NantHealth’s Soon-Shiong threatened Tronc to secure investments, lawyers say
Patrick Soon-Shiong is once again in the hot seat, this time for making an ‘implicit threat’ to the board members of media company Tronc to force investments in his company NantHealth.
Soon-Shiong invested $70 million, or a 13 percent stake, in the media company, formerly known as Tribune, in May 2016, as Gannett was pressuring Tronc to accept a buy-out. The deal made Soon-Shiong the second-largest stakeholder and placed him on the publishing board.
However, according to a letter from Tronc’s attorneys filed with the Securities and Exchange, Soon-Shiong very quickly made attempts to persuade the media company to buy a stake in NantHealth, before he joined the board -- chaired by Michael Ferro.
“Tronc properly declined to invest in that company, since such an investment would have had no logical connection to its business operations in the publishing industry,” the lawyers wrote. “Soon-Shiong then approached Ferro, and insisted that he, either personally or through Merrick, in lieu of Tronc, make the investment in NantHealth.”
“The implicit threat was that, if Merrick did not invest in NantHealth, Dr. Soon-Shiong would not invest in Tronc,” the lawyers said.
Merrick Ventures is Ferro’s private equity firm. The lawyers said Ferro made a $10 million investment in NantHealth to avoid any complications from Tronc.
While NantHealth went public in June 2016 with great expectations from the healthcare industry, its stock has fallen more than 60 percent since that time. Much of that is due to failed promises from Soon-Shiong -- and his questionable business tactics.
Tronc has since attempted to force Soon-Shiong out of the picture: The board removed him from the list of board members up for re-election and capped the amount of shares Soon-Shiong could purchase.
On March 27, Soon-Shiong responded by sending a letter to Tronc demanding the cap be raised and accusing the media company of “particularly egregious” behavior. The lawyers also demanded Soon-Shiong be allowed access to books and records pursuant to Section 220 of the Delaware General Corporation Law.