“Q. Can I ask you to go back to [page 47 of Mr Simms report]. We looked at this text already at the top, and this is Mr Simms, your expert, saying: "While I understand that RBI did attempt to perfect security rights over the remaining properties, this was complicated by the criminal case ..." So Mr Simms must have learned from the bank that its attempts to perfect security had been complicated by the criminal case. Mr Simms must have got this from RBI? A. Not necessarily, but possible. Q. Where else could he possibly have got it other than the bank? A. By talking to the land office? Q. Just look at what is actually said by Mr Simms: "While I understand that RBI did attempt ..." You say that is from some other third party, do you? A. I am saying I don't know where it comes from but it is possible it comes from a third party.”
“We did send the bible of documents to ASM rather early on, around17 June 2014 . These were then intended for the recipient’s use in relation to their role as Salim’s representatives (Project Goal).”
“Q… So he is asking there, isn’t he, for a reduction in the purchase price of 20 million, yes? A.Yes, and this was subsequently corrected by Pak Fuganto in a follow-up email. Mr Chubb was trying to get his equity deal done because he knows – he knew if the RBI guys do not agree to an amendment of the terms of the deal – by the way, we were more into deferment of payment rather than reduction but small difference – we would not, “we”, as in ACE, would not be able to close the transaction. And even the equity deal, because RBI would not be tendering, would have fallen through. Again, we all know how investmentbankers are like, I was one too, he was – he knows exactlywhat needs to be done in order to get the deal done, whichis changing, amending the payment terms to reflect thecollateral, the perfection or the lack thereof of the security.But he didn’t want to offend RBI, he is trying to bediplomatic, so he said – he put it in a way which is factually correct: we are now paying$40 – actually$50 million more, I think he did his maths a little bit wrong, and please help us to reduce, you know, the – but that is not the reason; you would see in all my communication with Mr Gonzalez and Dr Strobl I was very clear that it is the collateral that isdriving our request, not liquidity. But in any case, what MrChubb is saying here, Mr Fuganto corrected him, Iremember, in a subsequent email.”
“Q. Mr Chan, I think you are mixing up time periods here. At this stage in early June you had not raised an issue of any defects in the collateral, and what was being discussed was the fact that the deal with Mr Rothschild had resulted in ACE having to pay$40 million more, and what you were asking forwas for RBI to share the pain, either by reducing the price orproviding a loan or helping in some way, isn’t that right? A.That is not right. I am really – if Mr Chubb is here, I wouldsmack him. He was the one who wrote this email, he wanted to get to where we wanted to go, but he didn’t want 44. once, that the collateral you told us you had, you know, you didn’t have, so can you allow us to change the terms of the deal? I think rather than being blunt – maybe I am that type– he was trying to be diplomatic. But in any case, first point, the collateral deficiency has been discussed since May. Second point, Pak Fuganto did write an email subsequent to this one to correct – I mean, maybe like the amendment to the April 22 amendment that we both missed. But Fuganto did write one, and in that email hemade it very clear that Sinar Mas is not – has not – does notneed financial assistance.”
“We acknowledge your thoughts about the matter, please notethat I nor Sinarmas have never brought up any number or anydemand about compensation, it was an idea being thrown aboutin friendly brainstorming. While Andrew, Kin or Willi mayhave been discussing with you how you can help us, and it is ofcourse extremely helpful and well appreciated if there is someway you can offer assistance, for now I am not really focusingon this but on the offer and working with the board to regain control of Berau. There are a myriad of issues that are very concerning that have developed in the past few weeks. We have highlighted some of in our dinner but there are others that are not yet brought to your attention for various reasons. (We can talk about those with Kin off the record)”
“Q…This is an email from Mr Wang to Mr Krombass and Mr Avramov, and you are copied in, on12 April 2015 . It is a very long email, I’m not proposing to read it all out, but you will see that what had happened at this point was that RBI had indicated the preferred bidder for its loans was somebody that we now know to be Mr Siegfried Wolf in Austria and this email was trying to persuade RBI to reconsider…So what Mr Wang wassaying there was that it was important that you had anIndonesian owning the Berau Coal works and that foreignersowning those works didn’t work, isn’t that right? A. My colleague was trying to scare RBI into walking awayfrom the move… Q. You are saying he is lying, are you? A. I think he is trying to resurrect a deal we were clearly behind…”
“Q. Yes. You say in this email to Mr Gonzalez: “We have performed miracles to meet your requests in the last few days. Like yourself, I have been in the finance business for a long time, having run Lazard (not Rothschild) in Asia and worked at Goldman Sachs for a few years. Surely you can appreciate, as I do, that what the Sinar Mas Group has done is extraordinary. Ithas demonstrated beyond any unreasonable doubt that the SinarMas Group is both a serious buyer and a money-good buyer.”
