Platinum Equity loses court case(2)

A Delaware court has ordered the Beverly Hills private equity firm to pay $20.5 million for terminating its agreement to acquire Rohn Industries.

A private equity firm that terminated an agreement to acquire a company over asbestos concerns has been ordered by a Delaware court to pay the owners of the company $20.5 million (€14.9 million).
 
Platinum Equity, a Beverly Hills-based private equity firm, had agreed to acquire Rohn Industries for $13 million in November 2002, but pulled its bid a few weeks later over concerns of the company’s past work with asbestos.
 
The Superior Court for the State of Delaware had initially ruled in favor of Platinum Equity and PFrank LLC, a special purpose entity formed to acquire Rohn, but a judge later reversed the ruling.
 
Platinum Equity now has to pay the owners of Frankfort Tower Industries, formerly known as Rohn Industries, $14.6 million in damages. The court further ordered an additional payment of $5.9 million for prejudgement interest allowed by New York law on the damages award.
 
Rohn Industries, a Peoria, Illinois-based provider of infrastructure equipment to the telecommunications industry, had sued Platinum for breach of contract and breach of guaranty for termination of an asset purchase agreement. The company filed for bankruptcy protection in 2003 and later sold itself to Radian Communication Services Corp. for $7.9 million. Rohn’s debts were listed in a Chapter 11 bankruptcy filing as $14.6 million.
 
Duane Morris, Rohn Industries’ lawyers, argued that the company no longer had asbestos work, “they in fact were in the cell tower business.” In the original purchase agreement, Platinum had agreed to assume the liabilities of Rohn related to its environmental liabilities related to facilities in Peoria, among others.