Reuters – Warburg Pincus Sues Titan

U.S. private equity fund Warburg Pincus, a stakeholder of Titan Petrochemicals Group Ltd, has sued Titan and some of its executives in Hong Kong’s High Court for misrepresentation and breaches of contract, Reuters reported Friday. The suit alleges Hong Kong-listed Titan and its founder Tsoi Tin Chun and two unidentified executives secretly provided 1.48 billion yuan ($232.22 million) of unauthorised guarantees to subsidiaries, Warburg said in an emailed statement on Friday.

(Reuters) – U.S. private equity fund Warburg Pincus, a stakeholder of Titan Petrochemicals Group Ltd, has sued Titan and some of its executives in Hong Kong’s High Court for misrepresentation and breaches of contract.

 

The suit alleges Hong Kong-listed Titan and its founder Tsoi Tin Chun and two unidentified executives secretly provided 1.48 billion yuan ($232.22 million) of unauthorised guarantees to subsidiaries, Warburg said in an emailed statement on Friday.

 

The guarantees led to significant unspecified damages and potential liabilities, according to Warburg, which holds a stake of around 10 percent in Titan.

 

The New York-based private equity firm has ploughed more than $215 million into Titan since 2007, in an investment that has proved unprofitable. The Chinese company has suffered losses for five straight years after its debt-driven growth strategy unravelled during a downturn in the shipping industry.

 

“Titan Petrochemicals Group is aware of the writ, but the claims against it have not yet been particularised. Once full particulars are provided, the company will seek advice and respond accordingly,” the Chinese company said in an reply to an email seeking comment.

 

Tsoi, who stepped down as Titan’s chairman early this month, could not be immediately reached for comment.

 

Warburg’s High Court action in Hong Kong follows an offer from Chinese oil trader Guangdong Zhenrong Energy Co to buy Titan earlier in the week.

 

Warburg has not been contacted to discuss the Zhenrong offer, according to a source with direct knowledge of the matter, declining to be identified because the matter was confidential.

 

Warburg previously filed a separate petition to liquidate a subsidiary storage company of Titan, in which it claims a majority ownership, through a British Virgin Islands court.

 

The court on July 17 appointed KPMG partners Patrick Cowley, Edward Middleton and Russell Crumpler, and Stuart Mackellar of Zolfo Cooper as co-liquidators of the subsidiary Titan Group Investment, KPMG confirmed in an emailed statement.

 

Zhenrong’s investment is subject to an adjournment and eventual withdrawal of Warburg’s winding-up proceedings against Titan and the receipt of a waiver to exempt it from making a general offer for all of Titan, the Chinese company said previously.