The opinion of the court was delivered by: PENN
JOHN GARRETT PENN, UNITED STATES DISTRICT JUDGE
This matter comes back before the Court on Sea Containers Ltd.'s ("Sea Containers") motion for a preliminary injunction. The Court heard arguments on the motion on July 24, 1989.
This case was initially filed on March 22, 1989. Sea Containers states that "when it initially instituted this action on March 22, 1989, [it] alleged that in filings with the Securities and Exchange Commission ("SEC") Dan Sten Olsson, Sten Allan Olsson and three of the corporations they own and control had misrepresented the true purpose behind their purchase of a large block of Sea Containers common stock." Sea Containers' First Amended and Supplemental Complaint ("Sea Containers' Amended Complaint") par. 2. Sea Containers further states that "subsequent events have borne out the allegations of the initial complaint, and have given rise to additional securities laws claims against the Olssons and others acting in concert with them." Id.
On May 26, 1989, Temple Holdings Ltd. ("Temple")
commenced its $ 50 all cash tender offer for all shares of Sea Containers (the "Offer"). On June 22, 1989, Sea Containers sought leave to file an amended complaint.
Sea Containers asserts that this action arises under §§ 13(d), 14(d) and 14(e) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(d), 78n(d) and 78n(e)) and the rules and regulations promulgated thereunder by the SEC. Sea Containers' Amended Complaint par. 11. Temple has filed a Supplement to the Offer to Purchase dated July 14, 1989 (the "Supplement"); which addresses many of Sea Containers' claims. In the present motion, Sea Containers seeks a preliminary and permanent injunction to cure the alleged false and material disclosure with respect to the Offer in violation of the securities laws.
In order to be entitled to injunctive relief, a movant must demonstrate (1) that it has a strong likelihood of success on the merits, (2) that it will suffer irreparable injury if injunctive relief is denied, (3) that other interested parties will not suffer substantial harm if injunctive relief is granted, and (4) that the public interest favors the granting of injunctive relief or, at least, that the granting of injunctive relief is not adverse to the public interest. See Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 182 U.S. App. D.C. 220, 559 F.2d 841, 843 (1977). In addition, "the necessary 'level' or 'degree' of possibility of success will vary according to the court's assessment of the other factors." Id. In suits alleging violations of the disclosure requirements of section 13(d), an injunction may not issue in the absence of a showing of irreparable injury. Financial General Bankshares, Inc. v. Lance, Fed. Sec. L. Rep. (CCH) par. 96,403 at 93,424 (D.D.C. 1978), citing Rondeau v. Mosinee Paper Co., 422 U.S. 49, 95 S. Ct. 2069, 45 L. Ed. 2d 12 (1975).
This Court has noted that its role is to assure that public shareholders who are confronted by a cash tender offer for their stock, or when there are shifts in corporate control, will not be required to respond without adequate information regarding the qualifications and intentions of the offering party. See Memorandum at 5, filed May 8, 1989 (citing Rondeau v. Mosinee Paper Co., supra). In reviewing a claim under §§ 14(d) and 14(e), the Court must determine whether there are misstatements and omissions in connection with the tender offer, and if so, whether they are material.
The Supreme Court has articulated the general standard of materiality under the federal securities laws:
An omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote . . . It does not require proof of a substantial likelihood that disclosure of the omitted fact would have caused the reasonable investor to change his vote. What the standard does contemplate is a showing of a substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reasonable shareholder. Put another way, there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the "total mix" of information made available.
Riggs Nat'l Bank v. Allbritton, 516 F. Supp. 164, 172 (D.D.C. 1981) (quoting TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S. Ct. 2126, 2132, 48 L. Ed. 2d 757 (1976)).
The issues raised in the motion for preliminary injunction present the Court with the following questions:
(1) Whether Sten Allan Olsson and Dan Sten Olsson are bidders under SEC Rule 14d-1(b)(1), (2) if the Olssons are bidders, are they required to make financial disclosures, (3) whether there has been adequate disclosure regarding the criminal convictions of Sten Allan Olsson, (4) whether Temple has made a material misstatement with respect to the value of Sea Containers' shares, (5) whether Temple has made a material misstatement regarding the financing for the Offer, (6) ...