Holders Get Court OK To Continue Suit Against Sprint

OLATHE, Kan. -(Dow Jones)- A Kansas judge struck down Sprint Corp.'s (FON) motion to dismiss the class-action suit regarding the recombination of the company's PCS and FON tracking stocks.

The ruling comes almost 11 months after shareholders filed at least six lawsuits, which allege a breach of fiduciary duty by Sprint directors and management. The complaint specifically names former Sprint Chief Executive William Esrey and former President and Chief Operating Officer Ronald LeMay, who were ousted in 2003 over their use of a tax shelter device.

In a press release Tuesday, the law firm of Grant & Eisenhofer, which represents lead plaintiff institutional investor Carlson Capital LP, said it estimates potential liability of $5 billion to $10 billion from the suit.

In a released statement, the company said it is disappointed by the court's ruling. However, Sprint noted the ruling simply explains the company must further develop its case and then present the facts to the court before it can make a ruling.

"We will now turn our attention toward developing the facts we believe will show the plaintiffs' claims to be unfounded and without merit," a company spokeswoman said in an emailed statement.

On Feb. 29, Sprint's board voted to recombine the company's tracking stocks by eliminating the PCS common stock and converting each PCS share into half a FON common share.

In the third quarter, Sprint took a $3.54 billion pretax charge for asset impairment of its long-distance network assets. In Tuesday's release, the law firm said the charge was a "de facto" admission the company overpaid for the FON stock.

Geoffrey Rogow; Dow Jones Newswires; 201-938-5400; AskNewswires@dowjones.com

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Posted to the site on 8th February 2005