Shareholders may get $0 in National City suit

Shareholders may get $0 in National City suit
Friday, March 6, 2009 3:12 AM
By Dan Gearino
THE COLUMBUS DISPATCH
A proposed settlement in a class-action lawsuit against National City Corp. would give the bank's shareholders nothing while paying their attorneys $1.2 million, according to court documents.
The proposal, filed in a state court in Delaware, would resolve a lawsuit brought by shareholders across the country that alleged that National City's merger with PNC Financial Services Group was made at a significant discount and was unfair to shareholders.
The shareholders, including The Dispatch Printing Company, the owner of The Dispatch, would be unable to opt out of the settlement, which would bar them from taking other legal action related to the merger.
Dispatch Printing has a similar lawsuit against National City pending in Franklin County Common Pleas Court.
PNC made a deal to buy Cleveland-based National City in October. By late that month, National City's share price had collapsed from more than $38 in October 2007 to $2.75 as the company dealt with its exposure to subprime mortgages. Pittsburgh-based PNC paid $2.23 per share, or $5.58 billion.
Shareholders lost more than $16 billion worth of equity in the year between the disclosure about National City's exposure to subprime mortgages and the sale to PNC.
Neither the law firm that proposed the settlement, which was filed last month, nor PNC would comment. The law firm is Rigrodsky & Long of Wilmington, Del.
Shareholders who object to the terms of the proposal can file comments before April 20.
Attorneys for Dispatch Printing met with National City attorneys yesterday and Common Pleas Judge Julie M. Lynch, who has been assigned the local lawsuit filed by Dispatch Printing on May 1.
The company is alleging that directors of National City breached their fiduciary duties to shareholders by misleading the public on the extent of subprime-mortgage lending.
Lynch has ordered National City to provide more documents to Dispatch Printing. She is expected to rule on other motions within two weeks.
Dispatch reporter Bruce Cadwallader contributed to this story.
dgearino@dispatch.com