Trial goes into lunch recess with cross examination of Genesco CEO Pennington still to come
UPDATE, 3:32 p.m.:
Following the lunch recess, Hal Pennington was back on the stand to face cross-examination. Performing the cross on behalf of Finish Line was Mark Tipps of Walker Tipps & Malone (*see correction).
Tipps spent much of his time focusing on what information was provided to Finish Line and when. In light of Genesco’s earnings miss at the end of August, which led to a steep drop in the company’s stock price, Tipps asked Pennington if he had felt it necessary to forewarn Finish Line of the downturn in results.
Pennington testified that he did not feel it was necessary and went on to say throughout that he did not feel that the company’s weaker than expected 2nd quarter results nor any results between the signing of the merger agreement and September could be considered a “Material Adverse Change.”
Also at issue was whether other Genesco officers might have suggested to Pennington that Genesco alert Finish Line to the results prior to their release.
UBS’s attorney John Hicks of Baker Donelson echoed this line, asking similar questions. Additionally he took issue with certain Genesco behaviors such as the playing up of certain positive results in the August call when, as Pennington admitted, projections were going to be cut the following day.
Attorneys from the UBS/Finish Line camp have indicated that Genesco CFO Jim Gulmi will testify tomorrow. In their cross-examination of Pennington, both Tipps and Hicks indicated that Gulmi may been one of the officers to have suggested to Pennington that the company should alert Finish Line to operating results prior to their release.
* Corrected: In the earlier version of this story NashvillePost.com mistakenly reported that Bob Walker would cross-examine Pennington.
As originally posted:
The long-awaited trial of a lawsuit between Nashville-based retailer Genesco and its remorseful suitor Finish Line has begun.
In Davidson County Chancellor Ellen Hobbs Lyle's courtroom this morning, the battle over the $1.5 billion merger began with Genesco frontman Hal Pennington taking the stand for much of the morning. Pennington fielded questions from Bass Berry & Sims attorney Overton Thompson, representing Genesco, in which he worked to make the point very clear that Genesco had not misled Finish Line or the deal's financier, global banking giant UBS, in the lead-up to the signing of their merger agreement.
When asked by Thompson whether Genesco today is a different company than the one Finish Line agreed to buy back in June Pennington replied flatly, "No."
Additionally Thompson and Pennington made mention of the monetary damage done to Genesco by the delay in this deal. To date, legal costs have eaten into Genesco's balance sheet a great deal, as evidenced by the company's most recent quarterly filing.
Following the lunch break, Pennington will face cross examination at the hands of Finish Line attorney Mark Tipps, of Walker Tipps & Malone, as well as attorneys for UBS.