“69:20 A. No. Absolutely not. Mr Chan – Sinar Mas and ACE had a common goal, and I suppose I will use the general term “partners” in consortium, ACE could see tangible benefits that Sinar Mas would bring to the consortium in the form of financing and what I will loosely call experience in Indonesia and particularly in a difficult part of the world which is Kalimantan. ACE through Mr Chan in particular also brought value to the partnership. Mr Chan was the one who as in kindof commercial parlance brought the deal to Sinar Mas, and hewas going to work to try to achieve a successful transaction inthe form of acquiring control of ARM, so both were workinghand-in-hand with the common objective, but each part of thepartnership had their role to play, or I suppose the best way itdescribe it would be their contribution to make.”
“I was only 25 years old at that time. I worked closely with Mr Chan, on this transaction.”
“61:12 A. Sorry, I think I – again use building using MrChan’s words, I haven’t been precise. On what I mentioned. I was saying that we were working together with Sinar Mas 60. We with their help – maybe I should not use the word “advice”because this is – this is – maybe I was using the wrong word,we were working together, Sinar Mas help on the legal side,because we were partners. Because obviously Mr Chan, he himself is not – not trained in Indonesian law so we have to rely on Indonesian counsel, and Sinar Mas had a big team of Indonesian lawyers.”
“72: 4 a liquidation scenario the value of – I don’t know if this is helpful but the gold mine he mentioned is valued at zero and zero is the rock bottom value of any asset. Because the JORCreport as Mr Chan mentioned earlier last week, a JORC reportwasn’t done so this – no value can be assigned but there couldbe potential value once more analysis, geological analysis isdone. So these are again in response to your question, these are the recovery amount of money that you can get if you liquidate these assets, but not the value, the market value, if you continue to operate the asset as a going concern. ”
“I emphasised how [Mr Gonzalez’s] aggression, lack of flexibility and back-tracking on the commercial position of pain sharing, loans etc agreed with Dr Strobl had caused a lot of offence and frustration at Sinar Mas”
“If and insofar as such representations were made, were they true?”
“50. In determining whether there has been an express representation, and to what effect, the court has to considerwhat a reasonable person would have understood from thewords used in the context in which they were used. In determining what, if any, implied representation has been made, the court has to perform a similar task, except that it hasto consider what a reasonable person would have inferred wasbeing implicitly represented by the representor's words andconduct in their context.”
“52. Whether any of the alleged representations was made involves a consideration of each brochure or set of globals relied upon in order to see what the words used in the relevant document mean. The particular words used must of course beread in their context, which involves considering them in the context of the particular brochure or set of globals as a whole. Further, just as the words used must not be read in isolation, sothe document must itself be considered against the relevantsurrounding circumstances. In particular, it is necessary to haveregard to the purpose for which the document came intoexistence, why the statements contained in it were made and bywhom they were intended to be read. 53. It follows that the words used may have a meaning other than their literal meaning. They may also have a meaning which is not expressly stated, but which is implicit. However, as we see it, their meaning, whether explicit or implicit, should be arrived at by a process of construction and, subject to one point, not by a process of implication. In particular, whether the relevant document contains a particular representation does not depend upon a process of implication of the kind which is appropriate in answering the question whether a particular term is to be implied into a contract. 54. Mr Goldblatt submitted that the test is simply whether an ordinary person in the position of a prospective or existing name would have understood the document in question, read as a whole, to carry or contain the representation contended for. We agree. There has been some debate as to what attributes should be given to the person reading the brochure as a prospective name. In this regard Mr Goldblatt submitted that the ordinary person of reasonable intelligence in the position of a prospective (or indeed existing) name should not be treated as someone with previous knowledge of the insurance market generally or Lloyd's in particular. Again we agree. 55.. The point seems to us to be well demonstrated by the following statement made by Langley J in Sumitomo Bank Ltd v Banque Bruxelles Lambert SA[1997] 1 Lloyd's Rep 487 at 515: “It is well established in law that the question whether anykind and if so what particular representation was made dependsupon an objective assessment of what was said or done and itslikely effect on the alleged representee in the context in whichthe particular parties were concerned. In other words, what would the documents and exchanges relied upon have conveyed to a prudent banker in the position of the plaintiff banks?”
“Also, for your information, I have also attached the information pack that was provided to all interested investors already in November. It clearly says on page 3 that 15 vessels have not yet been perfected…”
“Unfortunately, I think that we are going to have to sue them. For the loans, they offered the full 71 if we go show that "everything" is perfected, by which they mean also the 15 additional tugs (to the 42 tugs/barges) that were never perfected and the plots of land where there are title issues (both of whichwere clearly stated in the IM that we sent to all investors).”
