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Osram Sylvania Products Inc. v. Tiberon Minerals Ltd

June 22, 2007

OSRAM SYLVANIA PRODUCTS INC., PLAINTIFF,
v.
TIBERON MINERALS LTD, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Before me is Plaintiff's Motion for Expedited Discovery. (Doc. 3.) Because the two agreements entered into between the parties require arbitration, the Court must stay proceedings, as is mandatory under the Federal Arbitration Act, 9 U.S.C. § 3. Thus, the Court cannot order the discovery relief Plaintiff requests.

FACTS

Plaintiff Osram Sylvania Products Inc. ("Sylvania") filed a Complaint in this Court on May 11, 2007. (Doc. 1.) Therein, Sylvania alleges that, on May 16, 2005, it entered into two (2) agreements*fn1 with Defendants Tiberon Minerals, Ltd. ("Tiberon") and Nui Phao Mining Joint Venture Company Limited ("Nui Phao")*fn2 concerning the supply of tungsten ore*fn3 from a mine that is being developed in northern Vietnam. (Doc. 1 ¶¶ 22, 29.) Tungsten ore is very difficult to acquire, and the mine is one of a very limited number of sources for tungsten ore. (Doc. 1 ¶¶ 15-16.)*fn4

Pursuant to the agreements, Sylvania has the specific and enforceable right to purchase up to one hundred percent (100%) of the tungsten ore produced by the mine during the ten (10) to fifteen (15) year term of the agreements. (Doc. 1 ¶ 31.) In order to assure Sylvania that it could rely on the mine to supply its tungsten ore needs, both agreements prohibit Nui Phao from selling any tungsten produced by the mine to any person or entity other than Sylvania is such a sale would impede Nui Phao's ability to sell and deliver the tungsten ore to Sylvania. (Doc. 1 ¶ 36.)*fn5 Sylvania agreed to make this long-term commitment to purchase tungsten ore from the mine once it was completed so that Nui Phao and Tiberon would be able to secure financing from institutional lenders. (Doc. 1 ¶ 32.) Sylvania, in reliance on the agreements, entered into an agreement with Sandvik AB and its affiliates to supply them with tungsten oxide, which would be produced by Sylvania from tungsten ore supplied by the mine. (Pl.'s Br. In Supp. at 4, Doc. 4 at 4.)

By September 2006, Tiberon and Nui Phao had announced that they had secured three hundred nineteen million dollars ($319,000,000) in financing, surpassing the required financing amount of two hundred twenty nine million eight hundred thousand dollars ($229,800,000) as defined by the agreements, as well as the latest capital cost estimate of three hundred two million dollars ($302,000,000). (Doc. 1 ¶¶ 39-54.)

In October 2006, Sylvania learned that Dragon Capital Management Limited ("Dragon") had made overtures towards Tiberon and had even entered into discussions with it regarding a possible acquisition. (Doc. 1 ¶¶ 55-59.) Tiberon also received acquisition bids from other companies. (Id.)*fn6

On December 19, 2006, Tiberon announced that it had signed a pre-acquisition agreement with Dragon and three (3) investment funds managed by Dragon: Vietnam Enterprise Investments Limited, Vietnam Growth Fund Limited, and Vietnam Dragon Fund Limited (the " VEIL Funds"). (Doc. 1 ¶ 61.) Pursuant to the pre-acquisition agreement, the VEIL Funds offered to acquire all of the issued and outstanding shares of Tiberon for cash. (Id.) Sylvania alleges that the pre-acquisition agreement between Dragon and Tiberon included a provision prohibiting Nui Phao and Tiberon from incurring any debt or issuing any equity securities without Dragon's consent, until Dragon appointed its own persons to the Tiberon board of directors after the completion of the acquisition. (Doc. 1 ¶ 62.)*fn7

Nui Phao and Tiberon failed to close on the bank financing.

On February 12, 2007, Dragon announced that the VEIL Funds' offer, presented through TML Acquisition Ltd. ("TML"),*fn8 had been accepted by the owners of ninety-three percent (93%) of the outstanding Tiberon common shares. (Doc. 1 ¶ 66.)

On April 25, 2007, Nui Phao provided letters to Sylvania purporting to give formal notice of termination of the agreements on the basis that the required financing had not been obtained. (Doc. 1 ¶ 74.)

Sylvania seeks a declaratory judgment that the required financing amount as defined by the agreements was obtained by Nui Phao and Tiberon, and, therefore, they did not have the right to terminate the tungsten supply agreements on that basis. (Doc. 1 ¶¶ 86-94.) Sylvania also seeks specific performance of the agreements (Doc. 1 ¶¶ 95-102), as well as preliminary and permanent injunctive relief to enjoin the sale or attempted sale of tungsten ore to third parties and to preserve the assets, books and records of Tiberon and Nui Phao. (Doc. 1 ¶¶ 103-107.) Sylvania also set forth a cause of action against Dragon for tortious interference of contract. (Doc. 1 ¶¶ 108-114.)

Sylvania requests that it be permitted to conduct limited and expedited discovery for the purpose of determining the status of the mine's development and financing, as well as whether Nui Phao and Tiberon have made any sales, or entered into negotiations regarding sales, of tungsten ore which was extracted from the mine. (Doc. 3.) Sylvania alleges that it will be significantly and ...


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