Legal saga between giants continues
As a major legal battle gets underway, shareholders in Indonesia's largest shrimp producer PT Central Proteinaprima (CP Prima) will seek to prove that their opposing camp - a group of big international bondholders - are in breach of contract, a spokesman claims.
"We simply look for their compliance with the terms of signed agreement, including with procedures," Edward Lontoh, the spokesman for Red Dragon Pte. Ltd, one of the four shareholders suing the bondholders represented by Bank of New York Mellon and Bank Danamon, acting as trustee and security agent respectively, said in a statement dated Wednesday.
The other shareholders are Regent Central International Limited, Charm Easy International and PT Surya Hidup Satwa. The bondholders meanwhile are a group of global companies including Morgan Stanley, Marathon Global Equity Master Fund and Highbridge Asia Opportunities Master Fund.
The shareholders have filed a lawsuit against Bank Danamon and Bank of New York Mellon for executing a transfer of pledged shares to the bondholders, with the first hearing in a Jakarta court having taken place on Aug. 20, when a judge temporarily delayed the proceedings to give more time to the opposing camps to prepare their cases.
In the lawsuit the shareholders are demanding US$4 billion in total damages and a $1 million penalty per day for any delays in the payment of damages.
The case revolves around a bond issue in July 2008, when the four companies pledged about a 70 percent stake in CP Prima to guarantee $200 million in secured exchangeable bonds, with Mellon and Danamon contracted to arrange the deal.
Things went well until the financial crisis began to cripple the world's economies and stock markets with CP Prima shares in the market depreciating as much as 70 percent in October 2008, creating a wide mismatch between the new value of shares relative to the value of bonds issued, as agreed in the contract with the bondholders.
As efforts to restructure the deal failed, the bondholders ordered the trustee Mellon and the security agent Danamon to seize the collateral offered because they believed the companies had defaulted - but the shareholders objected to this and claimed a breach of contract.
In Wednesday's statement, Edward said that under the terms of the bond agreement with the bondholders, a notice of default can only be issued after the issuance of a notice of remedy so that the bond issuer can find a way to recover the value of the pledged assets or shares.
Todung Mulya Lubis, the bondholders' legal consultant, has repeatedly dismissed the lawsuit as "ridiculous", saying that the lawsuit was just a legal tactic by the shareholders, which are linked to Thailand's powerful Jiaravanon family, so as not to repay loans due.
Todung has previously said that it was actually the bondholders who have been the subject of injustice, not only because they suffered losses from the declining value of the pledged shares, but also because they also took a further hit when CP Prima's recent rights issue further diluted their stake from 70 percent to 40 percent.
CP Prima is Indonesia's largest exporter of frozen shrimp to the US, the world's largest market. It is Indonesia's leader in shrimp fry, shrimp feed and fish feed production.
"We simply look for their compliance with the terms of signed agreement, including with procedures," Edward Lontoh, the spokesman for Red Dragon Pte. Ltd, one of the four shareholders suing the bondholders represented by Bank of New York Mellon and Bank Danamon, acting as trustee and security agent respectively, said in a statement dated Wednesday.
The other shareholders are Regent Central International Limited, Charm Easy International and PT Surya Hidup Satwa. The bondholders meanwhile are a group of global companies including Morgan Stanley, Marathon Global Equity Master Fund and Highbridge Asia Opportunities Master Fund.
The shareholders have filed a lawsuit against Bank Danamon and Bank of New York Mellon for executing a transfer of pledged shares to the bondholders, with the first hearing in a Jakarta court having taken place on Aug. 20, when a judge temporarily delayed the proceedings to give more time to the opposing camps to prepare their cases.
In the lawsuit the shareholders are demanding US$4 billion in total damages and a $1 million penalty per day for any delays in the payment of damages.
The case revolves around a bond issue in July 2008, when the four companies pledged about a 70 percent stake in CP Prima to guarantee $200 million in secured exchangeable bonds, with Mellon and Danamon contracted to arrange the deal.
Things went well until the financial crisis began to cripple the world's economies and stock markets with CP Prima shares in the market depreciating as much as 70 percent in October 2008, creating a wide mismatch between the new value of shares relative to the value of bonds issued, as agreed in the contract with the bondholders.
As efforts to restructure the deal failed, the bondholders ordered the trustee Mellon and the security agent Danamon to seize the collateral offered because they believed the companies had defaulted - but the shareholders objected to this and claimed a breach of contract.
In Wednesday's statement, Edward said that under the terms of the bond agreement with the bondholders, a notice of default can only be issued after the issuance of a notice of remedy so that the bond issuer can find a way to recover the value of the pledged assets or shares.
Todung Mulya Lubis, the bondholders' legal consultant, has repeatedly dismissed the lawsuit as "ridiculous", saying that the lawsuit was just a legal tactic by the shareholders, which are linked to Thailand's powerful Jiaravanon family, so as not to repay loans due.
Todung has previously said that it was actually the bondholders who have been the subject of injustice, not only because they suffered losses from the declining value of the pledged shares, but also because they also took a further hit when CP Prima's recent rights issue further diluted their stake from 70 percent to 40 percent.
CP Prima is Indonesia's largest exporter of frozen shrimp to the US, the world's largest market. It is Indonesia's leader in shrimp fry, shrimp feed and fish feed production.
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