Apple Inc. (NASDAQ:AAPL) has released a response to a lawsuit filed against it Thursday by David Einhorn’s Greenlight Capital hedge fund. Einhorn believes Apple Inc. (NASDAQ:AAPL) should increase shareholder value by giving away preferred stock, and he told Bloomberg TV Thursday that the company could unlock “several hundred dollars per share” by offering preferred stock. He also defended his views in an email discussion with Business Insider’s Henry Blodget.
Apple is recommending that shareholders vote in favor of Proposal 2—an item up for a vote at the next shareholder meeting—which Apple says would enable shareholders to vote on the issuance of preferred stock. David Einhorn believes if the proposal is adopted, it would bar the future issuance of preferred stock.
However in its response to Einhorn’s lawsuit, Apple Inc. (NASDAQ:AAPL) said it doesn’t believe Proposal 2 will prevent preferred stock from being issued.
“Apple’s articles of incorporation provide for the issuance of ‘blank check’ preferred stock by the Board of Directors without Shareholder approval,” Apple’s statement said.
Instead, Apple Inc. (NASDAQ:AAPL) said that if Proposal 2 passes, shareholders would gain the right to approve the issuance of preferred stock. This suggests that preferred stock could still be issued in the future.
Einhorn’s lawsuit claims that Apple Inc. (NASDAQ:AAPL) is hoarding cash in a way that it is against the best interests of shareholders. He believes that Apple could still return value to shareholders by issuing preferred stock without having to delve into its large cash pile.
Shares of Apple Inc. (NASDAQ:AAPL) rose 3 percent in trading on Thursday.
