BackCooper Tire granted fast-track handling in Apollo Tyres case
A trial in the Apollo-Cooper case may take place early in November
PremiumApollo has breached its obligations in the buyout contract. Photo: Mint
(Mint)
Wilmington, Delaware: Cooper Tire and Rubber Co. got a Delaware judge to fast-track its dispute over Apollo Tyres Ltd’s proposed $2.5 billion takeover, possibly setting up the case for trial in early November.
Cooper asked Chancery court judge Sam Glasscock at a telephone hearing from Georgetown, Delaware, on Thursday for speedy handling of its suit against Apollo, which had agreed to pay $35 a share for Cooper and now seeks a lower price. Glasscock said he could see a trial taking place early next month.
“It’s obvious that irreparable harm is threatened here with financing allegedly in jeopardy," Glasscock said. “It’s clear that expedition is justified."
Cooper, based in Findlay, Ohio, said on 12 June it would be bought by Gurgaon-based Apollo. When Apollo failed to close the deal as scheduled on 4 October, Cooper went to court to enforce the buyout agreement.
In its complaint, Cooper contends Apollo agreed to use its reasonable best efforts to complete the transaction or pay a $112.5 million reverse breakup fee to walk away.
Apollo has instead breached its obligations in the buyout contract, Robert Faxon, a lawyer for Cooper, told the judge. He said Cooper wants to close the deal before 13 November.
‘ No basis’
Raymond DiCamillo, an attorney representing Apollo, said there’s no basis to show his client breached the contract. There’s adequate time to resolve the dispute without any fast-tracking, he said.
To get a lower buyout price, Apollo is dragging its feet in negotiating an agreement with United Steelworkers unions, Cooper contends in court papers, and must deal with a strike involving a Cooper joint venture with China’s Chengshan Group Co.
The situations with the United Steelworkers and the joint venture partner and union in China are a direct result of the merger agreement, and are risks Apollo assumed, Cooper officials said in a 7 October statement.
Cooper said in court papers that under the merger contract one circumstance that would allow Apollo to back out is a material adverse effect—something that alters the value of the target business.
Apollo had agreed such effects would exclude disputes with Cooper’s labour unions or partners, including Chengshan, Cooper contends.
China subsidiary
In a statement on 6 October, Apollo officials said, on top of the United Steelworkers issue, Cooper has breached material representations and covenants, including with respect to its majority-owned China subsidiary due to the fact that Cooper has no control over the subsidiary or access to its records, all of which poses ‘significant and unanticipated costs.’
Cooper’s financial condition has deteriorated, according to a confidential letter of 4 October from Apollo officials to Cooper General Counsel Stephen Zamansky, made public today in court filings.
Apollo contends it sought financial projections and, in July, Cooper said it expected $4.3 billion in revenues for 2013. In August, the figure dropped to $3.9 billion and in September to $3.6 billion, according to court papers. The latest figure in the letter shows projected 2013 revenues of $3.4 billion, leaving Apollo confused and deeply concerned.
Cooper told Apollo deferred pricing actions impacted sales volumes and the decline would be remedied by overperformance later.
Cooper fell more than 12% on 7 October in New York trading. The shares fell 2.23% to $25.91 in trading on Thursday. Bloomberg
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