Enzo Delays Shareholder Meeting; Harbert Files Lawsuit

by | Feb 15, 2020 | Enzo Biochem, Harbert Discovery Fund | 0 comments

Enzo Biochem (New York City) has delayed its annual shareholder meeting, originally scheduled for January 31, until February 25. The move comes as Enzo’s executives are engaged in a bitter battle with the Alabama investment firm Harbert Discovery Fund (HDF) over board seats and the
strategic direction of the company

Enzo says the delay is needed so that shareholders can consider a new proposal to keep President Barry Weiner on its board by increasing the size of the board from five to six directors. In addition, Enzo wants to add a seventh board seat to be filled by an independent director to be identified in the near future.

HDF says that all three leading independent proxy advisory services had recommended voting in favor of HDF’s two board nominees, Fabian Blank and Peter Clemens. And that by January 28, three days before the election, with most of the expected votes cast, it was clear that both its nominees would win seats.

HDF has filed a lawsuit in Southern District of New York court against Enzo’s board, alleging it has engaged in “acts of entrenchment and misuse of the corporate machinery” to keep Barry Weiner on the board after most of the company’s shareholders had voted and it had become clear that Weiner would be removed.

“Recognizing that it was too far behind in votes to defeat HDF’s nominees, Enzo agreed in the January 28 Enzo Press Release to no longer oppose HDF’s nominees but instead would seek shareholder approval to expand the size of the board by at least one additional seat in a desperate attempt to keep Weiner on the board and reduce the influence of HDF’s nominees,” according to the lawsuit.

HDF says that Enzo has violated federal securities laws, and is seeking recompense for those actions which have cost hundreds of thousands of dollars in additional, unnecessary legal, proxy and other advisory fees. HDF says that its lawsuit also lays “a marker so that the director defendants’
gamesmanship stops.”

HDF owns 11.8% of Enzo’s outstanding shares, making it the company’s largest shareholder (see LE, January 2020).