FSN gets €50m insurance pay-out, sues Procuritas

A consortium of 12 underwriters led by Liberty GTS announced yesterday that it had paid €50m to FSN under a warranty and indemnity liability insurance related to the losses incurred in connection with FSN's acquisition of Gram.

The payment was made to FSN Capital V, the €1bn buyout fund that provided equity for the original buyout. Danske Bank provided debt for the acquisition.

The claim filed by FSN said the seller had breached its duty of loyal disclosure and to provide information that is true and not misleading. It also claimed that the seller breached the requirement to provide accounting and bookkeeping material that is reasonably complete and required by law.

Said Thomas Broe-Andersen, partner at FSN: "Obviously we are pleased that the underwriters, after detailed investigation of our claim that we were given false and misleading information by the seller in our due diligence process, have acknowledged cover and paid the full insurance amount.

"This case goes far beyond mere compensation for damages. It is absolutely crucial and necessary for the proper functioning of the market that a buyer can rely on the information provided by a seller in a due diligence process. If a buyer cannot trust a seller to act in good faith and provide information that is true and not misleading, the market simply breaks down."

FSN stated that it will continue to pursue claims against the seller and former top management as the €50m insurance limit does not cover its full loss. Gram made a loss of DKK 183m and an EBITDA loss of DKK 90m in 2017, after reporting an operating profit of DKK 100m and the whole management team was subsequently fired, Unquote understands.

FSN has employed two law firms to handle the case: Gorrissen Federspiel and Lundsgaard & Partnere. It filed a case against Procuritas at the international court of arbitration in Denmark in September, which is ongoing, and is currently preparing a case against the management and board of the company, Unquote understands.

Procuritas partner Tomas Théren was listed as the contact person on the press release for the original sale of Gram. "Procuritas has not been involved in the discussions with the insurance company. Furthermore, we have not been asked any questions by, or in any way been involved in the process with, the insurance company," Théren told Unquote in a written statement.

"Hence, we cannot have a view on the agreement between FSN and the insurance company. However, we completely disagree with the allegations made by FSN. They are in our view completely groundless. We do not have any responsibility for any challenges that the present owner has with Gram," the statement continued.

FSN and Procuritas did not respond to requests for further comment from Unquote.

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• Topics
• GPs
• Buyouts
• Nordics
• Exits
• Denmark
• FSN Capital
• Procuritas
• Insurance