Financial law distinction exam model answer required for the following question, OSCOLA referencing:
China
Global Investment Corp (CGIC) is a major investor in international
bonds. It had purchased US $100 million convertible bonds issued some
three years ago by Ayuthya & Sukothai Co (ASC), a multinational
conglomerate incorporated in Taipanbodia and a second investment of €
150 million of fixed rate bonds issued by ASC. CGIC had purchased both
sets of bonds through a dealer in Hong Kong which had in turn purchased
these bonds from a dealer in Singapore.
The
convertibles had been issued subject to a trust deed while the € bonds
were subject to a Fiscal Agency Agreement both sets of documentation
were subject to English governing law and were in market standard form
and both sets of bonds were listed in London.
Some
months after the purchase by CGIC, the regulatory authorities in London
announced that they were proceeding with an investigation into the ASC
bond issues under UK financial services legislation because the
estimates contained in the Listing Particulars submitted to the London
Stock Exchange with regard to copper deposits on lands which ASC had
leased In Zimbabwe and Botswana were now known to be completely
inaccurate. Both sets of bonds were immediately downgraded to BB from AA
by Cretin & Miscalculus (CM), the international rating agency. In
consequence, the market price of both sets of bonds fell to 60% to 65%
of their face value in daily trading in global bond markets. CGIC had
purchased the US $ bonds at 110% of face value while it had purchased
the € bonds at 95% of face value.
CGIC
requires your advice on its legal position under the terms of the €
bonds and the US $ convertible bond instrument with regard to the above
developments assuming documentation which is subject to market standard
clauses and conditions for such bond issues and in particular, whether
CGIC may call default on the two sets of ASC bonds; secondly, what
claims it may have due for any financial loss suffered due to the
misstatements in the prospectuses.
ASC
has also been in negotiations with a South Korean multinational
Boolgogi and Soba (BS) with a view to setting up a global conglomerate
to be named Kabuki & Kaiseki Co (KKC) by the merger of ASC and BS.
It is proposed that subsequent to the merger all assets and liabilities
of ASC and BS would be transferred to KKC and both ASC and BS will be
liquidated. Advise CGIC on its position under the US $ convertible bonds in view of the proposed merger.
In
addition, CGIC has become aware that in preparation for the launch of
the $ convertibles ASC may have engaged dealers in Hong Kong and Tokyo
to purchase shares in ASC with a view to increasing the price ASC shares
prior to the launch of the convertible. The ASC share price had risen
significantly in the week prior to the launch of the convertible. CGIC
requires your advice on whether ASC might have been in breach of US or
EU or UK regulatory law due to these purchases of ASC shares as a
prelude to the sale of the $ convertible bonds.
Advise CGIC on its legal position with regard to the above matters.
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