Paullee
5 years ago
Chancery Retains Part Of Boardwalk Pipeline Class Suit
By Rose Krebs
Law360 (October 7, 2019, 8:49 PM EDT) -- A Delaware vice chancellor on Monday refused to toss three of six counts in a proposed class challenge to Boardwalk Pipeline LP's $1.5 billion public unit buyout in 2018, ruling the class has shown it is “reasonably conceivable” the deal was unfair to minority unitholders.
In a 62-page memorandum opinion, Vice Chancellor J. Travis Laster dismissed breach of fiduciary duty claims and a count he deemed too similar to others, but kept alive contract-based claims involving breaches of a partnership agreement.
The fiduciary duty claims “are readily swept away because the partnership agreement eliminated all fiduciary duties,” the decision said.
However, claims dealing with whether Boardwalk Pipeline’s general partner, Boardwalk GP LP, breached certain provisions of the agreement can proceed because there is ambiguity in contractual language as it relates to disclosures made leading up to the buyout.
“At the pleading stage, it is reasonably conceivable that it was not ‘fair and reasonable’ to the partnership for the general partner to cause the partnership to make the potential-exercise disclosure,” the decision said.
The suit was filed in February after Vice Chancellor Laster months earlier rejected a class settlement reached between Boardwalk and two shareholders who previously filed suit, ruling that public investors got too little from the proposed deal. The then-class attorneys went for the settlement without fully investigating the harm or damages, the vice chancellor said.
In the subsequent suit, hedge fund Bandera Master Fund LP and affiliated funds asserted various claims against Boardwalk and argued that the $12.06 per common unit — for a total of about $1.5 billion — paid by the general partner to buy the outstanding units was far less than fair value.
"As a result of defendants' contractual breaches and deliberate, disloyal actions, plaintiffs and the class have been deprived of their significant investment in Boardwalk for an artificially low purchase price that defendants themselves engineered," the suit asserted.
Bandera contends public disclosures leading up to the buyout were purposely intended to drive down the price of units before they were purchased by Boardwalk's controlling general partner under a provision set forth in a master limited partnership agreement.
During oral arguments in July, Bandera argued the proposed class action, which seeks damages on behalf of minority unitholders who contend they were shortchanged, should survive the motion to dismiss Boardwalk filed.
In his decision, Vice Chancellor Laster agreed certain claims should proceed against the general partner and related entities that control the general partner.
Those related entities include Loews Corporation, Boardwalk GP LLC [GPGP] and Boardwalk Pipelines Holding Corp., with Loews in control of the general partner and the partnership, according to the suit.
“Because it is reasonably conceivable that GPGP, Holdings, and Loews used their controlover the general partner to cause it to breach the partnership agreement, and that they did so without justification, the complaint has stated a claim for tortious interference with contract,” the decision said.
In April, Loews disclosed that a Federal Energy Regulatory Commission announcement limiting pipeline owners' ability to recover tax expenses via adjustments in customer cost-of-service rates could trigger a general partner right to call in, or purchase, all outstanding public units.
In its suit, Bandera takes issue with what it contends were failures by the general partner in making certain disclosures and to comply with certain requirements of the call in right.
“Here, because of the fact-intensive nature of this inquiry, it is not possible to determine at the pleading stage whether GPGP, Holdings, and Loews acted with justification when they caused the general partner (through the partnership) to make the potential-exercise disclosure and subsequently exercise the call right,” the opinion said. “Based on the facts alleged in the complaint, however, it is reasonably conceivable that GPGP, Holdings, and Loews interfered with the partnership agreement maliciously or in bad faith by causing the partnership to make the potential-exercise disclosure to drive down the price of the common units and by causing the general partner to exercise the call right opportunistically.”
Boardwalk has disagreed with any assertion that disclosures or any comments made that the units may be called in were "suspicious" or that they were made in breach of the partnership agreement. The call-in of public units was handled properly and Bandera has failed to prove its assertion that there was any contractual or fiduciary duty breaches associated with the transaction, the company has argued.
Counsel for the parties did not immediately respond to a request for comment on Monday.