"Q… the claim that the BORN summary was an internal document not produced for the provision of information to third parties, not to be relied on by ACE, that is not true, is it? A. It might have begun life like this but it was most certainly given to external parties. Q. Yes, given to investors in November, described by yourself as an Information Memorandum. A. Correct. Q. The updated version placed in the data room for the purposes of marketing the loans and the collateral? A. Yes."
“It is admitted that on16 March 2015 RBI provided ACE with access to the Data Room. There were numerous documents in the Data Room, included in which was the BORN Summary. The BORN Summary was an internal RBI document, notproduced for the provision of information to third parties and, in particular, not to be relied on by ACE in entering into, or to induce it to enter into, any transactions with RBI.”
“A representation is a statement of fact made by the representor to the representee on which the representee is intended and entitled to rely as a positive assertion that the fact is true. In order to determine whether any and if so what representation was made by a statement requires (1) construing the statement in the context in which it was made, and (2) interpreting the statement objectively according to the impact it might be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee:…”
“18.3.1. there were 57 Samudra Vessels (as identified in Schedule 7 of the Samudra Loan) and mortgages had been “perfected” in respect of 42 of them; 18.3.2. the process of obtaining mortgages over the 15 remaining Samudra Vessels was “on- going” and “pending”; and 18.3.3. no substantive difficulties were envisaged in the process of obtaining mortgages in order to “perfect” the security over the 15 remaining Samudra Vessels;”
“SPM is a privately owned company incorporated on10 May 2011 . The company is deemed to be controlled by Samin Tan. SPM’s principal activity is mainly to undertake tug and barge operation to transport coal from AKT mines located along the Barito River waterways... For its operation, SPM employs new fleet of 4,000- tonne capacity barge which is more manoeuvrable in the volatile Barito waterways. Currently it has17 units of tugboats and 25 units of barges. Another five unitsof tugs are being registered and will be operational in thesecond half of 2014. The SPM facility went into default when SPM failed to pay a principal instalment…on21 May 2014 . A second principal instalment subsequently also went unpaid on21 August 2014 . Current outstanding principal stands at USD 42 million.”
“Currently [SPM] has 17 units of tugboats and 25 units of barges. Another five units of tugs are being registered and will be operational in the second half of 2014.”
“In fact the monitoring agent has identified the location of 47 vessels, 22 tugs and 25 barges. The increase from last week is amongst the tugs, which have increased in number from 17 tugs last week to 22 this week. This is because we have only extended the scope for the agent since last week to additionally locate and track the additional 15 tugs that have neither been registered nor pledged to us… Of that number (15) five have been located thus far… As I intimated in my email of 11th May, these vessels have neither been registered nor have the Hypothecs been perfected; indeed SPM has not even attempted to mortgage (Hypothec)them to us…”
“in the premises: 29.5.1. RBI did not have 3 of 5 of the original Certificates of Title in its control; 29.5.2. 3 Certificates of Title were not in the process of being reissued or renewed; and…”
“22.4.2 ACE is put to proof of the matters alleged in paragraph 29.5.2.”
"As regards the land, yes, only 2 parcels of land were ever mortgaged to us. The other 3 did not materialize as we enforcedon the Borrower group when the land office process wasongoing (hence we did not expect the Borrower to cooperate with us thereafter)."
“1. Based on the letter No. 47 / KET / RT / XII / 2013 datedDecember 23, 2013 issued by Rusnah Saidah, SH substitute of Ruddyantho Tantry, SH, Notary and Land Deed official in Samarinda, explained that SHGB No 16 / bukuan of an area of57,790 sqm is in renewal process of Right to Build in office ofLand Authority Samarinda. 2. Based on Letter No. 56/KET/RT/XII/2009 dated December24, 2013 issued by Rusnah Saidah, SH, Notary and Land Deed Official in Samarinda, the original SHGB No. 17 (land area59,700.00 m2) and SHGB No. 29 (land area 153,960.00 m2)were missing, however, the management of the Company had already reported the missing certificates to the police as proven by Surat Tanda Penerimaan Laporan Pengaduan from Kapolres Metro Jakarta Pusat No. Pol:6788/B/XTT/2013/POLRES JP dated Desember 20, 2013, and the missing certificates will beprocessed in Office of Land Authority Samarinda for theirreplacement.”
“In 2008, Samin Tan agreed to lend Gunawan Tue Land Certificate No. 29 for the purpose of obtaining a credit facility from Bank Mandiri, and have the ownership status transferred to Mulia under the condition that the ownership of the land should be transferred back to Tunggal at all costs following the release of the security… In 2013, Tunggal planned to request a credit facility from a foreign bank with Land Certificate No. 29 as collateral. It is to be noted that the Ravenwood loan agreement was entered in22 November 2013 . However, Tunggal was not able to locate the certificate and attempts to obtain the certificate back from Gunawan Tue were not successful. Tunggal made an inquiry to Samarinda Land Officeto understand the status of the certificate and found that: (i) thecertificate was still under Mulia’s name; and (ii) the landcertificate was pledged to Tegak Sukma Budiman, the owner ofUD Pulau Agung, a supplier of Mulia’s, for IDR 20 billiondebt. There was no permission from Samin Tan for this. Following these findings, Tunggal reported Gunawan Tue to Central Jakarta Police in the same year.”
