March 22, 2007 / 10:48 AM / 13 years ago

UPDATE 1-Shareholders sue Affiliated Computer Services

(Adds comments from ACS, Deason attorney. Previously NEW YORK)

BOSTON, March 22 (Reuters) - Affiliated Computer Services Inc. ACS.N said on Thursday it faced two class-action lawsuits over a buyout proposal from its chairman and investment fund Cerberus Capital Management.

The suits were filed just days after Chairman Darwin Deason, who founded the computer services company, and Cerberus presented the board with a $5.9 billion buyout offer to take the company private.

The lawsuits claim that the offer from Cerberus and Deason is “inadequate and to have resulted from an unfair process,” Affiliated said in a filing with the U.S. Securities & Exchange Commission.

Separately on Thursday, the Wall Street Journal said a company investigation into stock-options irregularities had unearthed a handwritten note from Deason suggesting that he had knowledge of widespread options backdating at the company.

Affiliated Computer’s chief executive, Mark King, and its chief financial officer, Warren Edwards, resigned in November after the internal probe determined they had violated the company’s code of ethics through their role in improper stock-options granting practices.

The Wall Street Journal said a Post-It note written by Deason in the summer of 2002 said the company has “always priced stock strike price on options at lowest so far in qtr.”

The article said it was not clear what Deason meant by the phrase “lowest so far,” and the note raised questions about Affiliated Computer’s prior assertions that Deason knew nothing about the questionable options.

Company spokesman Michael Buckley said the document, one of 2 million uncovered in the investigation, was consistent with the results of the board’s investigation into the matter, which cleared Deason of wrongdoing.

“It expresses in absolutely certain terms Mr. Deason’s desire to comply with the law and his understanding that ACS’s options practices were widely known and understood,” Buckley said.

Deason’s attorney, Marc Rosenberg, said in a statement that Deason never backdated an option. He said, “His notes make it explicit that Mr. Deason thought ACS’s option practices were perfectly legal.”

Affiliated shares fell 21 cents, or 0.35 percent, in morning trade to $59.32 on the New York Stock Exchange.

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