Bandera and its affiliated funds are represented by A. Thompson Bayliss and J. Peter Shindel of Abrams & Bayliss LLP.
Boardwalk and its affiliates and Loews Corp. are represented by Srinivas M. Raju, Blake Rohrbacher and Matthew D. Perri of Richards Layton & Finger PA, Lawrence Portnoy, Charles S. Duggan and Gina Cora of Davis Polk & Wardwell LLP, Rolin P. Bissell of Young Conaway Stargatt & Taylor LLP, and Stephen P. Lamb and Andrew G. Gordon of Paul Weiss Rifkind Wharton & Garrison LLP.
The case is Bandera Master Fund LP et al. v. Boardwalk Pipeline Partners LP et al., case number 2018-0372, in the Court of Chancery of the State of Delaware.
Paullee
5 years ago
Boardwalk Pipeline Buyout Suit Should Stand, Chancery Told
By Rose Krebs
Law360, Wilmington (July 10, 2019, 8:28 PM EDT) -- There is enough information to "reasonably" infer that Boardwalk Pipeline Partners LP's $1.5 billion public-unit buyout last year by its general partner was unfair to minority unitholders, and a suit challenging the transaction should proceed, a Delaware vice chancellor was told Wednesday.
During a hearing in Wilmington, hedge fund Bandera Master Fund LP and affiliated funds told Vice Chancellor J. Travis Laster that a proposed class action seeking damages on behalf of minority unitholders they contend were shortchanged per the transaction should survive a motion to dismiss filed by Boardwalk.
Bandera contends that public disclosures leading up to the buyout were purposely intended to drive down the price of units before they were purchased by Boardwalk's controlling general partner under a provision set forth in a master limited partnership agreement.
Last April, Loews Corp., which has a controlling stake in Boardwalk's general partner, disclosed that a Federal Energy Regulatory Commission announcement limiting pipeline owners' ability to recover tax expenses via adjustments in customer cost-of-service rates could trigger a general partner right to call in, or purchase, all outstanding public units.
Bandera's attorney, A. Thompson Bayliss of Abrams & Bayliss LLP, told the vice chancellor a series of sometimes "strange" disclosures were made last year leading up to exercise of the call right. A "deliberate" effort was made to drive down the stock price for Loews' benefit and to the detriment of minority unitholders, Bandera contends.
"The purpose of defendants' disclosures was clear: by threatening to exercise the option in the near term and at some uncertain price, the general partner and its controllers and affiliates sent Boardwalk's market price into immediate freefall," Bandera claimed in its complaint. "This sharp drop in Boardwalk's market price uniquely benefitted defendants at the expense of Boardwalk's minority unitholders."
Boardwalk's attorney, Lawrence Portnoy of Davis Polk & Wardwell LLP, disagreed with any assertion that disclosures or any comments made that the units may be called in were "suspicious" or that they were made in breach of the partnership agreement.
The call-in of public units was handled properly and Bandera has failed to prove its assertion that there was any contractual or fiduciary duty breaches associated with the transaction, Portnoy countered.
"All of these claims fail as a matter of law," Portnoy argued.
In September, Vice Chancellor Laster rejected a class settlement reached between Boardwalk and two shareholders who previously filed suit, ruling that public investors got too little from the proposed deal. The then-class attorneys went for the settlement without fully investigating the harm or damages, the vice chancellor said.
A substitute complaint was filed in February with Bandera asserting various claims against Boardwalk and arguing that the $12.06 per common unit — for a total of roughly $1.5 billion — paid by the general partner to buy the outstanding units was far less than fair value.
"As a result of defendants' contractual breaches and deliberate, disloyal actions, plaintiffs and the class have been deprived of their significant investment in Boardwalk for an artificially low purchase price that defendants themselves engineered," the suit asserted.
Vice Chancellor Laster said he would take the matter under advisement and render a decision on the motion to dismiss at a later date.
Bandera and its affiliated funds are represented by A. Thompson Bayliss, J. Peter Shindel and Daniel G. Paterno of Abrams & Bayliss LLP.