"Further, as recorded in the copies of the land title certificates, HGB Nos.16 and 17 have expired on23 April 2011 and 27January 2012, respectively. Based on Representation Letters…dated10 November 2014 issued by Notary Dedek Yuliona,SH, M. Kn, the HGB Nos.16 and 17 are in the process ofrenewal and extension under the name of PT. Tunggal Yudi Sawmill Plywood for a land area of approximately 57,790 square meters and 59,700 square meters, respectively."
“Progress with extension of land certificate HGB16 and HGB 17 has been good. The renewed land certificates are expected tobe received by end- Nov.”
“11.1.7 While I understand that RBI did attempt to perfect security rights over the remaining properties, this was complicated by the criminal case and other events (see Tunggal time line in Appendix 6) and was not supported by Tunggal’s management or shareholders.”
"RBI made express (alternatively implied) representations to the effect that it had perfected security over the Samudra Shares which could and would be transferred to ACE on Completion"
“Unfortunately, we do not have the original share certificates ora copy of the share register duly annotated with the pledge. We understand from our Indonesian counsel that in terms of enforceability, the pledge of shares agreements have been signed in a notarial deed form, which is considered as prima facie and complete evidence for third parties that the pledge agreement has been executed. We also have notified the company of the pledge and have received the Acceptance Letter from the company acknowledging the pledge of shares agreement (attached). Despite the share certificates andannotation in share register book have not been received by thepledgee, based on the pledge agreement, the notice and theacceptance, requirement for pledge perfection under IndonesianCivil Code has been satisfied. Our counsel is of the firm viewthat on these grounds, the pledge under the pledge agreementremains valid and enforceable.”
“Did ACE rely on (and/or were they induced to enter into the SPA by) any of the alleged misrepresentations? (Issue 3)”
“A representation is a statement of fact made by the representor to the representee on which the representee is intended and entitled to rely as a positive assertion that the fact is true.”
“I also note that from a Singapore regulatory perspective, RBIcannot share the RBI loan information directly with ARM/itsadvisors but is allowed to share (and has shared) theinformation with ACE (as the potential purchaser of the loans). This point was discussed with Ashurt last week. We understand and note that to evaluate the purchase of the RBI loans, ACE may need to disclose the information to its advisers including information which ACE has received through the JPM data room. Under the circumstances and given that the disclosure by ACE to ARM/its advisers is linked to the sale and purchase of the RBI loans, and we do not see this as a major issue. I assumehowever that ACE will take the information from the data roomand send the relevant information to ARM/its advisors (andACE is not going to request direct access for ARM to the dataroom - which may create some legal issues for us andJPM).”
“In the "BORN EXPOSURE INFORMATION SUMMARY" presentation (attached), it is mentioned that 15 other vessels were pending perfection (p.2), in addition to the 42 vessels on which you provided information just now. Are these 15 vessels still pledged to these loans?”
“The burden of proving that the claimant’s decision to enter the contract was not induced by a misrepresentation normally lies on the defendant… the question of the burden of proof is an evidential one, not a rule of law; and this has been confirmed by the Court of Appeal [in BV Nederlandse Industrie Van Eiprodukten v Rembrandt Enterprises Inc[2019] EWCA Civ 596 , [2019] at [32] and [44]]” (Chitty at 7-037). “It is not necessary that the misrepresentation should be the sole cause which induced the representee to make the contract. It is sufficient if it can be shown to have been one of theinducing causes.” (Chitty at 7-038) [emphasis added] 171.At 7-039 Chitty states: “It seems to be the normal rule that, where a party has entered a contract after a misrepresentation has been made to him, he will not have a remedy unless he would not have entered thecontract (or at least not on the same terms) but for themisrepresentation. Certainly this is the case when the misrepresentee claims damages in tort for negligent misstatement; and it seems also to be required if damages are claimed for fraud. It seems likely that the same rule applies if he seeks to rescind on the ground of an innocent or negligent misrepresentation.”
“NR [Rothschild] will attack us by claiming that we pay RBI too much and is therefore required to increase our general offer price. We need to obtain a fairness opinion from NM Rothschild & Sons, independent adviser A plc. This is a request from the takeover panel. The board of ARMS and the adviser need to opine the price we pay for RBI loans is fair. Our defence, the valuation of other collateral must exceed 85 million.”
