MAXWELL FILES SUIT TO STOP HARCOURT <HBJ>
Publisher Robert Maxwell's British
Printing and Communicaton Corp PLC said it filed a lawsuit in
U.S. district court against Harcourt Brace Jovanovich Inc, its
directors and advisers to stop, among other things, payment of
the special dividend Harcourt is paying as part of its
recapitalization.
    The suit, filed in Manhattan, also names First Boston Corp
<FBC> and seeks to void the issue by Harcourt of 40,000 shares
of super voting preferred stock to First Boston Securities Corp
and the issue of convertible voting preferred stock with
4,700,000 votes in the Harcourt employee stock ownership plan.
    The preferred shares to be issued to First Boston have
8,160,000 votes. The suit, brought derivatively on behalf of
Harcourt and individually in British Printing's capacity as a
substantial holder of Harcourt common shares and 6-3/8 pct
convertible debentures.
    The suit alleges Harcourt's special dividend exceeds by
more than one billion dlrs Harcout's surplus available for
dividends under New York law and contstitutes a fraudulent
conveyance.
    The lawsuit also alleges that Harcourt failed to disclose
that one consequence of the payment of the dividend, which it
terms illegal, will be that shareholders will be liable to
repay it.
    Harcourt last week said it would pay 40 dlrs per share to
stockholders as a special dividend. Harcourt also announced an
extensive recapitalization plan, which analysts said was aimed
at thwarting a takeover effort by British Printing.
    British Printing last week withdrew its 44 dlr per share,
or two billion dlr offer for Harcourt because of the
recapitalizaton plan. At the time, it said it was reviewing its
alternatives.
    British Printing said it filed the suit after consultation
with its advisers. Its lawsuit also alleges that Harcourt
failed to disclose the effect of the special dividend on
Harcourt 6-3/8 pct convertible debentures.
    British Printing alleges the effect will be an enormous
increase effective on the June eight record date for the
dividend in the number of Harcourt common shares issuable upon
conversion of the debentures. British Printing also charged 
Harcourt is unlawfully coercing debenture holders to convert
denbentures before the record date because Harcourt may not
have enough authorized common shares to honor conversion after
the date.
    British Printing holds 460,600 shares and 5.6 mln dlrs
worth of debentures.
    The suit also alleges that management, the board of
directors, and First Boston engaged in an illegal scheme of
entrenchment through a combination of selling to First Boston
Securities Corp the super voting preferred at a bargain price,
the grant to the company employee stock plan of convertible
voting preferred, the six mln share open market repurchase
program and the manner in which its financing has been
structured.
 Reuter
