust is commonly employed in bankruptcies and is a good vehicle for unsecured creditors to get at least some payment on their claims.  He called the Freedom deal “very reasonable.”

“The structure is excellent — there certainly should be money there to pay the unsecured creditors a reasonable amount and potentially a much bigger dividend,” Marshack said.

Selected trade creditors will be paid in full out of $5.5 million being set aside for that purpose.

Freedom filed for  bankruptcy on Sept. 1. The unsecured creditors had denounced Freedom’s original plan as unfair and illegal, noting that under bankruptcy’s absolute priority rule; existing owners typically get nothing until the creditors are paid off. In addition, they said the take-it-or-leave-it offer “terrorized” the unsecured creditors into giving up their rights.

They asked the Delaware judge to reject the reorganization plan, an action that would have delayed Freedom’s efforts to exit bankruptcy quickly.

Asked why Freedom was willing to add so much more money into the deal, Klyman said it was a matter of what was best for the company, both in terms of the ability of executives to run the operation and for it to emerge as soon as possible from bankruptcy.

“It’s all about getting to a deal,’’ said Klyman, who wouldn’t say why the board was willing to agree to forgo the equity share in the company the original plan provided for.

Bankruptcy, Klyman said, is a “distraction for management,’’ and the company has to “operate in a fishbowl’’ while it’s still under the court supervision.

” It’s great news for the company, its employees, its retirees, its community and its business partners,” said Burl Osborne, Freedom’s acting chief executive. “We all have to be grateful to the shareholders who put the interest of the company ahead of their own interest.”

What is still uncertain is exactly how much money the newspaper carriers who sued the Register will end up with.

The dispute between the newspaper carriers and the Register dates back to 2003 when about 5,000 current and former delivery people claimed they were supervised as if they were employees but paid as independent contractors who got no benefits. The company contended the carriers signed contracts saying that they were independent contractors.

Last year the two sides agreed to a $28.9 million settlement but Freedom says the bankruptcy filing voided it.

Their share of the new Freedom plan’s $14.5 million litigation trust will provide them with some money and the agreement gives the trust the ability to sue former and current directors of the company and Osborne to try and recover more money for unsecured creditors.

Freedom officials estimate that the insurance policies held by the company directors and Osborne have a combined value of $25 million.

In addition to the Register, Freedom owns 32 daily newspapers nationwide and more than 70 weekly newspapers, magazines and other specialty publications. The company also owns eight television stations.
Freedom is just one of seven media companies that have gotten caught in the grips of the recession exacerbated by a major challenge from the Internet. Tribune Co., owner of the Los Angeles Times, filed for bankruptcy in December 2008. That case is still pending.

(Register staff writer Mary Ann Milbourn contributed to this report)

Did you miss these other recent media stories …

Freedom, creditors reach bankruptcy deal is a post from: OC Business News