“A. No. I mean, we are conflating two issues and ignoring oneof them. We just -- yes, we have to do the fairness opinion. That is absolutely true. We -- but in order to do the fairness opinion, we didn't have to do so much. We were -- we just signed on May 7. We were trying to start the closing process. That is how it works. You sign an agreement then you ask the counterparty to deliver you the closing documentation. But thetwo processes -- the two rationales are not necessarily one overthe other. The fairness opinion point, yes, we have to satisfythe takeover panel, NMR and also the ARMS board but at thesame time we need to make sure we are going to get -- if the deal goes through, we are going to get what we thought wewere going to get, which is, you know, the tugs and barges, theland and the shares, and the gold mine and so on.”
“Spoke to Willi and Andrew. More pressure: the situation in Indonesia is very precarious. I will try to get some 3rd party confirmation of this. They are concerned that about Samin Tan doing a counter offer… They said that there is a problem with some titles associatedwith some parcels of the land and barges. The issue with theland I was aware of. I was not aware of any issues with thetugs/barges.”
“In the "BORN EXPOSURE INFORMATION SUMMARY"presentation (attached), it is mentioned that 15 other vesselswere pending perfection (p.2), in addition to the 42 vessels on which you provided information just now. Are these 15 vessels still pledged to these loans? If yes, may I have information on these vessels as well?”
“May I check if you have the originals of the land certificates? Our valuer told me the vessels should have "operating certificates". May I check if you have them as well?”
“… the current valuations have all been based on 42 vessels (17 tugs and 25 barges) over which the pledges have been perfected. Although a remaining 15 vessels were due to be pledged this does not seem to have been completed.”
“Please try hard to find info on the other 15 vessels. Value is significant. Roughly assuming $lm each, they're worth$15m .”
“Thanks for your sincere consideration and suggestion of a loan, but in our spirit we don't want to add debt or liability as of now. However we recognize the well intention and we appreciate it very much.”
“… Sinar Mas Group is one of the most substantial conglomerates in South East Asia.$70 million is not a lot of money to them.”
“Subject to documentation acceptable to RBI (Richard has already started to prepare the documentation), RBI is, inprinciple, willing to accept your proposal to have RACL acceptthe offer before the Rule 16 vote has occurred. Before RACLaccepts the offer, RBI will require an agreement amending andrestating the loan purchase agreement and the framework agreement and providing for the termination of the irrevocable undertaking (the Amendment Agreement) to be executed and become fully effective between ACE, RACL, RBI and ASM. A condition precedent to the Amendment Agreement will be that the Escrow Agreement is executed and the Escrow Agent confirms receipt of funds or that the full purchase price is held directly by RBI. In addition to making suitable amendments tothe existing transaction documents to reflect the revisedtransaction structure, the Amendment Agreement will contain: … e. acknowledgement and confirmation from ACE that itperformed its own due diligence prior to entering into the loanpurchase agreement and framework agreement, did not seekany representations and warranties and has no recourse to RBIwhatsoever in respect of the loans save for a breach by RBI of an express term of the loan purchase agreement.”
“I think all of what you propose is fine - including e) in youremail apart from the need to fund the escrow in full as that doesn't solve our cashflow/ liquidity issue…”
“Q. Mr Chan, it is simply incredible, isn't it, that Mr Chubb could have written this email without having your instructions? A. He did not have my instruction, because in all my communication with RBI I did not -- I did not make any of these points. So how could I be saying no -- for instance, how could I be saying no to an as is where is deal and at the same time instructing him, ie Mr Chubb, to be communicating to RBI in a totally opposite, different scenario?”
“On19 June 2015 , the Board approved a request to modify (at ACE's request) the structure of the deal to allow for acceptance of the shares before the Rule 16 vote. This approval had a number of conditions, including the full funding of the escrow account. This condition was ultimately rejected by ACE. As an alternative, RBI then negotiated with the counterparty to put in place a deferred consideration scheme whereby ACE would only partially fund the escrow account. Ultimately, the partieswere unable to agree on a number of points (see Annex) beforethe Rule 16 vote [on29 June 2015 ].”
“ACE/Sinar Mas's unwillingness to sign an amendment agreement, which including representations for them confirming that they asked for no representations as to the state of the underlying security, carried out their own DD and that the purchase price was fair.”
“Further to Monisha's email, we confirm that we have the original land certificates no. 32 and 35 in our possession - these are the only 2 we have as security over the other 3 plots of land have not been perfected.”
