Wilmington, Del. -- The parent of U.S. student lender Sallie Mae has sued a group of firms that are trying to renegotiate their agreement to buy SLM Corp. for $25 billion.
The suit, filed Monday in Delaware Chancery Court, came the day before a self-imposed deadline by the buyers to reach a new agreement, The New York Times reported Tuesday. If a new agreement wasn't reached the buyers -- private equity firms J. C. Flowers & Company and Friedman Fleischer & Lowe and banks JPMorgan Chase and Bank of America -- were prepared to walk away from the deal.
At the heart of the bitter takeover is whether Sallie Mae is worse financially than when the deal was struck in April. The buyers and the company disagree on whether recent legislation reducing subsidies to student lenders adversely affected Sallie Mae’s earnings.
In its complaint, Sallie Mae said it disclosed in its 2007 annual report all potential legislation that could affect its finances.
“As a matter of logic and clear contractual language, legislation that is only marginally worse for Sallie Mae than the disclosed proposals” cannot be a material adverse effect, the company said in its complaint.
Submitted by Seth (not verified) on Thu, 2007-10-11 05:19. *
Both JPMorgan and BofA had close corporate ties with Sallie Mae http://www.newsvisual.com/newsvisual/2007/09/jp-morgan-and-s.html , which they most likely used to pressure the company to accept a lower price. Since Sallie Mae did not budge on the price, it seems logical that Sallie Mae will now attempt to use these ties to try and settle out of court, or perhaps vice-versa.
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Both JPMorgan and BofA had
Both JPMorgan and BofA had close corporate ties with Sallie Mae http://www.newsvisual.com/newsvisual/2007/09/jp-morgan-and-s.html , which they most likely used to pressure the company to accept a lower price. Since Sallie Mae did not budge on the price, it seems logical that Sallie Mae will now attempt to use these ties to try and settle out of court, or perhaps vice-versa.