(Updates with excerpt from court papers in third paragraph.)
July 22 (Bloomberg) -- Former stockholders of Citigroup Inc.’s Student Loan Corp., bought by Discover Financial Services in December for $30 a share, are to receive another $2.50 a share under a $13.5 million settlement filed in court.
Investors who owned about 4 million Student Loan shares will get the additional payment from Citigroup once the accord is approved by a judge, and shareholders’ lawyers will get as much as $3.5 million in fees and expenses, according to papers made public today in Delaware Chancery Court in Wilmington.
“All defendants deny and continue to deny that they have committed or aided and abetted” any wrongdoing, and “maintain that they diligently and scrupulously complied with their fiduciary duties,” lawyers for Student Loan directors said in the agreement.
Investors sued Student Loan last September contending the shares were worth more in the $600 million acquisition. Judge J. Travis Laster in December declined to block the merger saying shareholders could seek damages later in a trial.
The Student Loan Corp was one of at least 21 Citigroup businesses tagged for sale by Chief Executive Officer Vikram Pandit in the wake of the bank’s $45 billion bailout in 2008. The New York-based bank, the third-biggest in the U.S., took a $435 million loss on the sale during the third quarter of 2010.
Jon Diat, a Citigroup spokesman, and Leslie Sutton, a spokeswoman for Riverwoods, Illinois-based Discover, declined to comment on the settlement. Discover wasn’t sued.
The main case is Kahn v. Student Loan Corp., CA5832, Delaware Chancery Court (Wilmington).
--Editors: Mary Romano, Charles Carter
To contact the reporters on this story: Phil Milford in Wilmington, Delaware, at firstname.lastname@example.org; Donal Griffin in New York at email@example.com.
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