“Just to let you know, I had a very positive meeting with Fuganto today ahead of the R16 EGM tomorrow. He is extremely pleased and grateful that RBI will tender in the shares so Sinar Mas can fix the situation with Amir. He is alsohappy that we have reached a good position with regards to theloan and deferred consideration. He does not understand why you want two guarantors when RBI knows Sinar Mas well through your French team and that they are about to pay back the final instalment of a$60m loan to one of their French companies so you know how they do business (repayment in full and on time). Nevertheless, he is discussing with his board who, in addition to GEAR, can be used for this and will have names for you shortly. He also asked me to communicate that the funds to pay for the loan purchase remain available and untouched in Ashurst's account, ready to transfer to you on closing and to reassure you that he intends to honour this deal, especially in light of the good faith displayed by RBI on the loan and deferred consideration. As you know, this money was put in place at very short notice at the cost of several million dollars in lost interest and early redemption penalties. He is keen that the commercial terms of the loan get finalised as soon as possible so he can communicate that with his board and to move the relationship with RBI beyond the current status where there still seems to be a concern at your end about trust. Heasked me to reiterate that they are not looking to do anythingother than buy the shares and loan as agreed.”
“we have reached a good position with regards to the loan and deferred consideration. He does not understand why you want two guarantors when RBI knows Sinar Mas well through your French team and that they are about to pay back the final instalment of a$60m loan to one of their French companies so you know how they do business (repayment in full and on time). Nevertheless, he is discussing with his board who, in addition to GEAR, can be used for this and will have names for you shortly”
“A. I remember the A&O document because of the unreasonable request of "as is, where is" provision. I don't remember anything else that were proposed because the document is a non-starter…”
“So firstly, Mr Chan, Mr Widjaja was keen to get the commercial terms of the loan finalised. He was agreed on theA&O deal, wasn't he? A. No, I don't recall that, I don't recall that at all. I don't know if I was in this meeting, I don't recall this. But Mr Widjaja would share my view which was communicated strongly when I spoke to Ryan Gonzalez and Dr Strobl, and so did Mr Widjaja, that we would like -- of course we would do the deal as agreed, because the deal as we agreed was to pay 70 million and you deliver us all the collateral, but not beyond that. I don't remember -- we negotiate, this is June 28, we negotiate until the date they filed for the winding-up, so obviously we have not agreed. Obviously we have not agreed, because if we didagree, we wouldn't have been negotiating all the way until July -- I forgot the date that they filed the winding-up petition, but if we had agreed, then we wouldn't have been continuing the negotiation in July.” “Q. You were copied in on this email, Mr Chan, and if you hadthought that this email misrepresented your position and that infact you weren't prepared to honour the deal because of defectsin the collateral, and you weren't prepared to agree to the A&Oproposal because of defects in the collateral, you would havesaid so, wouldn't you? A. I would have said that and I must have said that to Andrew Chubb probably in private. You don't air your dirty laundry in public. But I want to make sure you understand what is going on. We had a tender offer coming, we have a looming bond default in a week's time, and at the same time Indonesia was blowing up. I think a small matter of our investment bank are saying some nonsense. I don't think it is the top of my priorities. You must know from the materials that there was strike, there was sabotage in Indonesia. That is probably Fuganto's priority, that was my biggest concern. And the bondholders were very concerned, the shareholders were very concerned. Those were the -- those were the issues. A&O, wedid not agree and we would not agree, and we did not agree.”
“Johann just to recapture our talk: Share sale first which leads actually to lower completion risk for rbi Senior loan for 50 Mio to creditworthy Sinar MAS entity. Maturity the shorter of 5 years or proper title to collateral at a favorable interest rate. More formal term sheet suggestion to follow. Please ask Ryan to start negotiating the share sale immediately as timing here is crucial.”
“… We were trying to tell RBI, and I think that was to -- to both Dr Strobl -- I notice Mr Gonzalez is not copied here, but definitely separately to Mr Gonzalez, that your collateral -- you don't have proper title to many of the collateral, and we are -- we would be happy to continue and pay for everything that we thought we were going to pay according to what you told us, for 70 million. But since you cannot give them to us today, wewill pay you as and when they are ready. If you say they arepending, so when you get them, when the title deeds are reissued or renewed, we will pay you…”
“In response to your 9 July Letter, we confirm that we are ready, willing and able to proceed with the closing of the Sale and Purchase Agreement on condition that you are in a positionto convey and transfer all of the Purchased Assets (as definedin the Sale and Purchase Agreement), including all original titledocuments relating thereto and otherwise to comply with all representations and warranties made by you under and in connection with the Sale and Purchase Agreement... … We reiterate that we are ready, willing and able to make thepayment of the Purchase Price under the Sale and PurchaseAgreement upon our being satisfied that you are able (in form and substance satisfactory to us) to deliver each of the deliverables set out in the Annex. We look forward to working with you with a view to doing so as soon as possible.”
