Asset-management firm S. Muoio & Co. has filed a lawsuit in the Delaware Court of Chancery on behalf of Class A shareholders in an effort to block a proposed recapitalization of the company by its majority shareholder, Hallmark Cards. Crown Media owns and operates the Hallmark Channel. In the suit, which names Hallmark, Crown Media and its board of directors as defendants, S. Muoio & Co. claims that Hallmark "breached the fiduciary duties they owe to [Crown] and its minority stockholders by seeking to cause [Crown] to engage in a self-dealing transaction." In late May, Hallmark proposed that Crown Media swap out $1.05 billion in debt that it owes the greeting-card maker, in exchange for $500 million in new loans and $550 million in preferred equity. The transaction would, according to S. Muoio & Co., result in Hallmark Cards' owning approximately 95% of the equity in Crown Media Holdings, leaving just 5% for minority shareholders. "Hallmark is using the threat of bankruptcy to coerce Crown into agreeing to the recapitalization on terms that are patently unfair, to force Crown to overpay in the transaction, and enable Hallmark to extract economic and voting power from Crown's minority stockholders," S. Muoio states in its lawsuit. S. Muoio & Co. owns 4,313,276 shares of Class A stock (5.82% of total outstanding) of Crown Media. Hallmark owns 67% of Crown's equity and controls more than 95% of the voting power.

Technology Crossover Ventures disclosed that it now holds 3,803,770 shares (9.38%). The firm bought 3,780,070 shares at an average price of $15.37 each from June 23 to July 10, and said it had acquired the stock for investment purposes.

Longitude Capital stated that it now controls 2,843,601 shares (8.91%). The firm's holdings consist of 1,895,734 shares, as well as warrants to purchase an additional 947,867 at $4 apiece. Longitude acquired the stake in a private placement, paying approximately $7 million.

Jacob Richter now holds a stake of 2,615,445 shares (7.7%), after purchasing 1,200,000 on July 7 at $10 each. Richter founded the company, which develops optical-inspection systems, and he currently serves as one of its directors.

Shah Capital Management increased its holdings to 3,487,771 shares (7.3%), after purchasing 291,305 since April 1. The firm did not indicate when or at what prices it purchased the additional shares.

Wexford Capital reduced its stake to 3,220,883 shares (11.83%), after disposing of 365,961 from April 2 through July 9 at an average price of $5.13 per share.

ValueAct Capital reduced its holdings to 2,853,721 shares (3.7%), after selling 2,085,631 from June 11 to July 8 at prices ranging from $6.98 to $8 each.

Security Capital Research & Management sold its entire stake from June 30 through July 8, disposing of 4,775,400 shares at 96 cents to $1.14 apiece.