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American Tower Sued Over Indian Tower Purchase
Horse-Shoe Capital, a fund based out of Mauritius, has filed a US$100 million breach-of-contract lawsuit against American Tower, an owner and operator of wireless and broadcast communication towers. The complaint details American Tower's alleged willful breach of the purchase agreement concerning the acquisition of XCEL Telecom, an Indian telecommunications infrastructure firm.
In March 2009, Horse-Shoe Capital sold XCEL Telecom and its more than 1,700 wireless communications towers in India to American Tower. The purchase agreement required a number of post-closing adjustments and created escrows to protect both parties. These adjustments related to final accounting due diligence and a potential tax liability that concerned American Tower.
Although the transaction closed more than a year ago, and Horse-Shoe Capital claims that all the conditions related to the post-closing adjustments have been met and the tax issues has been obviated, American Tower has refused to release the escrows and has avoided paying Horse-Shoe Capital the full price due under the acquisition agreement. The escrows are material to the size of the deal, representing roughly 17% of the deal value.
Horse-Shoe Capital commented that the lawsuit is the culmination of a pattern of bad faith behavior by American Tower, which has systematically evaded its post-closing financial obligations despite the fact that XCEL's assets are performing extremely well and all other requirements have been addressed.
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