“I think that it would be important that you call Fuganto today. I spoke to Kin Chan for longer today. It is not going in the rightdirection, and we will end up in litigation Kin offered: 1. To pay the remaining$71m subject to everything beingperfected. This will not happen as they will argue that there are15 tugs missing and 3 out of the 5 land plots have issues withthe titles. This will be their argument on why they don't have to pay us. Legally, we should be fine here, plus NM Rothschild said that the price was fair as did 99.7% of the independent shareholders. In the info memorandum, which we sent to all investors, this situation was disclosed. 2. We defer$50m for a period of 5 years (to be paid back earlier) if progress is made on getting the assets. I told him that both were unacceptable and thatthere are threeoptions (this has been consistently communicated now for some time): 1. They pay the$71m 2. They pay$46m and we agree to defer$25m subject to their signing of an amendment agreement. He said that the amendment agreement was a non-starter as it contains new reps and warranties. These new reps, and warranties make it explicitly that they are happy with the price being paid for the assets, etc. I told them that I do not understand why this should be a non-starter if their intention is to pay us. He talked a lot about how the figure should be$35m and that the gap is not that large between$50 and$35m . I told him that I do not want to negotiate the agreement or the amount. This is good will and they can take or not. 3. We sue them.”
“Assuming that a claimant who wishes to rescind is in a position to make restitutio in integrum, the present position seems to be that he may expect the restoration of benefits and the resumption of burdens which have passed under the contract. Thus, if property has been delivered, it must be restored, and the claimant likewise must make restitution of any property delivered to him; and if obligations have passed to the claimant, these must be resumed by the defendant so that the restoration of the status quo ante may be achieved. In practicalterms this means that the defendant must indemnify theclaimant against obligations which he has discharged or willbecome liable to discharge. One problem arises: how is the rule requiring the defendant to indemnify the claimant for obligations assumed by him reconciled with the rule that damages cannot be recovered for an innocent misrepresentation which has not become a term of the contract? The traditional answer has been that the defendant must indemnify theclaimant against obligations necessarily created by the contract,i.e. against liabilities to third parties which the contract requiredthe claimant to incur or payments to third parties which itrequired him to make, but against these only. Thus the court is enabled to stop short of making an award which could be classified as damages.”
“ACE incurred substantial expenses in relation to the purchase of the Loans. This principally comprised costs incurred with respect to valuation and other professional advisors. Given that some advisors were instructed on issues pertaining to the purchase of both the loans and the Ravenwood ARMS Shares, it is difficult in those instances to clearly delineate between the cost of services rendered for the purchase of the Loans and the cost of the services in relation to the Ravenwood ARMS Shares. In other instances, it is clear that the services were directly related to the purchase of the Loans and these expenses can be attributed to the Loans in full.”
"Did the warranty in clause (b)(ii) of the Solicitor's Confirmation, on a true interpretation, apply only for so long as the alternative arrangement contemplated by clause 4.2 of the SPA was "pending", and, if so, did it mean that such an arrangement would cease to be "pending" if and when there was no realistic prospect of any such agreement or arrangement being reached, or at some other time? a If it was contemplated that an arrangement contemplated by clause 4.2 would cease to be "pending" if and when there was no realistic prospect of any such agreement or arrangement being reached, when was there no longer any such realistic prospect and, in particular, was there such a realistic prospect at the time of any or all of the transfers out of the Ashurst client account? b Was there a real and substantial chance that, had Ashurst not made the relevant transfer(s), RBI would have received the Purchase Price, because ACE and RBI would have reached an agreement that retained the essential terms of the SPA (in particular ACE's obligation to pay the Purchase Price) but which provided a different structure by which ACE could make payment, for example by permitting part of the Purchase Price to be deferred?"
“1. We refer to the escrow agreement, the current form of which is set forth as Schedule 2 of the [Sale and Purchase Agreement] (referred to in this letter as the “Escrow Agreement”) ... 2. We confirm that: (a) we have been put in funds in an amount that is not less than US$85,000,000 (the “Escrow Amount”); and (b) we have irrevocable instructions as follows: (i) to transfer the Escrow Amount to the Escrow Agent upon the signing of the Escrow Agreement in accordance with the terms thereof; and (ii) in the event that the Escrow Agreement is not signed within30 days of the date hereof, to continue to hold the EscrowAmount pending agreement by the Parties contemplated byclause 4.2 of the [Sale and Purchase Agreement], 3. This confirmation and any non-contractual obligations arising out of or in connection with it are governed by English law.”
“4.1 As soon as reasonably practicable, the Purchaser and the Seller shall enter into the Escrow Agreement. 4.2 If the Escrow Agreement is not entered into by all partiesthereto within 30 days from the date of this Agreement, theparties shall discuss in good faith an alternative arrangement toachieve the same commercial purpose.”
