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Jp Morgan V. Primacom Notes

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JP MORGAN V. PRIMACOM (2005) FACTS JP Morgan acts as Agent for a number of banks (the SSLs) under a Second Secured Facility Agreement dated 26 March 2002, which provided for a term loan facility in the amount of 375 million (the SSFA). PAG is the borrower under the SSFA and on-lent the sums advanced to it to PMG, which is the guarantor of the loan made by the SSLs. The SSFA is specifically governed by English law and contains an exclusive jurisdiction clause in favour of the courts of England and Wales. In addition the parties expressly agreed that England was the forum conveniens. Default by Primacom Group: On 30 June 2004 PAG failed to make an interest payment as required under the SSFA but because of an agreement between the SSLs and Primacom's senior lenders under the Senior Credit Facility, the SSLs were subject to a 60-day standstill period during which they were not to take action to enforce payment of interest due. Pre-emptive proceedings by Primacom in Germany: On 9 December 2004, without any prior notice, Primacom issued a press release stating that it had issued proceedings in Mainz, and on 22 December 2004 it issued a further press release stating that it had issued proceedings in Frankfurt. As a matter of English law it is clear that both these proceedings were commenced in breach of the exclusive jurisdiction clause and the evidence suggests that this was done with the primary intention of frustrating any possible attempt by JP Morgan and the SSLs to seek appropriate relief in the English courts in accordance with that jurisdiction clause. Attempts to sell off assets: By clause 20.2.5 of the SSFA, Primacom is prevented from selling certain assets without first obtaining the consent of an instructing group of the SSLs. Primacom Netherlands Holdings BV and NV Multikabel (collectively Multikabel) are together Primacom's most valuable asset and significant source of cash flow. From early September 2004 press reports and market rumours indicated that Primacom was intending to dispose of Multikabel without first obtaining the consent of an instructing group of SSLs. English proceedings by JP Morgan: As a result of concerns over any possible sale of Multikabel, before being served with any German proceedings, JP Morgan commenced proceedings in England on 23 December 2004, seeking an order preventing disposal without the contractual consent required ("the Injunction Proceedings"). In the next two weeks, Primacom's solicitors in London gave assurances that Primacom had no intention of disposing of Multikabel without the required consent and stated that there was nothing going on behind the scenes that should cause JP Morgan any concern. On 7 January, however JP Morgan received a letter from PAG questioning the need for the SSLs' consent to any sale of Multikabel. In consequence, on 10 January JP Morgan sought and

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