RCS up 10%, ARCS flat on $58M deal in Scorsch feud (Update)
RCS to pay American Realty
Shares of RCS Capital Corp., the New York investment firm controlled by Jenkintown scrap-metal heir turned corporate landlord Nicholas Schorsch, rose 10% to $10.72 in Thursday morning trading after RCS said it has cut a deal with Schorsch-founded American Realty Capital Properties Inc. to end litigation over American Realty's aborted plan to sell Cole Capital and related assets to RCS for $700 million. American Realty shares were flat on the morning's news, at $9.21.
RCS cancelled the Cole deal in October, after two American Realty officials quit and the company blamed them for submitting phony public financial reports. But American Realty sued RCS, in Chancery Court in Delaware, to force the deal through anyway. To end the dispute, RCS agreed to pay American Realty $32.7 million up front, plus $15.3 million by 2016. American Realty will also keep RCS's $10 million down payment.
In a statement, RCS ceo Michael Weil said the deal "is in the best interests of RCS Capital stakeholders. We believe the negotiation of a fixed-cost settlement clearly outweighs the potential expense and distraction of a drawn-out litigation process, enabling us to focus" on expansion.