Standard General withdraws nominee to Tegna board

(Reuters) - Standard General, the hedge fund battling for board seats at Tegna Inc TGNA.N, said on Monday it withdrew one of its five director nominees after discovering a "contractual restriction" on him serving on the U.S regional TV station operator's board.

Lawrence Wert, a former Tribune Media Company executive who was nominated as a director four weeks ago, withdrew as a Standard General nominee on March 27, the hedge fund said in a regulatory filing on Monday.

Wert ended his employment with Tribune last year, and the restriction relates to non-compete clauses in his employment contract that still apply, according to people familiar with the matter. Standard General said it became aware of the situation on March 26, and did not elaborate.

Standard General and Tegna declined to comment.

Tegna and Standard General have been locked in a proxy battle since the middle of January when the hedge fund nominated four candidates to the board. In late February it added Wert as a fifth nominee, after the company named a new director.

Standard General is pressing on with four nominees, including it’s founder Soohyung Kim.

Kim’s role as potential board member has been controversial, according to Tysons, Virgina-based Tegna.

The company said it would be inappropriate for Kim to have access to Tegna's proprietary information, including its acquisition pipeline and product development plans, given his involvement with two other broadcasting companies, Standard Media Group LLC and Mediaco Holding Inc MDIA.O.

Standard General holds a note that is convertible into 99% of the limited liability interests in Standard Media and some of its assets. It also holds an option to acquire from McDermott Communications LLC, an entity owned by one of its board nominees Deborah McDermott, all of its equity interests in Standard Media.

Standard General has called Tegna’s claims of conflicts of interest “spurious.” It has said its investment in a woman- and minority-owned broadcasting start-up with approximately $10 million of annual cash flow does not represent a conflict with Tegna’s business. It offered Tegna not to make any new investments in TV stations without asking Tegna if it is interested.

Standard General, which owns 9.7% of Tegna, has also been pushing the regional TV station operator to sell itself. The company said on Sunday the turbulent market conditions, driven by the coronavirus pandemic, had weighed on takeover talks.

Tegna shareholders will vote on the board of directors nominees at the company’s annual meeting on April 30.

Reporting by Svea Herbst-Bayliss; Editing by Chris Reese