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Friday, December 12, 2008
Ind. Decisions - More on "Judge gives reprieve to Hoosier Energy"
Updating this ILB entry from Nov. 26th, yesterday federal Judge David Hamilton issued a 28-page opinion superseding "prior orders regarding injunction security, including the court’s order of November 26, 2008." Some quotes from the new opinion:
John Hancock has argued that the security posted to protect it from damage from an improvident injunction has not been sufficient. The state court that originally issued a temporary restraining order required Hoosier Energy to post a bond in the sum of $100,000. It appears that the state court relied on both the Ambac credit default swap and John Hancock’s second mortgage on the Merom facility to provide the bulk of the protection for John Hancock. On November 26th, after hearing a portion of the parties’ evidence on the injunction security issue, this court ordered Hoosier Energy to post a bond for $2,000,000, also relying primarily on the Ambac credit default swap itself and the second mortgage to protect John Hancock from the risks posed by the injunction, if it is ultimately determined to have been issued improvidently. The court heard additional evidence and argument on December 2nd, and the parties submitted additional briefs after that hearing. Based on all the evidence and arguments presented, the court takes the following actions:First, John Hancock is entitled to a total injunction security in the sum of $132 million, which is the $120 million termination payment plus about 10 percent. Hoosier Energy must be potentially liable to John Hancock in that sum worstcase scenario, John Hancock’s damages might be as high as $120 or $121 million, plus some additional costs, such as transaction costs.
Second, the more difficult issue is what form this security should take. With a more complete record than was available two weeks ago, the court finds that John Hancock is adequately protected by a total of four different forms of security, plus a further restriction on Hoosier Energy’s ability to take on additional debt while the preliminary injunction is in effect. The first form of security is the existing credit default swap arrangement itself, which currently provides security in the sum of $121 million. The second form is the $2 million cash bond posted by Hoosier Energy. The third form is a bond by Hoosier Energy undertaking to pay John Hancock up to an additional $130 million in the event that John Hancock is damaged by improper issuance of the preliminary injunction. The fourth form is John Hancock’s existing second mortgage on Hoosier Energy’s Merom facility.
Posted by Marcia Oddi on December 12, 2008 08:21 AM
Posted to Ind Fed D.Ct. Decisions