Jersey Unreported Judgments

2002/243

ROYAL COURT

(Samedi Division)

 

20^th December 2002 

 

 

 

 

 

 

 

Application by the Defendant to lift Injunctions and/or replace with undertakings, given by the Defendant and Intervenors.

 

 

Advocate F.B. Robertson, Advocate M.P.G. Lewis and

Advocate M. St.J. O'Connell for the first Plaintiff.

Advocate M.J. Thompson, Advocate T.J. Le Cocq and

Advocate M.S.DO. Yates for the Defendant and for the Intervenors.

The Parties Cited did not appear and were not represented.

 

 

judgment

the deputy bailiff:

1.        This is an application by JP Morgan Chase Bank, Lehman Commercial Paper Inc, Dr Dietrich Wolf, Dr Rudolf Hanisch, Dr Thomas Fischer, Klaus DiederichsDiedrichs and Thomas Bernard for leave to intervene in the current proceedings.  It is also an application by the defendant and the intervenors that I have just mentioned to vary certain injunctions which were granted ex parte.

2.        We begin by summarising the background to this application, although I should add that the application for leave to intervene is not opposed and we therefore grant it. 

3.        Speed Investments Ltd is a company incorporated in Jersey.  It owns 75% of SLEC Holdings Ltd - another Jersey Company.  The remaining 25% of SLEC is owned by Bambino Holdings Ltd, which represents unrelated 3^rd party interests.  SLEC owns directly, or indirectly 100% of various companies in the Formula 1 Group, which holds the television broadcasting rights to the Formula 1 motor racing series.  Speed is owned as to 22.3% by the plaintiff, whom we shall call EMTV, which is a German incorporated company whose business includes the distribution and marketing of television and other rights to sporting and other events.  The remaining 77.7% of Speed is owned by Formel Eins Beteiligungs GmbH - (GMBH - 'FEB'), a German owned company, which is a wholly owned subsidiary of Kirch Beteiligungs GmbHGMBH & co - 'Kirch'.

4.        When it made its investment in Speed in March 2001, FEB borrowed a sum of approximately US$1.57 billion from a number of banks, including the defendant, which is a bank incorporated in Germany.  As part of the arrangements FEB entered into an agreement to grant the defendant, as security trustee for the syndicate of lending banks,lenders a security interest in FEB's shares in Speed under the Security Interest (Jersey) Law (1983 ("the 1983 Law").

5.        As a further part of the arrangements EMTV also entered into a security agreement with the defendant, as security trustee, purporting to grant a security interest over its minority shareholding in Speed in support of FEB's indebtedness to the banks.  These two security agreements were in broadly similar form.  The share certificates were placed in the possession of the defendant and the security agreement conferred a power of attorney on the defendant to do all such acts and things as might be necessary to give full effect to the agreement and the security.  A similar security agreement was entered into by Speed, whereby Speed purported to grant a security interest in its 75% shareholding in SLEC in support of FEB's liability to the banks.

6.        The Kirch group has run into financial difficulties.  FEB was placed in provisional administration earlier this year.  As a result FEB has defaulted on its obligations to the banks.  The banks have therefore made  a demand on FEB and on EMTVEMTB, pursuant to its guarantee of FEB's obligations, such guarantee being limited to the value of EMTV's shares in Speed.  In particular, pursuant to its powerPower of attorneyAttorney in the security agreement, the defendant signed a written resolution on behalf of EMTV and FEB removing certain directors of Speed and appointing Dr Thomas Fischer and Dr Dietrich Wolf as directors of Speed.  We were told that the defendant subsequently also appointed Mr Diederichs and Mr Bernard as directors. 

7.        It is of note that under a shareholder's agreement entered into between EMTV and FEB in relation to their shareholdings in Speed, FEB was entitled to appoint four directors and EMTV one director.  In effect, therefore, the defendant has appointed four employees or representatives of the banks as directors in place of the previous four FEB nominated directors.  The EMTV director, Mr Klatten, remains in place.  The new Speed directors have purported to reconstruct the board of SLEC in like manner so that it is also now managed by a majority of appointees of the defendant.

8.        Negotiations have been taking place between the banks and EMTV following the default by FEB.  In the course of these negotiations EMTV was advised that it had grounds for contending that the security agreement, in respect of its shares in Speed, did not comply with the requirements of the Security Interests (Jersey) Law 1983 Law and was therefore invalid. 

9.        Accordingly, on the 27^th November 2002 EMTV issued an order of justice seeking a declaration that the security agreement was void and/, or not effective to create a valid security interest over its shares in Speed.  It also sought a declaration that as a result the purported power of attorney contained in the security agreement was also invalid as were the actions of the defendant in appointing its nominees to the board of directors of Speed pursuant to that power of attorney.

10.      On 9^th December, on an ex parte application, albeit on short notice to the defendant so that Advocate Thompson was heard briefly, I granted an injunction restraining the defendant from enforcing its purported security over EMTV's shares in Speed.  This arose out of concerns that the defendant was going to exercise the power of sale conferred on it under the security agreement and the 1983 Law security interest law by selling the shares in its capacity as the security trustee, to three banks, namely itself, Lehman Commercial Paper Inc and JP Morgan Chase Bank.  The injunctions which I granted are referred to as the first injunctions and are in the following terms:

"1. Injunction against the defendant:  It is hereby ordered that the defendant shall until further order be restrained, whether by itself or by its directors, officers, employees or agents or in any other way from taking any steps in relation to the purported enforcement of the security agreement, including, without prejudice to the generality of the foregoing taking any steps to exercise the power of sale under the law and or pursuant to clause 9 of the Security Agreement.

