SOURCE: Eagle Rock Energy Partners, L.P.

February 09, 2010 18:52 ET

Abraham, Fruchter & Twersky, LLP Announces Filing of Eagle Rock Energy Partners, L.P. Law Suit

NEW YORK, NY--(Marketwire - February 9, 2010) - Abraham, Fruchter & Twersky, LLP today announced that it filed a lawsuit in the Delaware Court of Chancery on behalf of a common unitholder of Eagle Rock Energy Partners, L.P. (NASDAQ: EROC) ("Eagle Rock" or the "Partnership") and all others similarly situated, and also derivatively on behalf of the Partnership. The complaint alleges that the controlling parties of Eagle Rock, through a complex series of proposed transactions, and through a materially false and misleading proxy statement, seek to enrich themselves at the expense of Eagle Rock and those common unitholders who are not affiliated with the Defendants or the Partnership's controlling entities (the "Public Unitholders"). The Defendants named in the complaint include the Partnership's general partner, the latter's' general partner, which has a board of directors that makes the management decisions regarding Eagle Rock (the "Board"), two limited partnerships that effectively control Eagle Rock and all the members of the Board.

The complaint alleges that Defendants breached their fiduciary duties to Eagle Rock and the Public Unitholders by acting in bad faith and operating under the influence of the entities that control the Partnership. The components of the proposed transactions (collectively, the "Transaction") include a sale of some of Eagle Rock's most valuable assets, an equity rights offering, a public equity offering, the issuance by the Partnership of newly-issued units, a cash payment to certain interested parties and the cancellation of subordinated units and incentive distribution rights, and elimination of accumulated distribution arrearages on the common units as well as the elimination of the concept of minimum quarterly payments to the common unitholders. The complaint alleges that Defendants proposed the Transaction, among other reasons, to trade virtually worthless subordinated units for valuable consideration, to increase their percentage ownership of common units at below market prices and to dilute unfairly the interests of the Public Unitholders. The complaint further alleges that the Board and certain other defendants seek to solicit approval of the Transaction from the Public Unitholders with a materially false and misleading proxy statement. The complaint alleges that the proxy statement is deficient because, among other reasons, it does not disclose: that the subordinated units are virtually worthless, yet are being traded for valuable consideration; that the Board's conflicts committee had at lease one member who was conflicted; and that certain valuation analyses appear to indicate that the common units are more valuable if the Transaction does not occur. Plaintiff is seeking to enjoin the Transaction.

This action was filed after an extensive investigation conducted by Abraham, Fruchter & Twersky, LLP, which has significant experience successfully prosecuting cases of this nature on behalf of investors. Abraham, Fruchter & Twersky, LLP has successfully litigated similar actions brought on behalf of limited partnership investors based on alleged omissions of material facts.

Contact Information

  • If you are a holder of Eagle Rock common units and would like to discuss
    this action, your rights or interests, or want more information, please
    contact:
    Lawrence D. Levit
    Abraham, Fruchter & Twersky, LLP
    (212) 279-5050
    Email Contact