Monday, December 1, 2008

Sale of Interest in Curlin Rejected

By Ryan Conley

A Kentucky state judge has denied the private bid by majority owner Stonestreet Stables for the minority interest in reigning Horse of the Year Curlin, ordering the pertinent parties to work out their differences on their own.

Franklin County Circuit Judge Roger Crittenden sustained two objections to the proposed sale Dec. 1 during a hearing that was intended to provide arguments against the $4 million offer for the 20% interest from Stonestreet, which is headed by prominent horseman Jess Jackson.

Crittenden effectively told those assembled the court was removing itself from the process of selling the interest controlled by a holding company managed by Shirley Cunningham Jr. and William Gallion, who are the principals behind minority owner Midnight Cry Stables.

The two disbarred attorneys are appealing a previously-ordered $42-million judgment leveled against them for their role in alleged mishandling of the $200-million settlement for their former clients in the class-action litigation involving the diet-drug fen-phen. The proceeds from the sale of the Curlin interest, which were facilitated through a court-appointed receiver managing the attorneys’ company, were ultimately intended to help satisfy that judgment.

“I am ending the process,” Crittenden said from the bench after hearing arguments from several lawyers involved in the proceeding. “What the receiver has received as an offer, as far as what the court can tell, is a fair offer. But both the defendants and the plaintiffs object (and) because of the objections, I am going to deny the receiver’s motion (to approve the sale).”

Instead, Crittenden suggested the parties figure out on their own what should be done with the interest. Stonestreet is not a party to the lawsuit against Cunningham and Gallion, but became a major player as an intervener about a year ago when the court ordered the sale of the minority interest in Curlin to help satisfy the judgment.

“As far as future business discussion and business transactions, that will take place between the owners,” he said.

An attorney representing Stonestreet said another offer will not be forthcoming.

“The offer that was made was at least $1.5 million over what was fair,” said Richard Getty of the $4 million bid, which was based on an analysis presented Nov. 17 in court by prominent bloodstock agent Ric Waldman. “I have no knowledge of any intent on the part of Mr. Jackson or Stonestreet or anyone else in their camp to make any other offer.”

Andre Regard, an attorney representing Cunningham and Gallion’s company, Tandy LLC, argued the $20 million valuation by Waldman was too low, and was prepared to offer testimony from bloodstock agent Thomas Clark setting a value of $37.5 million for the 4-year-old champion son of Smart Strike. Regard said his clients are content for now to retain its 20% interest and are prepared to support the stallion prospect financially.

Crittenden had previously approved a sealed-bid process to sell the interest in Curlin, but that effort only produced two unacceptable offers, including one from Stonestreet, which holds a contractual right of first-refusal on any sale of the share.

Curlin, who is North America’s all-time leader in race earnings at $10,501,800, was recently retired by Stonestreet to stand for a $75,000 stud fee at Lane’s End Farm near Versailles, Ky.

“We were told in court (by Stonestreet attorneys) that the horse couldn’t be retired and go to stud, and the market said, no, the horse can be retired and the horse can go to stud,” said Regard. “And now the horse is standing arguably at the leading stallion location in the world.”

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