Florida financial firm sued over cancelled IPO
By Pankaj Ladhar of Manos • Alwine P.L.
With large business opportunities come large business risks. When several companies come together to pursue a common goal there is often a great deal of optimism and positive messages about the future of the joint venture. Contracts are signed and hands are shaken as all the parties begin to try to carry out their responsibilities under the agreement. It is at this point that plans can sometimes go off the rails, deadlines and payment may be missed and the finger pointing begins.
A Florida financial firm now finds itself involved in a commercial lawsuit as part of a joint venture that was intended to facilitate the initial public offering of a security alarm servicing company. The lawsuit claims that the Florida firm, along with its partner intentionally destroyed the alarm servicing company by cancelling the IPO. They claimed that his was a breach of their contract and amounted to a “double cross.”
The lawsuit indicates that the decision to cancel the IPO was an assertion on the part of the Florida firm and its partner that the alarm company had defaulted on a payment on an $85 million loan. It appears that the allegedly missed loan payment was supposed to come about as a result of an IPO by the alarm company on March 1. When the IPO did not happen the Florida firm stepped in and cancelled the IPO that was expected to close in April.
In response the alarm company says that they have actually paid $47 million and that they had not, in fact, defaulted on their loan payment. The alarm company is seeking $20 million in damages as a result of the cancelled IPO.
Source: Reuters, “Siemens sued for calling off alarm company IPO,” Karen Freifeld, March 22, 2012