For Immediate Release          Contact: Renee Asher, 202-255-4251

WASHINGTON, D.C.—TPG and GS Capital Partners’ $26.3 billion [1] buyout of Alltel (NYSE:AT), the fifth largest mobile phone operator, [2] raises serious red flags for investors concerned that company insiders, who stand to make nearly $2 billion from the deal, [3] did not act in the best interest of shareholders when they agreed to sell the company. To track the deal go to http://alltelrevealed.blogspot.com

Five company insiders and execs will take home at least $31 million, and up to $281 million—if they leave Alltel when the deal closes due to “change of control” clauses in their contracts. [4] In addition, Alltel board members and executives stand to collect a staggering $1.975 billion from their 8 percent stake in the company. [5]

Concerned the current system does not safeguard the interests of shareholders, SEIU has asked Congress to look at regulatory measures to eliminate conflicts of interest in private industry buyouts. To track the deal, go to alltelrevealed.blogspot.com.

Five insider board members at Alltel, including CEO Scott Ford and shareholder Warren Stephens of Alltel advisory firm Stephens Inc. stand to profit considerably from the deal. CEO Ford will receive $11.4 million as a result of the “change of control”; t he top five officers will receive payments totaling $31million . [6] Additionally, Ford stands to receive $89 million should he leave the company; the top five officers—Ford, Presidents Beebe and Fox, CFO Gasaway, and General Counsel and Secretary Massey—will receive nearly $250 million should they leave the company after a "change of control" takes place. [7]

Shareholders concerned the board of directors did not act in the best interest of shareholders have already sued. Lon Engel, a shareholder who filed suit in May, claims the deal was “grossly unfair (to shareholders) and far below the maximum value.” [8]

At issue is the basic conflict between managers and directors of public companies who owe a fiduciary duty to maximize returns to shareholders during private equity buyouts, but who frequently stand to personally gain millions from the deal. More than one commentator has suggested this inherent conflict should be regulated by prohibiting management participation in buyouts. [9] In addition, the big private equity firms are now the largest customers and generators of fees to the global investment banks and commercial banks for their stock and bond underwriting, bank lending and investment banking advisory services. These multifaceted relationships with firms such as Goldman Sachs, Merrill Lynch, and JPMorgan Chase led Robert Kindler, vice chairman for investment banking at Morgan Stanley, to say at a recent panel at the Corporate Law Institute at Tulane University, “We are all totally conflicted—get used to it.” [10]

The private equity buyout industry, armed with more than a half-trillion dollars of capital, is today engineering financial deals that together are larger than the annual budgets of most of the world’s countries. This financial juggernaut is generating hefty returns to its investors, extraordinary riches for its executives, and newly relevant questions about the impact of its business practices on American workers, businesses, communities, and the nation.

SEIU has released a set of principles designed to address the concerns of investors, the public, and workers including:

• The buyout industry should play by the same set of rules as everyone else, including providing transparency and disclosure about their businesses, supporting equitable tax rates, and eliminating conflicts of interest and other potential abuses in their transactions;
  
  
• Workers should have a voice in the deals and benefit from their outcome; and
  
  
• Community stakeholders, including consumer organizations and the public, should have a voice in the deals and benefit from their outcome.

SEIU members participate in pension funds with more than $1 trillion in assets, most of which invest 5 percent to 10 percent of their assets in private equity. SEIU is a longtime advocate of responsible corporate governance practices and an active member of the Council of Institutional Investors, an organization of more than 130 pension funds whose assets exceed $3 trillion.

For more information go to http://www.behindthebuyouts.org

[1] SEC Form 14A, filed June 13, 2007, p6 (http://www.sec.gov/Archives/edgar/data/65873/000006587307000088/alltelprem14a061107.htm#c-1).

[2] SEC Form 14A, filed June 13, 2007, p2 (http://www.sec.gov/Archives/edgar/data/65873/000006587307000088/alltelprem14a061107.htm#c-1).

[3] “Money to flow to some in Alltel buyout,” Associated Press, June 13, 2007 ( http://hosted.ap.org/dynamic/stories/A/ALLTEL_BUYOUT?SITE=MOCOD&SECTION=BUSINESS&TEMPLATE=DEFAULT&CTIME=2007-06-13-16-59-51 ).

[4] Bill Hornaday, “Alltel sale would fill top execs’ pockets; 3 groups angling to buy, paper says,” Arkansas Democrat-Gazette, May 10, 2007 (ATTACHED)

[5] “Money to flow to some in Alltel buyout,” Associated Press, June 13, 2007 ( http://hosted.ap.org/dynamic/stories/A/ALLTEL_BUYOUT?SITE=MOCOD&SECTION=BUSINESS&TEMPLATE=DEFAULT&CTIME=2007-06-13-16-59-51 ).

[6] Bill Hornaday, “Alltel sale would fill top execs’ pockets; 3 groups angling to buy, paper says,” Arkansas Democrat-Gazette, May 10, 2007 (ATTACHED)

[7] Bill Hornaday, “Alltel sale would fill top execs’ pockets; 3 groups angling to buy, paper says,” Arkansas Democrat-Gazette, May 10, 2007 (ATTACHED)

[8] “Alltel Stockholders File Suits over proposed $24.7 billion buyout,” Associated Press, May 23, 2007 (http://www.cellular-news.com/story/23919.php).

[9] See, for example, Stein, Ben, “EVERYBODY'S BUSINESS; On Buyouts, There Ought to Be a Law,” The New York Times, September 3, 2006, at http://select.nytimes.com/search/restricted/article?res=F00E10FE345A0C708CDDA00894DE404482

[10] Quoted in Andrew Ross Sorkin, “Dealbook: When a Bank Works Both Sides,” The New York Times, April 8, 2007, at http://www.nytimes.com/2007/04/08/business/yourmoney/08deal.html?_r=2&oref=slogin&oref=slogin

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