NEW YORK A lawsuit filed by GoldenTree Asset Management LP against steelmaker Schmolz + Bickenbach AG has been moved to U.S. District Court in Illinois.
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 AMM.
A spokeswoman for Paris-based BNP Paribas told AMM that the company does not comment on ongoing litigation.