Loews Corp. persuaded the Delaware Supreme Court to toss a $690 million damages award to affiliates of New York hedge fund Bandera Partners LLC, who claimed they were squeezed out of an oil-pipeline partnership.
(Bloomberg) — Loews Corp. persuaded the Delaware Supreme Court to toss a $690 million damages award to affiliates of New York hedge fund Bandera Partners LLC, who claimed they were squeezed out of an oil-pipeline partnership.
The state’s highest court rule Monday that the Delaware judge erred in finding Loews breached a 2018 deal by using an improper pretext to buy out the other investors in Boardwalk Pipeline Partners LLP at a bargain price.
Loews, which served as general partner for Boardwalk, was “exculpated from damages” under the partnership agreement, the five-member court ruled. The company has hotel, energy and insurance businesses and is owned by some members of the billionaire Tisch family.
Bandera representatives didn’t immediately respond to a request for comment.
“We are very pleased with the Delaware Supreme Court’s ruling and continue to believe that the process we undertook in 2018 to purchase the minority units in Boardwalk was appropriate,” Loews CEO James Tisch said Tuesday in a statement.
Read More: Loews Corp. Owes $690 Million in Suit Over Pipeline Gamesmanship
At trial, Judge Travis Laster found Loews’s deal to take Boardwalk private was facilitated by a legal opinion letter that was ““contrived” to achieve Loews’ goals. The letter said Loews had rights under the partnership agreement to buy out other investors in a deal worth $1.5 billion, according to court filings.
The state supreme court said the opinion letter was appropriate and provided a legitimate basis for triggering Loews’ purchasing rights. On that basis, the state Supreme Court ruled Loews was protected from any damages in the case.
The Bandera affiliates claimed Loews drove down the unit price of Boardwalk through well-timed public disclosures in order to exercise its rights and buy up the pipeline company’s outstanding interests.
As a result of the comments, “Boardwalk’s common unit price experienced a downward spiral, leading to a decline in the 180-trading-day average,” investors alleged in court filings.
The case is Bandera Master Fund LP v. Boardwalk Pipeline Partners, 2018-0372-JTL, Delaware Chancery Court (Wilmington).
(Updates with company comment in fourth paragraph)
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