LOS ANGELES - Seda Specialty Packaging Corp. has been rebuffed in its attempt to change the terms of its agreement to merge with American Safety Closure Corp., based in Plattsburgh, N.Y. According to Seda, the U.S. District Court for the Southern District of New York denied Seda's request for a preliminary injunction that would have blocked disbursement by an escrow agent of $1.1 million and 82,000 shares of Seda stock as part of the merger agreement with ASC.
On June 23, Los Angeles-based Seda filed suit seeking recision of the merger agreement on the grounds of fraud and misrepresentation.
It also sought to allow the agreement to be amended with the consent of both boards of directors, without consent of any other parties, including stockholders.
Seda planned to change the ratio for the exchange of ASC stock for Seda stock from eight ASC shares to one Seda share, to 24-to-1.
The company also sought elimination of a cash option as an alternative to stock exchange, and a provision dictating that all ASC shareholders receive shares at the same ratio.
In a prepared statement, Shawn Sedaghat, president and chief executive officer of Seda, said his company believes the merger should be rescinded entirely, or ``take place under terms that are fair to Seda's shareholders and which realistically and equitably reflect ASC's fair value.''
ASC officials could not be reached for comment.
Seda, a maker of specialty closures and containers for the personal-care, food and beverage, household, industrial chemical and pharmaceutical industries, initiated the merger agreement in January to increase its presence in the eastern United States.