Genesco subpoenaed by U.S. Attorney over Finish Line merger deal

By Lisa Kerner

Charlotte, N.C., Nov. 26 - Genesco Inc. received a subpoena from the Office of the U.S. Attorney for the Southern District of New York for documents related to the company's merger agreement with the Finish Line, Inc. and alleged violations of federal fraud statutes, it was announced on Monday.

"The U.S. Attorney subpoena comes on the heels of the baseless fraud allegations made by UBS ten days ago," Genesco chairman and chief executive officer Hal Pennington said in a company news release.

"These allegations are completely without merit and are simply part of UBS' litigation tactics to avoid their contractual obligations; we will fully cooperate with the U.S. Attorney in connection with their inquiry. Most importantly, we will not be deterred from enforcing our rights under the merger agreement," Pennington added.

It was previously reported that the Finish Line and Genesco were named as defendants in a complaint for declaratory relief filed by UBS Securities LLC and UBS Loan Finance LLC. In the lawsuit, UBS is seeking a declaration from the court that its commitment letter with the Finish Line for financing the company's merger with Genesco is void and/or may be terminated by UBS. The commitment letter expires on April 30.

UBS believes the Finish Line will not be able to provide, prior to April 30, a valid solvency certificate, which is a condition of the closing, according to a form 8-K filing with the Securities and Exchange Commission.

Genesco filed a lawsuit on Sept. 21 in the Chancery Court in Nashville asking the court to require the Finish Line to consummate its merger with Genesco without further delays by the company or UBS.

On Sept. 17, Genesco shareholders approved the June 18 merger agreement that gives them $54.50 in cash, without interest, for each share of Genesco common stock they own. The $1.5 billion merger of the two specialty retailers was slated to close in the fall with Genesco's Nashville operations being maintained and the company becoming a subsidiary of the Finish Line, which is based in Indianapolis.

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