Boardwalk and its affiliates and Loews Corp. are represented by Srinivas M. Raju, Blake Rohrbacher and Matthew D. Perri of Richards Layton & Finger PA, Lawrence Portnoy, Charles S. Duggan and Gina Cora of Davis Polk & Wardwell LLP, Rolin P. Bissell of Young Conaway Stargatt & Taylor LLP, and Stephen P. Lamb, Andrew G. Gordon and Daniel A. Mason of Paul Weiss Rifkind Wharton & Garrison LLP.
The case is Bandera Master Fund LP et al. v. Boardwalk Pipeline Partners LP et al., case number 2018-0372, in the Court of Chancery of the State of Delaware.
--Additional reporting by Vince Sullivan and Jeff Montgomery. Editing by Jack Karp.
liggity
10 years ago
Huge spike in volume post selloff. Read this written by richard ney.
Ney quotes about Market Makers to give you peace of mind.
She is going up eventually. Specialist = MM
"SPECIALIST STRATEGY (MMs)
The specialist should be thought of as a merchant with some rather unique inventory problems and opportunities. His goal, always, is to buy at wholesale prices and to sell at retail. This applies to his actions in the course of trading day as well as a year of trading.
At the bottom of a slide the specialist will buy heavily for his trading, investment, and omnibus accounts. His goal then becomes to raise the price of his stock with his wholesale inventory intact. In practice, though, he may have to sell shares to meet public demand. This will cause him, then, to lower the price to re-accumulate his inventory before he can proceed to higher levels.
A rally begins while the price of the average stock is still falling. "Major rallies begin and end with the unexpected," (3Ney, 184).
To stimulate public demand for his stock, near the high the specialist will raise the angle of the rising prices dramatically for the stock. True to one of Ney's axioms that prices beget volume, the public will rush into the market place at the rally high. The specialist can now sell his accumulated inventory to fill the increased demand. Heavy Dow 30 volume at the high is evidence of heavy short sales by the specialists (3Ney, 113).
When the specialist has sold all his inventory, and has sold short, he will then begin a downward slide of prices so necessary to his plans. Slides are a mirror of rallies. Near the bottom, the specialist will increase the angle of price decline, alarming investors, scaring them into selling their shares to the specialist who needs them to cover his short sales, and to build a new inventory at wholesale. The media will remain bullish, or cautiously optimistic throughout a slide, until the last two weeks, when they will turn suddenly bearish (3Ney, 158)."
They are also actively making agreements with land owners to build another pipeline in kentucky. This company isnt going anywhere but up from here.
liggity
10 years ago
Here is another possibility.
They start bringing price up these next couple weeks, then release some earnings numbers that are made to seem mediocre. They will then drop price from where it is, say 15-17, back down to these current levels. This would be an effective way of shaking out more shares and taking some profits on the way back up, a very brief drop to aid in wholesale accumulation. If that seems possible come earnings time, just don't set a stop loss, you have to roll with the decision IMO. Too often they love to trigger stop losses on earnings day just to then bring the price right back up. Just don't be taken by any tricks one way or another. Ill be around for the ride and let you know if I bail at some point.
liggity
10 years ago
I guess it depends on how quickly you need some profit. I have conviction in the fact that BWP is going up eventually, proof is in the accumulation at these levels. Also its reassuring to know that if big money and or MM's are accumulating at these levels, it isn't likely to go below these levels as they are in the business of making money, not losing it. Volume tells the story here, check a daily chart and compare volume before and after the big drop from 20+. What I don't know is how long they will stay at these levels before moving price up. Cant be too long though OS is 240mil, and this stock has: let me copy paste here
Institutional Stock Ownership 64.3%
Institutional Mutual Fund Ownership 14.5%
Mutual Fund Ownership 0.4%
Insider Ownership 51.7%
Other 0%
Total Outstanding Shares: 243,223,801
liggity
10 years ago
Yea its tough to watch it on days like these past couple, but they are still accumulating. Yesterday and today's volume was really pretty small, and you were a witness to the fact that even though there was a ton of buying yesterday, there was a larger drop in price than there should have been considering the volume - an anomaly. Cramer took a shot at this stock recently, they are really trying to shake people off the boat if they can, which IMO is a good sign., I feel like earnings could be something to look forward to.
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