UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No.     )
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Crown Media Holding, Inc.
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CROWN MEDIA HOLDINGS, INC.

12700 Ventura Boulevard

Studio City, California  91604

 

SUPPLEMENT NO. 2 DATED JULY 20, 2009 TO THE

PROXY STATEMENT DATED JUNE 12, 2009 FOR THE

2009 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 23, 2009

 

This Supplement No. 2 provides updated information for the Proxy Statement dated June 12, 2009 (the “Proxy Statement”) and the Supplement dated July 6, 2009, which have been previously provided, or made available, to the stockholders of Crown Media Holdings, Inc. (“we”, “our” or the “Company”) in connection with our 2009 Annual Meeting of stockholders.  The first Supplement concerned a change in the location of the Annual Meeting.

 

This Supplement No. 2 is being made available in order to provide information on an adjournment and reconvening of the 2009 Annual Meeting and to provide information on events that have occurred since the date of the Proxy Statement and the first Supplement.

 

Availability of Proxy Materials

 

The Proxy Statement for the 2009 Annual Meeting, the first Supplement to the Proxy Statement, this Supplement No. 2 to the Proxy Statement, the 2008 Annual Report and other proxy materials are available to our stockholders at:  http://www.hallmarkchannel.com/2009annualmeeting.html.

 

Temporary Adjournment and Reconvening of the Meeting

 

The 2009 Annual Meeting has been scheduled to be held at 11:00 a.m. EDT on July 23, 2009 at the Sheraton New York Hotel and Towers, 811 Seventh Avenue, New York, NY 10019.  At that time, in accordance with our Bylaws, the chair of the Meeting will temporarily adjourn the 2009 Annual Meeting.  The adjourned Meeting will be reconvened as follows:

 

Date:		July 30, 2009
Time:		11 a.m. EDT
Place:		Sheraton New York Hotel and Towers
		811 Seventh Avenue
		New York, NY 10019

 

The record date for determining stockholders entitled to vote at the reconvened Annual Meeting will remain unchanged as June 2, 2009.

 

The purpose of temporarily adjourning the 2009 Annual Meeting is to give our stockholders an opportunity to consider the information contained in this Supplement No. 2.

 

S. Muoio Lawsuit

 

On July 13, 2009, a lawsuit was brought in the Delaware Court of Chancery against each member of the Board of Directors of the Company, Hallmark Cards, Incorporated and its affiliates, as well as the Company as a nominal defendant, by a minority stockholder of the Company regarding the recapitalization proposal which the Company received from Hallmark Cards, Incorporated (the “Proposal”).  The plaintiff is S. Muoio & Co. LLC which owns beneficially approximately 5.8% of the

 

 

Company’s Class A common stock, according to the complaint and filings with the Securities and Exchange Commission.  The Proposal, which the Company publicly announced on May 28, 2009, provides for a recapitalization of its outstanding debt to Hallmark Cards affiliates in exchange for new debt and convertible preferred stock of the Company.  A copy of the complaint in the lawsuit is an exhibit to a Schedule 13D filed by S. Muoio & Co. on July 14, 2009. The lawsuit claims to be a derivative action and a class action on behalf of the plaintiff and other minority stockholders of the Company.  The lawsuit alleges, among other things, that, the defendants have breached fiduciary duties owed to the Company and minority stockholders in connection with the Proposal.  The lawsuit includes allegations that if the Proposal is consummated, an unfair amount of equity would be issued to the majority stockholders, thereby reducing the minority stockholders’ equity and voting interests in the Company, and that the majority stockholders would be able to eliminate the minority stockholders through a short-form merger.  The complaint requests the court to enjoin the defendants from consummating the Proposal and to award plaintiff fees and expenses incurred in bringing the lawsuit.

 

Special Committee

 

As previously announced, the Special Committee of the Company’s Board of Directors formed to review and consider the Proposal has retained Morgan Stanley & Co. Incorporated as its independent financial advisor.  The Special Committee, with the assistance of Morgan Stanley, is considering Hallmark Cards’ proposal as well as the Company’s other alternatives. There can be no assurance that the Special Committee will recommend Hallmark Cards’ recapitalization proposal, nor can there be any assurance as to when, if ever, or on what terms any such recapitalization or alternative transaction will be consummated.

 

Explanatory Note

 

Except as specifically updated by the information contained in this Supplement No. 2, all information set forth in the Proxy Statement, as supplemented, and the notices remains accurate and should be considered in voting your shares.  This Supplement No. 2 does not provide all of the information that is important to your decision in voting at the 2009 Annual Meeting.  Additional information is contained in the Proxy Statement for the 2009 Annual Meeting.  This Supplement No. 2 should be read in conjunction with the Proxy Statement.

 

 

	BRIAN E. GARDNER
	Secretary
	Crown Media Holdings, Inc.
July 20, 2009

 

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