ERJ staff report (TP)
Delaware − Apollo Tyres asked a judge to bar Cooper Tire & Rubber Co. from having access to more than $112m (€81.7m) set aside in case Apollo’s $2.5bn (€1.83bn) acquisition of the tiremaker collapses, according to court filings, reported Jef Feeley and Phil Milford for Bloomberg.
Apollo’s lawyers asked Delaware Chancery Court Judge Sam Glasscock III on 19 December to deny Cooper executives access to a $112.5m (€82.2m) letter of credit which covers breakup fees for the $35-a-share (€25.6) buyout. Cooper officials contend Apollo executives suffered buyer’s remorse after agreeing to acquire the fourth-largest US tiremaker in June.
Apollo filed the motion to bar Cooper from tapping the letter of credit, which covers a “Reverse Termination Fee to which Cooper is not entitled under the agreement,” according to the filing. It requested a 24 December hearing on the request.
The dispute over the breakup fees is the latest between Cooper and Apollo over the faltering buyout. The Delaware Supreme Court sent the case over the deal back to Glasscock two weeks ago to decide whether Apollo wrongfully violated an agreement to buy the US tiremaker.
Glasscock last month rejected Cooper’s claim that Apollo breached the contract by dragging its feet in seeking to negotiate a contract with a US steelworker’s union that would have helped clear the way for the deal. Glasscock allowed Cooper to appeal his ruling to Delaware’s highest court, which declined to hear it.
Anne Roman, a spokeswoman for Cooper, and Meghan Gavigan, a spokeswoman for Apollo, didn’t immediately respond to e-mail messages seeking comment on the 20 December filings.
Steven Norman, one of Cooper’s attorneys, said today the US tiremaker had no intention of using the $112.5m (€82.2m) letter of credit.
“There was never a need for a motion for a temporary restraining order, because there is no threat, let alone an imminent one, that Cooper will draw down on the letter of credit,” Norman said in a letter to the court.
Cooper, based in Findlay, Ohio, sued Gurgaon, India-based Apollo after the Indian tiremaker failed to complete the buyout by a 4 October deadline and suggested Cooper might have to accept as much as $9 (€6.58) less per share to get the deal done.
Apollo officials contend they didn’t know about Cooper’s labour problems in the US and China, where executives of Cooper’s joint-venture partner have objected to the buyout. As a result, they are denying Cooper officials access to the facility and aren’t providing financial records.
Apollo contends the events show Cooper can’t meet all the requirements for closing the deal. Cooper counters that it disclosed the negotiations with the US steelworkers and warned that their Chinese partners might object to the purchase.
In a separate filing on 19 December, Apollo asked Glasscock for a “declaratory judgment” in its favour and a finding that “conditions to closing had not been satisfied” and that Cooper is “not in a position to close the merger.”
The case is Cooper Tire & Rubber Co. (CTB) v. Apollo (Mauritius) Holdings Pvt, CA8980, Delaware Chancery Court (Wilmington).
This is an external link and should open in a new window. If the window does not appear, please check your pop-up blocking software. ERJ is not responsible for the content of external sites.
Full story from Bloomberg