Shareholders sue to block privatization plan

Tuesday, Aug. 14, 2001 | 10:29 a.m.

Herbalife International Inc. and its directors have again been sued by a shareholder to stop them from taking the company private.

The lawsuit was filed in Las Vegas because the company is incorporated in Nevada, though its corporate headquarters is in Los Angeles.

Herbalife shareholders have been trying to stop the company and founder Mark Hughes from taking the company private for two years. Their legal efforts have continued even after Hughes' death in May 2000.

Carl Brown sued the company and its trustees in Clark County District Court. At least two such lawsuits have been filed raising concerns over the "serious conflicts of interest" Herbalife directors Christopher Pair, Conrad Lee Klein and John Reynolds allegedly have as trustees.

Brown accused the defendants of self-dealing when they allegedly adopted "golden parachutes entitling them to receive excessive severance payments upon a change of control."

The suit also accused the defendants of rejecting offers by "a credible buyer to acquire the company at a premium to the market" despite a significant downturn in Herbalife's business since Hughes' death.

The defendants declined comment.