While he does cite precedents, he is not (I think??) a lawyer. So it's hard to tell if he is spouting off an uneducated opinion, or instead is stating a consensus legal view.
His comments about limited damages completely surprised the inteviewer, and as a result did not get any detailed scrutiny.
I've read some articles that say the opposite, and also that say the case he cites does NOT lead to his conlcusion, so ..... I'm left with "this is an interesting topic, but we need real legal advice" to determine it's validity.
Logic says his view is wrong. That's persuasive to me. These agreements are written to prevent exactly what MXL did. I doubt MXL has just outsmarted SIMO because MXL has better lawyers. He seems to think MXL can just not follow the contract, and there is no meaningful penalty because SIMO the company remains SIMO the company, there's no real damage, just some legal expenses, so there's no penalty. Hard to believe. Why have a contract at all?
If the seller does not want to accept such a contract, then they should either not write No Third Party Beneficiaries, or they should specifically carve out that the shareholder expectation damages are an exception in cases of Willful and Material Breach.
I'm sure SIMO's lawyers (Latham and Watkins) are aware of this topic. They were the lawyers in the Conedison Case! I would imagine they wrote the contract to ensure shareholder damages are part of material breach damages, but lets see.
The No Third Party Beneficiaries clause is included (as I understand it) to prevent SIMO shareholders individually or in a class action from suing MXL for breach. Hard to believe SIMO the company would give up the same $$ value since it has been taken away the right to pursue remedy from the shareholders. It's just very hard to believe.....
As for the committed Wells Fargo financing, it ended with the deal cancellation.
My information indicates that MXL can raise $3 billion cash to buy SIMO, but the terms would be onerous, but it is feasible. So I differ with him on that opinion as well.
It's an interesting topic, though, and would explain why MXL isn't trading as if it may go bankrupt in a SIMO favorable ruling in Singapore arbitration.
I think damages will follow Cayman law, so it's not clear that the two cases he cites apply. I don't know if there is any Cayman case history of this sort, but surely some buyer has breached a purchase agreement in the Cayman Islands previously (??), and ... what happened then? Don't know, but I'm sure the lawyers are researching it now.
I also doubt Singapore arbitration takes years. Why? I think this case is not at all complicated. MXL is going to allege lots of nonsense, and lose. I doubt it takes a year.
If you believe the podcast speaker, and the damages are only $160m break up fee + lawyer's fees, it's obviously a quick and easy case.
If you don't believe the podcast view is correct, and it's $160m break up fee and legal fees AND damages, then the only compex part is assessing damages. Again, it's complicated (how much shareholder value was lost by not executing the contract?), but not time consuming.
I am curious how Singapore arbitration decides this question if it is not clear in Cayman's law? To what do they default to? |
