Aerojet CEO’s Use of Company Resources Curbed in Board Fight (2)

A judge said she plans to limit the use of Aerojet Rocketdyne Holdings Inc. resources by the chief executive officer and her board allies in their campaign to secure control of the rocket-engine maker.

CEO Eileen Drake and her allies will be restricted in making statements and using company resources to back candidates in upcoming board elections, Delaware Chancery Court Judge Lori Will said on Tuesday. The judge, who also agreed to fast-track the litigation over the board battle, said she’d issue a final temporary restraining order later.

Drake and Board Chairman Warren Lichtensteinare going head-to-head in a proxy fight over the U.S. defense-industry supplier, which took a hit to its business Sunday when Lockheed Martin Corp. scrapped a $4.4 billion buyout, citing regulatory concerns.

The restraining order is designed to “retain the company’s neutrality in the upcoming election,” Will said during a hearing on Zoom. It’s not intended to interfere with running the firm “in the normal course of business,” she said.

Aerojet shares rose 61 cents to $37.50 in New York on Tuesday. They’re down 20% this year.

Charlotte Kiaie, Lichtenstein’s spokeswoman, and Tim Ragones, a spokesman for Drake and Aerojet, didn’t return calls and emails seeking comment on the judge’s statements.

When Aerojet reports earnings Thursday, it’s expected to provide an update on its strategy to operate as a standalone company. The defense-industry supplier must now chart its future with its board divided and its chairman and CEO at loggerheads over corporate governance and strategy.

Proxy Fight

Drake and Lichtenstein have sued each other in Delaware over the lead-up to the proxy fight. Lichtenstein was demanding the CEO look for alternate bidders to Lockheed, while Drake has threatened to quit the company and take her management team with her. They have competing slates of board candidates.

Drake theorized in her court filings that Lichtenstein had filed suit to mount a “hostile takeover” to preserve his board seat amid an internal probe of his actions. The chairman allegedly badmouthed the Lockheed deal and Aerojet executives to industry insiders, according to the filings.

One of Drake’s lawyers told the judge at the hearing that Lichtenstein wanted to bar management and dissenting directors from speaking on behalf of the company to avoid having the results of the internal probe made public.

“It’s a tragic situation that it’s come to this,” that an individual is putting his personal interests ahead of the company’s, attorney Randy Mastro said.

Lichtenstein’s lawyer, Tom Bayliss, told the judge that the chairman wasn’t launching a board takeover, but exercising his rights as one of Aerojet’s largest investors. “It’s not a fight, its corporate democracy,” Bayliss said. “All we want is a fair election.”

The case is IN RE Aerojet Rocketdyne Holdings Inc., 2022-0127, Delaware Chancery Court (Wilmington).

(Updates with lawyers’ arguments starting in 10th paragraph)

To contact the reporters on this story:
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net;
Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editors responsible for this story:
Katia Porzecanski at kporzecansk1@bloomberg.net

Steve Stroth

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