BANGALORE - Revlon Inc's chairman and majority shareholder Ronald Perelman was sued by an investor who exchanged his common stock for preferred shares, alleging that he missed out on a sharp rally in the cosmetic maker's stock price.
Investor Edward Gutman, who owned 26,000 shares of Revlon class A common stock, traded them for newly issued preferred shares under an offer that expired in early October.
Despite the fact that the exchange offer closed a full week after the close of Revlon's 2009 third quarter, its stockholders were not provided with material information about the company's results, Gutman said in a filing dated Dec. 21.
The lawsuit said 9,336,905 shares of Revlon common stock were exchanged under the offer, resulting in an increase in the voting power of Perelman's holding company MacAndrews & Forbes to 77.3 percent from 74.6 percent.
We believe (the complaints) are without merit and intend to defend them vigorously, Chief Financial Officer Steven Berns told Reuters.
Revlon shares surged 48 percent on Oct. 29, the day the company reported that it swung to a third-quarter profit on a continuing operations basis. A year earlier the company had posted a loss excluding a gain from the sale of discontinued operations.
Revlon announced stellar financial results for its quarter ended September 30, 2009, causing the company's common stock price to skyrocket, the court filing said.
Revlon was not immediately available for comment.
The company's share price has more than tripled since the day before it posted third-quarter results. The shares were trading down 6 cents at $18.13 Thursday noon on the New York Stock Exchange. (Reporting by Nivedita Bhattacharjee; Editing by Mike Miller, Unnikrishnan Nair)