Feds subpoena Genesco records

November 26, 2007
Federal prosecutors have issued a subpoena to Genesco Inc., a move that suggests they've launched an investigation into allegations that the Tennessee company hid financial problems before agreeing in June to be acquired by The Finish Line Inc. for $1.5 billion.

Genesco revealed late Monday afternoon that it had received the subpoena from the U.S. Attorney's Office for the Southern District of New York. The company said the subpoena seeks documents related to the negotiations with Indianapolis-based Finish Line.

Finish Line and its financial backer, the Swiss financial giant UBS, have been trying to cancel the acquisition agreement, while Genesco has been trying to force Finish Line to close.

The three companies are battling in court in Tennessee and New York City. Finish Line says it has the right to walk away because Genesco's financial results have declined dramatically. UBS says it has multiple grounds to yank financing, including that Genesco management committed fraud. UBS charges that Genesco executives hatched a scheme "to sell their company before everyone knew that its financial condition was collapsing."

Genesco CEO Hal Pennington denied that allegation last week and did so again Monday.

"These allegations are completely without merit and are simply part of UBS' litigation tactics to avoid their contractual obligations," he said in a statement.

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