ESun Holdings Ltd. (571), which planned to build a Macau casino with Oaktree Capital Management LP and other investors, accused directors of its joint venture partner of acting in bad faith and lying, as the company sought to overturn the dismissal of a claim against them.
Oaktree, Silver Point Capital LP, former Las Vegas Sands Corp. (LVS) executive David Friedman and Singapore’s CapitaLand Ltd. (CAPL) are embroiled in a legal battle over the plan to develop Macao Studio City, a $4 billion Macau casino complex, which was to feature a Playboy mansion and a film studio. The dispute took on new urgency after the Macau government said last year it may take back undeveloped land it has granted to investors.
Benjamin Yu, a lawyer representing ESun unit East Asia Satellite Television (Holdings) Ltd., said in Hong Kong’s Court of Appeal today that directors of New Cotai, the investment vehicle representing Friedman and the U.S. private equity firms, made “misrepresentations” about a January 2009 letter from the Macau government asking for more information about the project.
“The primary allegation is that they didn’t act in good faith,” Yu said.
ESun sued Friedman, Oaktree, Silver Point, and six New Cotai directors in 2009 for “systematically hindering” the development of Macao Studio City in order to force a renegotiation of the terms of their agreement, according to court documents.
High Court Judge Anselmo Reyes in July dismissed ESun’s $2.39 billion claim, calling it “untenable.” He allowed a separate $88.6 million claim against the U.S. investors to proceed.
At the first of two scheduled appeal hearing days, Yu said today New Cotai directors “acted tortiously in inducing breach” of their share purchase agreement, which required the parties to cooperate in good faith in obtaining land grants from the Macau government. The hearing continues tomorrow.
Last October, Oaktree, Silver Point and Friedman accused ESun and CapitaLand of conspiring to stall the development of the project, countersuing their partners for unspecified damages.
The U.S. investors alleged they were prevented from developing and operating a casino on the site in part because CapitaLand wanted to exercise a put option, or a right to sell its stake in the project back to ESun, after the Hong Kong company “misinformed” the developer about how much rent the U.S. investors would be paying, according to a court filing.
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