Boxclever fallout comes to court

Separately to a criminal prosecution of ex-West LB executive Jürgen Sengera, the collapse of Boxclever has resulted in various civil cases disputing information provided to French bank Natixis during the television rental business’ refinancing in 2002.

The first of multiple lawsuits relating to the collapse of UK television rental business Boxclever, when it was owned by UK buyout firm Terra Firma, began yesterday.

Jürgen Sengera

Jürgen Sengera, the former chief executive of German bank WestLB, faced criminal charges in Germany of “aggravated breach of fiduciary duty” for providing £1.35 billion ($2.65 billion; €1.8 billion) in loans to Boxclever, which subsequently led to £430 million of write-offs by the German bank, according to UK newspaper Financial Times.

Sengera denies any wrongdoing.

In the UK, French bank Natixis has filed cases against three companies that worked on the £748 million refinancing of Boxclever in 2002, West LB, Terra Firma and Canadian bank CIBC. This case opens on January 21. Boxclever defaulted on its loan payments in 2003.

West LB provided £860 million in loans to Boxclever in 2000. It then refinanced Boxclever alongside CIBC in 2002.

Natixis, then called CDC Ixis, bought £200 million of loans from CIBC. The French bank lost nearly half its investment. It subsequently sold the debt on to US hed

 (Natixis) learnt the transaction was in trouble in April 2003, only months after closing…
Sunil Gadhia, partner, Stephenson Harwood

ge fund Fortress Investment Group, which acquired Boxclever alongside Cerberus Capital Management for £200 million in 2005.

Sunil Gadhia, partner at Stephenson Harwood representing Ixis, said: “As soon as (Natixis) learnt the transaction was in trouble in April 2003, only months after closing, (Natixis) began to investigate what went wrong and why.”

Natixis alleges Terra Firma, CIBC and West LB were aware of a flaw in Boxclever’s financial projections but failed to warn investors. It is seeking around £135 million in damages including interest and legal costs from the various companies.

West LB has also filed a counter-suit against Terra Firma claiming the UK buyout firm knew about a flaw in the projections but it did not tell the German bank.

The company was formed by Terra Firma from various television rental companies Radio Rentals, Thorn and Granada in 2000.

Terra Firma, West LB and CIBC could not immediately be reached for comment.