Striking back against its antagonistic merger partner, Dallas-based Energy Transfer Equity, L.P. announced on Thursday that it recently filed its affirmative defenses coupled with a counterclaim in the Delaware Chancery Court lawsuit originally brought by The Williams Companies, Inc. on May 13.
In the Delaware action, ETE also seeks a declaratory judgment allowing the company to immediately terminate the merger agreement without penalty in the event that its tax law firm, Latham & Watkins LLP, cannot deliver the critical tax opinion prior to the merger deadline of June 28.
ETE has been advised by the law firm that it is unable to deliver the opinion letter prior to next month’s deadline, resulting in “a substantial risk that the closing condition relating to this tax opinion will not be met or waived,” according to the press release.
The Delaware counterclaim alleges the Williams board breached the merger agreement by modifying its merger approval and recommendation; refusing to jointly cooperate with ETE’s attempts to finance the merger; and violating a mandatory forum provision in the merger agreement when Williams personally sued ETE founder Kelcy Warren in Dallas County, Texas.
An expedited trial is scheduled for June 20-21 in Delaware to resolve any outstanding issues prior to the merger deadline.
ETE and Williams executed the merger agreement on September 28. The energy sector has since suffered an economic downturn that would substantially reduce the financial impact and cost savings associated with the merger. The merger partners have been at odds over a variety of issues.
Tulsa-based Williams would be on the hook for a $1.48 billion termination fee if ETE receives a court judgment allowing termination of the merger agreement due to adverse actions caused by the Williams’ board.
In other news, ETE also announced that the lawsuit filed by Williams on March 9 in Dallas, Texas against CEO Kelcy Warren was dismissed on May 24. The Williams board filed the suit challenging a private stock offering that contained allegations of tortious or wrongful interference with the merger agreement.