Apollo Tyres Ltd. asked a judge to bar Cooper Tire & Rubber Co. from having access to more than $112 million set aside in case Apollo’s $2.5 billion acquisition of the tiremaker collapses, according to court filings.
Apollo’s lawyers asked Delaware Chancery Court Judge Sam Glasscock III yesterday to deny Cooper executives access to a $112.5 million letter of credit which covers breakup fees for the $35-a-share buyout. Cooper officials contend Apollo executives suffered buyer’s remorse after agreeing to acquire the U.S.’s fourth-largest 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 Dec. 24 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 last week to decide whether Apollo wrongfully violated an agreement to buy the U.S. 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 U.S. 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.
Apollo’s motion to bar access to the breakup fee was “aimed at actions Cooper had no intention of taking,” Anne Roman, a Cooper spokeswoman, said in an e-mailed statement. “After Cooper so advised the Court, Apollo’s motion was formally withdrawn.”
Steven Norman, one of Cooper’s attorneys, added that the tire maker hadn’t seriously considered requesting monies tied to the $112.5 million 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 an Oct. 4 deadline and suggested Cooper might have to accept as much as $9 less per share to get the deal done.
Apollo officials contend they didn’t know the depth of Cooper’s labor problems in the U.S. 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 evidence shows Cooper can’t meet all the requirements for closing the deal. Cooper counters that it disclosed the negotiations with the U.S. steelworkers and warned that their Chinese partners might object to the purchase.
In a separate filing yesterday, Apollo asked Glasscock for a judgment in its favor 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. v. Apollo (Mauritius) Holdings Pvt, CA8980, Delaware Chancery Court (Wilmington).