A class action complaint was filed in the Supreme Court of NewYork in Nassau County against MarketSpan Corp. and former seniorofficers/directors of Long Island Lighting Company (LILCO). Theclass action was filed on behalf of current shareholders ofMarketSpan who were stockholders of LILCO and/or The Brooklyn UnionGas Co. (BU) or its successor, KeySpan Energy Corp. at the time ofthe merger of LILCO and BU.
The complaint alleges defendants breached fiduciary duties bypaying to former senior LILCO and current MarketSpan officersand/or directors about $67 million in retirement benefits and othercompensation upon the separate mergers of certain LILCO assets withBU and other LILCO assets and stock with the Long Island PowerAuthority (LIPA), including about $42 million to former LILCO andcurrent MarketSpan CEO William J. Catacosinos alone. The paymentswere criticized last week by New York Governor George E. Pataki.Richard M. Kessel, chairman of LIPA, also criticized the payments
“We have received the lawsuits and we are reviewing them andwill respond in a timely fashion,” a MarketSpan spokeswoman said.
Plaintiffs seek to obtain “equitable” relief, includingdisgorgement of the payments, an injunction preventing furtherpayments, and accounting, and/or compensatory damages fordefendants’ breaches of their fiduciary duties to the plaintiffs.
In May, KeySpan Energy combined with LILCO to form holdingcompany MarketSpan. Headquartered in both Brooklyn and Hicksville,MarketSpan owns LILCO’s common plant, non-nuclearelectric-generation assets and operations, and the regulated gasbusinesses of both LILCO and Brooklyn Union. In addition, MarketSpan owns KeySpan’s unregulated subsidiaries and its investments ingas exploration, production and transportation – including a 66%ownership in Houston Exploration Co.
The Long Island Power Authority, LIPA became the authorityproviding electric service on Long Island. Brooklyn Union customersin New York City and on Long Island, in general, were to beginreceiving an average reduction of 3.8% in their gas transportationrate. In New York City, the reduction resulted from theconsolidation. On Long Island, the reduction resulted from both theconsolidation and a 2.1% reduction set by a rate agreement with theNew York State Public Service Commission Feb. 5.
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