Updated on 01/28/2011 6:31PM

Court ruling offers options to Lane's End syndicate members


LEXINGTON, Ky. - A U. S. District Court judge here has cleared the way for syndicate members in Lane's End stallions Kingmambo and Lemon Drop Kid either to match a purchase offer for shares in the horses or to sell those shares to a group affiliated with owner and breeder Jerry Jamgotchian.

In her ruling Friday, Judge Karen K. Caldwell denied Lane's End's motion for a temporary injunction and required the farm to notify the stallions' shareholders of an offer by KNC Investments to purchase shares belonging to syndicate members Ashley Andrews and Robert Raphaelson. KNC notified Lane's End in September that Andrews and Raphaelson had accepted offers of $350,000 for Andrews's Lemon Drop Kid share and $175,000 for Andrews's and Raphaelson's jointly-owned Kingmambo share; the purchase prices include a $50,000 commission to Jamgotchian for each transaction.

Kingmambo was pensioned in October, but Jamgotchian said Friday that the purchase offer still stands.

Lane's End's initial filing had alleged that Andrews and Raphaelson violated the terms of their syndicate agreements by accepting the offers without providing a right of first refusal to other shareholders. The farm also contended Jamgotchian was in violation of Kentucky's law against dual agency. KNC Investments alleged in its original filings that Lane's End was "concealing and withholding these offers from all of their syndicate members."
Syndicate members have a right to match the offers.

"Why does Lane's End care about a syndicate share transfer unless they have something to conceal from their syndicate members?" Jamgotchian said in a statement. "Lane's End, as syndicate manager, is nothing more than an agent for all of the syndicate members, but, in this case, they were acting in a far different capacity and contrary to the best interests of all syndicate members. My question is, why? And we'll soon find out that answer."

Caldwell's ruling can be appealed, but an attorney for Lane's End, William Hoskins III, said late Friday no appeal is currently planned. Hoskins said Lane's End had been "seeking the court's advice on notices to the members of two syndicates regarding offers made to purchase shares in those syndicates. Lane's End requested the court's advice because of the very unusual factual circumstances presented by the offers," including what Hoskins called "large commissions payable to a dual agent," the dual agent's role as an owner of the purchasing entity and Kentucky's five-year-old statute outlawing undisclosed dual agency.

"Given all that, we thought it best and appropriate how we should handle it," said Hoskins. "The court has now given us the advice we requested, and, frankly, we appreciate the court's efforts and intend to proceed in accordance with the advice the court gave us."