Union Fund Sues over Duke-Cinergy Merger

May 20, 2005 (PLANSPONSOR.com) - An Illinois electrical workers union pension fund has sued Cinergy Corp. and its board of directors over charges that officials put their own financial interests in front of shareholders in the company's pending merger with Duke Energy Corp.

The Decatur, Illinois-based NECA-IBEW Pension Fund alleges in the suit that James Rogers, Cinergy’s chairman, chief executive and president, and fellow directors sold the company so they could cash out unvested stock options when the deal is completed, the Associated Press reported. According to the lawsuit, about a fifth of the options can be sold as they become vested each year.

“We think the lawsuit is utterly frivolous and riddled with misstatements and errors of fact,” said Cinergy spokesman Steve Brash, according to the news report.   He said shareholders will have the opportunity to vote on the merger and can make their concerns known then.

The lawsuit asked that the merger be halted until Cinergy agrees to seek the highest possible price for the company. The fund represents pensioners with the National Electrical Contractors Association and the International Brotherhood of Electrical Workers.

Charlotte, N.C.-based Duke Energy and Cincinnati-based Cinergy announced their merger on May 9, creating one of the largest utility holding companies in the nation with 5.4 million retail customers, $70 billion in assets and $1.9 billion in annual earnings.