HFTP Investment L.L.C., Gaia Offshore Master Fund, Ltd., and Caerus Fund Ltd. v. Grupo TMM, S.A.

The Situation

Grupo TMM, S.A. (“TMM”), a Mexican integrated logistics and transportation company, was sued by plaintiffs holding warrants with a reset feature (the “note-linked securities” or “NLS”) exercisable for TMM’s American Depositary Shares. After a series of public announcements by TMM constituting a “Major Transaction” under the terms of the NLS, the company failed to honor its resulting obligation to reset the exercise price of the NLS and as well as the number of shares for which the NLS could be exercised.

NERA's Role

NERA was asked by counsel for the plaintiffs to determine the extent of monetary damages sustained by the plaintiffs as a result of TMM’s failure to reset the NLS. NERA Senior Vice President Dr. Chudozie Okongwu set forth calculations using valuations, at the dates of interest, of both the original NLS and the reset NLS. He employed two alternative valuation methodologies.

The Result

In March 2006, the Supreme Court of the State of New York, County of New York, found that plaintiffs had established that an award of damages was required and had calculated the amount of their damages to a reasonable degree of certainty. The Court stated that Dr. Okongwu’s testimony at trial was “highly credible” and adopted NERA's calculated damages amounts for the purposes of the damages award.