AMARILLO, Texas, June 20, 2014 /PRNewswire/ -- Hastings
Entertainment, Inc. (NASDAQ: HAST), a leading multimedia
entertainment retailer ("Hastings"), today reported that the United
States District Court for the Northern District of Texas, Amarillo Division, has issued an Order
Denying Motions for Expedited Discovery and for a Preliminary
Injunction (the "Order") with respect to the potential merger
transaction involving Hastings and an affiliate of Mr. Joel Weinshanker. As Hastings first
disclosed on March 17, 2014, Hastings
entered into an Agreement and Plan of Merger (the "Merger
Agreement") on such date with Draw Another Circle, LLC ("Parent")
and Hendrix Acquisition Corp. ("Merger Sub"), which are each
wholly-owned, directly or indirectly, by Mr. Weinshanker. Mr.
Weinshanker is the President and sole shareholder of National
Entertainment Collectibles Association, Inc., which holds
approximately 12% of Hastings' outstanding shares ("NECA").
Pursuant to the Merger Agreement, Merger Sub will be merged with
and into Hastings, with Hastings surviving the merger as a
wholly-owned subsidiary of Parent, and each share of Hastings
common stock held by a shareholder of Hastings (other than Mr.
Weinshanker and his affiliates) will, upon completion of the
merger, be converted into the right to receive a cash payment of
$3.00 per share.
On March 28, 2014, a lawsuit
challenging the merger, captioned CV-00072-J—Andreas Oberegger and David A. Capps, directly and derivatively on
behalf of Hastings Entertainment, Inc., v. Danny W. Gurr, Ann S.
Lieff, Frank O. Marrs,
John H. Marmaduke, Jeffrey G. Shrader, Draw Another Circle, LLC,
Hendrix Acquisition Corp., Joel
Weinshanker and National Entertainment Collectibles
Association, Inc., as defendants, and Hastings Entertainment, Inc.,
as a nominal defendant, was filed in the United States District
Court for the Northern District of Texas, Amarillo Division. The plaintiffs are
purported shareholders of Hastings and are alleging, among other
things, that the merger contemplated in the Merger Agreement
provides for insufficient consideration to be paid to Hastings'
shareholders in exchange for their shares of Hastings' common
stock, that the officers and directors of Hastings breached their
respective fiduciary duties in the course of negotiating and
approving the Merger Agreement and that the other defendants aided
and abetted such breach of fiduciary duties. The lawsuit
seeks to enjoin the merger or rescind the merger if it is
consummated and compensatory damages in an unspecified
amount.
On May 28, 2014, the plaintiffs
filed a motion for expedited discovery and a motion for entry of a
temporary restraining order to enjoin the proposed transaction from
closing. On May 30, 2014, two
days after the plaintiffs filed this motion, the Court issued its
Order Granting Motion for Temporary Restraining Order and Setting
Hearing on Request for a Preliminary Injunction (the "Initial
Order"), which restricted the consummation of the Merger prior to
the hearing scheduled for June 12,
2014. On June 12, the Court
conducted a hearing on the plaintiffs' requests for leave to amend
their complaint to allege disclosure violations under the federal
securities law, for expedited discovery and for a preliminary
injunction. On June 19, 2014,
the Court issued an order granting the plaintiffs' motion to amend,
and then issued the separate Order denying the plaintiffs' motions
for expedited discovery and for preliminary injunction. Under
the terms of the Order, the restrictions on consummating the merger
contained in the Initial Order, as subsequently extended, are
vacated, and Hastings is holding a special meeting of its
shareholders on July 15, 2014 for the
purpose of obtaining shareholder approval of the Merger Agreement
and certain related matters.
Hastings believes that the lawsuit was improperly and
prematurely filed under Texas law
and that the claims alleged therein are factually incorrect and
deficient as a matter of law. Hastings intends to vigorously
dispute these claims throughout the life of this litigation.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
Hastings has filed with the SEC and is mailing to its
shareholders a Proxy Statement in connection with the transaction.
The Proxy Statement contains important information about Parent,
Merger Sub, Mr. Weinshanker, Hastings, the transaction and related
matters. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT CAREFULLY WHEN IT IS AVAILABLE.
Investors and security holders will be able to obtain free
copies of the Proxy Statement and other documents filed with the
SEC by Hastings through the web site maintained by the SEC at
www.sec.gov or by phone, email or written request by contacting
Hastings at the following:
Address: 3601 Plains Boulevard, Amarillo, Texas 79102
Phone: (806) 677-1402
Email: dan.crow@goHastings.com
PARTICIPANTS IN THE SOLICITATION
Hastings and its directors, executive officers and certain other
members of management and employees of Hastings may be deemed
"participants" in the solicitation of proxies from shareholders of
Hastings in favor of the proposed merger. Information regarding the
persons who may, under the rules of the Securities and Exchange
Commission, be considered participants in the solicitation of the
shareholders of Hastings in connection with the proposed merger,
and their direct or indirect interests, by security holdings or
otherwise, which may be different from those of Hastings'
shareholders generally, will be set forth in the Proxy Statement
and the other relevant documents to be filed with the Securities
and Exchange Commission. You can find information about certain of
Hastings' executive officers and its directors in its Annual Report
on Form 10-K for the fiscal year ended January 31, 2014.
Safe Harbor Statement
This press release contains "forward-looking statements."
These forward-looking statements are being made pursuant to the
safe harbor provided by the Private Securities Litigation Reform
Act of 1995, as amended, and are based on currently available
information and represent the beliefs of the management of
Hastings. These statements are subject to risks and
uncertainties that could cause actual results to differ
materially.
These factors include, but are not limited to, (1) the
occurrence of any event, change or other circumstances that could
give rise to the termination of the Merger Agreement after it has
been signed, (2) the outcome of any legal proceedings that may be
instituted against Hastings or others following the announcement of
the Merger Agreement, (3) the inability to complete the merger due
to an insufficient number of votes by Hastings' shareholders in
favor of the Merger Agreement or the failure to satisfy other
conditions contained in the Merger Agreement, (4) the risks that
the proposed transaction disrupts current plans and operations of
Hastings, (5) the actual timing of the closing of the acquisition,
and (6) the costs, fees and expenses related to the
transaction. There can be no assurance that such closing will
proceed as planned due to the inherent uncertainties of
litigation. There can be no assurance as to the outcome of
the action described above or its impact on the transactions
contemplated by the Merger Agreement with Parent. We
undertake no obligation to affirm, publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise. Shareholders of Hastings are
cautioned not to place undue reliance on the forward-looking
statements included in the Press Release, which speak only as of
the date such statements are made. Please refer to Hastings'
annual, quarterly, and periodic reports on file with the Securities
and Exchange Commission for a more detailed discussion of these and
other risks that could cause results to differ materially.
About Hastings
Founded in 1968, Hastings' is a leading multimedia entertainment
retailer that combines the sale of new and used books, videos,
video games and CDs, and trends and consumer electronics
merchandise, with the rental of videos and video games in a
superstore format. We currently operate 126 superstores,
averaging approximately 24,000 square feet, primarily in
medium-sized markets throughout the United States. We also
operate three concept stores, Sun Adventure Sports, located in
Amarillo, Texas and Lubbock, Texas, and TRADESMART, located in
Littleton, Colorado.
We also operate www.goHastings.com, an e-commerce Internet web
site that makes available to our customers new and used
entertainment products and unique, contemporary gifts and
toys. The site features exceptional product and pricing
offers. The Investor Relations section of our web site
contains press releases, a link to request financial and other
literature and access to our filings with the Securities and
Exchange Commission.
SOURCE Hastings Entertainment, Inc.