Apollo-Cooper Update: Cooper Files Supreme Court Appeal But Not 3Q Financials - Tire Review Magazine

Apollo-Cooper Update: Cooper Files Supreme Court Appeal But Not 3Q Financials

Even as both sides were awaiting the rest of Judge Sam Glasscock III’s ruling on the case, Cooper Tire & Rubber Co. filed a formal appeal of the judge’s partial ruing to the Delaware Supreme Court.

Cooper is seeking an expedited ruling from the state supreme court, certainly prior to the Dec. 31 expiration of its acquisition agreement with Apollo Tyre. Cooper had also sought an expedited hearing on its Oct. 4 suit against Apollo in Delaware Chancery Court, which was heard by Glasscock over Nov. 5-7.

Meanwhile, the key element to completing any sale deal remains elusive as Cooper has now formally requested an extension from the U.S. Securities and Exchange Commission regarding its third quarter 2013 financial reports.

The Nov. 12 filing does little to raise hopes that the company can provide Apollo creditors with financial information for the quarter to Sept. 30, 2013, by tomorrow, as required in order for Cooper not to breach its merger agreement.

At press time this morning, Apollo offered no comment on Cooper’s appeal or its SEC extension filing.

Glasscock ruled on Nov. 8 that Apollo did not breach terms of its $2.5 billion deal to buy Cooper, and had not been suffering from “buyer’s remorse” as the reason why it had not year closed its deal to buy Cooper for $35 per share. The judge noted that his was a partial ruling, and the remainder of his decision is expected this week.

In a statement issued yesterday, Cooper said: “Cooper believes that, with all due respect to the Vice Chancellor and the Court (Judge Glasscock), the Nov. 8 ruling misconstrues the contract between Cooper and Apollo. We are seeking a reversal of the ruling from the Delaware Supreme Court.

“While we dispute the Nov. 8 decision and points expressed in the Vice Chancellor’s Nov. 9 clarification letter, we are pleased it was confirmed that Apollo remains required to use its best efforts to reach an agreement with the United Steelworkers (USW). Cooper will continue to work toward closing the transaction that both parties agreed to on June 12, 2013.

“Cooper entered into the agreement with Apollo from a position of strength. Our company generated record sales and earnings in 2012 and continued to perform well with record earnings in Q1 and operating profit that was up in the first six months of 2013 compared to the prior year. Our joint venture in China was performing well with no labor or other unrest. We were not looking to be acquired, but our operating performance and growth-oriented strategic plan for the future attracted Apollo to Cooper.

“There is one point on which all parties agree – it was the merger agreement itself that caused the issue with our Cooper Chengshan Tire joint venture in China. Absent the agreement, CCT would have continued in full operation, performing well and making an important contribution to Cooper’s results…Overall, Cooper believes it has met its conditions for closing and we believe that the best way forward starts with Apollo advancing the agreement with the USW that is currently on the table.”

Meanwhile, Cooper’s SEC filing states that “following the announcement of the merger, the production employees at the company’s joint venture, Cooper Chengshan (Shandong) Tire Company Ltd., in Rongcheng, China went on strike, demanding termination of the merger. On Aug. 17, those employees returned to work on a limited basis to manufacture only non-Cooper branded products, but have taken other disruptive actions, including denying access to certain representatives of the company and withholding certain business and financial information.”

Cooper reported that as of Nov. 12, it “has not been able to obtain this business and financial information from the joint-venture in a sufficient manner to complete the Form 10-Q for the quarter ended Sept. 30, 2013.” Therefore, the company is “currently evaluating its options for resolving this matter” and says that until it obtains satisfactory information from the joint-venture, it will not be able to file the Form 10-Q. Cooper says it “expects to file the Form 10-Q as soon as practicable after the information is obtained,” however no likely date for this was given.

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