The board of Financial Models Company has shied away from making a recommendation for competing bids for the company pending the outcome of expected litigation by French financial IT firm Linedata which is challenging the legitimacy of a rival offer from FMC president and CEO Stamos Katotakis.
In a circular to shareholders, FMC directors say that Linedata believes the Katotakis offer does not comply with securities laws in Canada in that its financing arrangements are inadequate. The circular says Linedata has instructed legal counsel to raise the issue with regulatory authorities.
The French firm has written to the Bank of New York and FMC director William Waters insisting that they remain contractually obliged under a lock-up agreement signed prior to the Katotakis offer to sell their combined 42% stake to Linedata.
Under a pre-existing shareholder's agreement, Waters and BoNY are bound to accept the Katotakis bid.
The Bank of New York and Waters are considering their position and have advised FMC that they may apply to the courts for guidance.
The Katotakis offer is open until February 16, 2005. The Linedata offer is currently set to expire on 28 January 2005, but FMC has asked Linedata to extend that date and informed shareholders to bide their time until all legal arguments have been heard and resolved.