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March 10, 2003 at 07:00 PM
REDWOOD CITY, Calif. (HedgeWorld.com)–Control of MeVC Inc., an information-technology venture capital firm changed hands with the victory of the dissidents’ slate for the board of directors.
The dissident slate included George Karpus, president of the hedge fund manager Karpus Investment Management Inc., Pittsford, N.Y. Spokesman Scott Nasca said that the new board of directors has already met and that they expect that as soon as the results of the Feb. 28 vote are officially certified the transition would be a smooth one.
A preliminary tally indicates that the margin of victory was overwhelming, with less than one vote in five supporting the incumbent management.
One of the first acts of the new board will be to “go through the total assets of the portfolio and get a true net asset value,” said Mr. Nasca. He also expects that they will soon “install some type of tender offer for a portion of the outstanding shares.”
Another hedge fund that has been prominent in the opposition to the outgoing management is Millennium Partners LP, New York, managed by Robert Knapp, (Previous HedgeWorld Story). In litigation, Millennium and an affiliated fund, Millenco LP, contested the validity of the election of MeVC’s board of directors at the 2001 and 2002 annual meetings, claiming that material matters had not been disclosed.
On Dec. 19, 2002, the Delaware Chancery Court agreed with that claim and ordered new elections. Vice Chancellor Stephen Lamb expressed particular concern about the business relationships between John Grillos, incumbent chairman, chief executive, and chief investment officer of MeVC and one of the nominally independent members of the incumbent board, Larry Gerhard. Mr. Gerhard is also a member of the three-person audit committee.
“The business relationship of Grillos and Gerhard goes back for some years to a time when Grillos hired Gerhard as CEO of a company known as Test Systems Strategy Inc.” the chancellor wrote. “In 1999, Gerhard solicited Grillos to be an initial investor in eVinyard,” a web-based wine retailer. Subsequently, Mr. Grillos became chairman, both of eVinyard’s board and of its compensation committee and in that capacity he played a leading role in negotiating a revised employment contract with Mr. Gerhard as chief executive.
