It accuses the bank of backing out of 2006 deal to provide takeover financing
10 November 2008
Merrill Lynch & Co was sued by United Fiber System Ltd, a Singapore-based forestry company, and accused of backing out of a 2006 deal to provide takeover financing due to pressure from non-governmental organisations (NGOs).
Merrill, the investment bank being taken over by Bank of America Corp, agreed to provide up to US$500 million for the acquisition of the Indonesian pulp maker PT Kiani Kertas, United Fiber said on Nov 5 in a complaint in federal court in New York.
Merrill backed out of the deal in May 2006 under pressure from unnamed organisations after making promises not to ‘succumb’, United Fiber said.
‘As a result of Merrill’s breach, plaintiff was unable to acquire PT KK and suffered tremendous financial loss,’ United Fiber said, requesting unspecified damages. ‘When news of Merrill Lynch’s breach became public, plaintiff’s stock price crashed and plaintiff lost the profits that would have been earned had the acquisition gone through.’
Merrill spokesman Mark Herr declined to comment immediately.
On Sept 8, 2006, shares of United Fiber fell as much as 10 per cent after a newspaper reported that the company dropped a plan to buy Kiani Kertas. Bisnis Indonesia reported that the company dropped its purchase plan because the process was taking too long.
United Fiber’s legal claims include breach of contract and breach of fiduciary duty. The complaint does not specify what type of ‘pressure’ was exerted by the NGOs.
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United Fiber sues Merrill Lynch
It accuses the bank of backing out of 2006 deal to provide takeover financing
10 November 2008
Merrill Lynch & Co was sued by United Fiber System Ltd, a Singapore-based forestry company, and accused of backing out of a 2006 deal to provide takeover financing due to pressure from non-governmental organisations (NGOs).
Merrill, the investment bank being taken over by Bank of America Corp, agreed to provide up to US$500 million for the acquisition of the Indonesian pulp maker PT Kiani Kertas, United Fiber said on Nov 5 in a complaint in federal court in New York.
Merrill backed out of the deal in May 2006 under pressure from unnamed organisations after making promises not to ‘succumb’, United Fiber said.
‘As a result of Merrill’s breach, plaintiff was unable to acquire PT KK and suffered tremendous financial loss,’ United Fiber said, requesting unspecified damages. ‘When news of Merrill Lynch’s breach became public, plaintiff’s stock price crashed and plaintiff lost the profits that would have been earned had the acquisition gone through.’
Merrill spokesman Mark Herr declined to comment immediately.
On Sept 8, 2006, shares of United Fiber fell as much as 10 per cent after a newspaper reported that the company dropped a plan to buy Kiani Kertas. Bisnis Indonesia reported that the company dropped its purchase plan because the process was taking too long.
United Fiber’s legal claims include breach of contract and breach of fiduciary duty. The complaint does not specify what type of ‘pressure’ was exerted by the NGOs.
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