Reuters – Judge May Block TCW Sale to Carlyle

A federal judge in Los Angeles has issued a tentative ruling that could block a sale of asset manager TCW Group to private equity firm The Carlyle Group. If TCW is not successful in convincing the judge otherwise, the ruling may become final, Reuters wrote. The tentative ruling stems from a lawsuit filed in August by EIG Global Energy Partners LLC to block the sale of TCW to Carlyle. Earlier in August, Paris-based Societe Generale agreed to sell its stake in TCW to Carlyle and TCW management and employees.

(Reuters) – A federal judge in Los Angeles has issued a tentative ruling that could block a sale of asset manager TCW Group to private equity firm The Carlyle Group LP (CG.O).

If TCW is not successful in convincing the judge otherwise, the ruling may become final.

The tentative ruling stems from a lawsuit filed in August by EIG Global Energy Partners LLC to block the sale of TCW to Carlyle.

Earlier in August, Paris-based Societe Generale (SOGN.PA) agreed to sell its stake in TCW to Carlyle and TCW management and employees.

In its lawsuit, EIG, which was spun off by TCW in early 2011, contends the deal with Carlyle, which is expected to close in the first quarter of 2013, violates certain contractual rights granted to EIG as part of its separation from TCW.

The dispute involves a joint venture between EIG and Los-Angeles based TCW that was put in place at the time of the spin-off. Carlyle has energy funds that compete directly with EIG’s funds. According to the lawsuit, EIG’s contract with TCW includes the right to approve any change of control affecting the joint venture.

Carlyle’s energy funds had $16 billion of assets under management while EIG had $10.6 billion of assets under management as of the end of June.

On Monday, Judge Christina Snyder of the U.S. District Court for the Central District of California shared a tentative ruling in favor of EIG’s case, but TCW has the opportunity to respond.

On Tuesday, TCW will submit additional evidence to the court, wrote Thomas Jerome Nolan, an attorney with Skadden Arps Slate Meagher and Flom LLP, which is representing TCW, in an e-mail to Reuters Tuesday morning. EIG will respond on Wednesday.

“We are very pleased by the tentative ruling and look forward to it becoming finalized,” an EIG spokeswoman said. “We will have more to say once that has happened.”

In his e-mail, Nolan wrote that if the judge does grant the injunction to EIG, she would consider narrowing its scope.

The judge is expected to issue a final ruling on the injunction within a few days of the submission, said three sources familiar with the situation.

“We look forward to a prompt resolution of these narrow issues involving EIG through arbitration, and we remain fully committed to moving forward with the Carlyle transaction in a timely fashion,” TCW spokesman Peter Viles said.

(Reporting by Jessica Toonkel, additional reporting by Suzanne Barlyn, both in New York; Editing by Jennifer Merritt and Maureen Bavdek)

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