“…In particular, the commercial purpose of the alternative arrangement contemplated by clause 4.2 was to provide a mechanism for payment of the price when the conditions were satisfied…”
“That purpose could only be achieved if the arrangement was put in place prior to the conditions being satisfied. There wasno point, the purchase price had already become due andpayable and ACE had made it very clear that it had no intentionof completing on the basis proposed by RBI.”
“I think that it would be important that you call Fuganto today. I spoke to Kin Chan for longer today. It is not going in the rightdirection, and we will end up in litigation Kin offered: 1. To pay the remaining$71m subject to everything beingperfected. This will not happen as they will argue that there are15 tugs missing and 3 out of the 5 land plots have issues withthe titles. This will be their argument on why they don't have to pay us. Legally, we should be fine here, plus NM Rothschild said that the price was fair as did 99.7% of the independent shareholders. In the info memorandum, which we sent to all investors, this situation was disclosed. 2. We defer$50m for a period of 5 years (to be paid back earlier) if progress is made on getting the assets. I told him that both were unacceptable and that there are threeoptions (this has been consistently communicated now for sometime): 1. They pay the$71m 2. They pay$46m and we agree to defer$25m subject to their signing of an amendment agreement. He said that the amendment agreement was a non-starter as it contains new reps and warranties. These new reps, and warranties make it explicitly that they are happy with the price being paid for the assets, etc. I told them that I do not understand why this should be a non-starter if their intention is to pay us. He talked a lot about how the figure should be$35m and that the gap is not that large between$50 and$35m . I told him that I do not want to negotiate the agreement or the amount. This is good will and they can take or not. 3. We sue them.”
“If the Bank has not provided the notification contemplated by clause 3.2 above before 18:00 Singapore time on29 June 2015 , this clause 3 (Amendments) shall lapse and the Sale and Purchase Agreement shall not be amended. For the avoidance of doubt, in such circumstances the entering into by the Bank and Offeror of the Escrow Agreement in the form scheduled to the Amended Sale and Purchase Agreement shall not constitute compliance with Clause 4 (Escrow Arrangements) of the Sale and Purchase Agreement and the Escrow Agreement is not an alternative arrangement as described in clause 4.2 of the Sale and Purchase Agreement..”
“Next week, together, we will continue to work toward implementing the deferred consideration structure as per the documents that A&O circulated.”
“Please note that we are taking the considerable risk of completing the share sale before the escrow agreement is funded as has been agreed. This has always been a crucial component of the deal. Andrew has also indicated that there were concerns on your side about the confirmation that you accept that you have no recourse to RBI with respect to the loans (other than where we breach the loan sale agreement). Your side has recently expressed concerns that the loans youacquired are less valuable than you anticipated. This is something that I absolutely reject because the documentation signed contains no details of the value of collateral and you did your own DD. We cannot proceed without having some level of comfort that you are not going to try to resist paying the full 120m. This point was accepted when we were talking about theshares first structure that it would contain this no recourseconfirmation. But this is now being pushed back on. If I am going to defer the payment of the purchase price, I will need the docs to contain this confirmation.”
“Maturity the shorter of 5 years or proper title to collateral at a favorable interest rate.”
“As you requested RBI has tendered its shares and released its security over them. As a result, the conditions to completion of the sale and purchase agreement between RBI and ACE have now been satisfied. We remain willing to discuss the concept ofdeferred consideration; however, any such discussions are of course without prejudice to our rights arising under or inconnection with the sale and purchase agreement at law and inany other manner, which we reserve.”
"Following entry into the SPA, RBI was ready to execute the Escrow Agreement as required and actively engaged the Com pany to do so. However, the Company refused to enter into the Escrow Agreement and no alternative arrangement insubstitution of the escrow was discussed or agreed."
"during the period from or around 15 June to25 June 2015 , the Company approached RBI seeking to defer payment of part of the Purchase Price. Shortly after it appeared that no agreementwould be reached, it appears that the Company entered into the ACE Debenture"
“If an alternative agreement contemplated by clause 4.2 wasstill pending prior to29 June 2015 , then it had certainly ceasedto be so from this point onwards at the latest… There was no point in an escrow or similar arrangement being agreed after the conditions were satisfied, because from that point onwards, the purchase price had already become due and payable and ACE had made it very clear that it had no intention ofcompleting on the basis proposed by RBI.”
“On 29 June, 99.7% of the voting shareholders voted in favour of the loan sale. With this event, both conditions for the loan sale were met. RBI accepted the Offer and on 1 July the acceptance was cleared. After this, ACE has not made any realattempt to put this deferred consideration into place despiterepeated attempts on RBI's side to do so, though this was not in RBI's interest.”
“…told him that both were unacceptable”
“This will not happen as they will argue that there are 15 tugs missing and 3 out of the 5 land plots have issues with the titles.”
"A. Fundamentally at that time it was blindingly clear that there was no prospect of an alternative arrangement being agreed…"