NEW YORK A lawsuit filed
by GoldenTree Asset Management LP against steelmaker Schmolz +
Bickenbach AG has been moved to U.S. District Court in
New York-based GoldenTree
alleges that Schmolz "fraudulently induc(ed) GoldenTree to
purchase more than $50 million in bonds based on
representations concerning the proven track record
of the experienced management team of the issuer
... while concealing the secret intention of the Schmolz board
of directors to fire that very management team," according to
the original complaint.
"Only six weeks after Schmolz
obtained financing from GoldenTree, the company stunned
GoldenTree (and other investors) by terminating its chief
executive officer, Benedikt Niemeyer, and chief financial
officer, Axel Euchner," the lawsuit said.
Schmolz chairman Hans-Peter
Zehnder later told investors in a conference call that the
terminations were the result of "a long-standing feud between
the companys board and senior executives," according to
the suit. "In a farcical about-face, Zehnder announced that
Niemeyer and Euchnerwhom defendants represented six weeks
earlier were core rationales for investing hundreds
of millions of dollars in the companylacked
honesty, integrity, and ethics."
The lawsuit, originally filed in
Cook County (Ill.) Circuit Court in December, also accuses BNP
Paribas SA, which allegedly operated as Schmolzs agent
for the bond deal, of negligent misrepresentation.
"We are confident that we will
be able to successfully defend against this complaint," a
spokesman for Emmenbrücke, Switzerland-based Schmolz told
A spokeswoman for Paris-based
BNP Paribas told AMM that the company does not comment
on ongoing litigation.