2. Injunctions against the parties cited:  Service of this amended order of justice upon the First Partyparties Cited shall operate as an immediate interim injunction, restraining it until further order (whether by itself or by its directors, officers, employees or agents or in any other way) from registering or otherwise giving effect to any dealings to any by the Defendant with the shares in the First Party Cited currently registered in the name of the Plaintiff."

  (The first party cited was a reference to Speed.) 

  I also ordered that the first injunction against the defendant could be replaced by an undertaking by the defendant in exactly similar terms provided that the defendant submitted irrevocably to the jurisdiction of this Court.  That subsequently occurred so that Injunction (1) has now been replaced by an undertaking.

11.      On 10^th December I was asked to grant further relief because at 11.17.pm., on 9^th December a notice convening a meeting of the board of directors of Speed had been sent to all the directors, including Mr Klatten.  The meeting was convened for the next day in the offices of the defendant in Germany at 2pm or 15 minutes after the end of the meeting of the directors of SLEC, who had a pre arranged board meeting for that day.

12.      The main business referred to in the notice was the transfer of FEB's shares in Speed into the names of the three banks referred to earlier.  The plaintiff attended upon me shortly before 1pm Jersey time i.e 2pm German time.  The plaintiff expressed concern that the effect of registering the banks as majority shareholder would be to circumvent the effect of the injunction granted the previous day because the appointment of the directors of Speed was under challenge; registration.  Registration of the shares would enable the banks to assert control of Speed at shareholder level which would, in turn, enable them to deal with the shares in SLEC.  All of this could prejudice EMTV in relation to its ability to participate in any upside in the value of its shares as a result of any ultimate realisation of Speed's investment through SLEC, in Formula 1.

13.      In the circumstances, I granted further ex parte relief in the following terms contained in paragraphs 2.2  and 2.3 of the order of justice, which are as follows:

2.2. Further, the First Partyparties Cited be restrained from permitting Dr Dietrich Wolf, Dr Thomas Fischer, Mr Klaus Diederichs, Mr Thomas Bernard or any other appointees of the Defendant, made pursuant to a security agreement to act as Directors or agents of the First Partyparties Cited for any purpose, including taking any steps to approve or register any share transfers in the First Party Cited or dispose of any assets of The First Party Cited (including its shareholding in the Second Party Cited, SLEC Holdings Ltd) save that this injunction shall not prevent any of the aforesaid persons from conducting any of the day to day business of the First Party Cited and that the First Party Cited, (whether by itself or by its directors, officers, employees or agents or in any other way) be restrained from registering or otherwise giving effect to any dealings in its shares or disposing of any of its assets (including its shareholding in the Second Party Cited).

2.3.  The Second Party Cited ( whether by itself or by its directors, officers, employees or agents or in any other way) be restrained from registering or otherwise giving effect to any dealings in its shares or disposing of any of its assets. 

These have been referred to as the second injunctions.

14.      The next day I was presented with a further application by the plaintiff.  In particular I was presented with a filefinal note, subsequently confirmed by affidavit, from Mr Ekard Martin of Freshfield Buckhaus Deringer, German lawyers to EMTV, who had attended the board meeting of Speed the previous day. 

15.      It is not necessary to recite it in detail.  Suffice, suffice to say that Mr Martin said that he had informed the meeting of the injunction which I had issued the day before.  This had initially been simply an oral description of what he had been told on the telephone, but subsequently he received and handed to the chairman Dr Fischer, albeit it towardsappears toward the end of the meeting, the text of the injunction which had by then been faxedforwarded to him by the plaintiff's Jersey advocates.Advocates.  It appeared that Dr Fischer had not read the injunction but had put to the meeting that the share transfer from FEB to the banks should be approved, subject to legality.  Dr Fischer explained that this proviso was designed to cope with the injunction.

16.      On the basis of the information supplied to me, I concluded that the further injunctions as applied for by EMTV should be granted.  These were in the following terms and are found at 2.4 and 2.5 of the re-amended order of justice:

"2.4. The Viscount do take, and have exclusive possession, custody and control of such affairs and property of the First Party Cited, as relate to shares issued by it and its own shareholding in the Second Party Cited, subject to third party rights, if any, to possession of share certificates issued by the Second Party Cited, including, for the avoidance of doubt, its own register of members and the Viscount shall have exclusive authority to give instructions on behalf of the First Party Cited in respect of all such matters.

2.5.  The Third Party Cited (whether by itself or by its directors, officers, employees or agents or in any other way) be restrained from acting on the instructions of any person other than the Viscount in respect of: (i)  any transfer of shares in the First Party Cited; (ii) the making of any entries in the register of members of the First Party Cited; (iii) the shares in the Second Party Cited held by the First Party Cited and (iv) ceding possession, custody or control of the register of members of the first party cited."

These have been referred to as the third injunctions.

17.      There the matter rests.  The defendant and the intervenors now apply to set aside those injunctions and we have received a considerable body of evidence by way of affidavit sworn on behalf of each party.  The defendant, supported by the other banks, submits strongly that the second and third injunctions go too far and will seriously inhibit the banksbanks' prospects of negotiating satisfactory arrangements in relation to Formula 1 and thereby obtaining repayment in full of their debt. 

18.      In summary, Mr Thompson's contentions on their behalf were as follows:

(i)        There is no challenge to the FEB security agreement by FEB or its liquidator.  There is without doubt a default.  The banks are therefore entitled to enforce that agreement as against FEB.  That includes exercising the power of sale conferred on the defendant as security trustee.  Indeed, that power of sale has already been exercised by the security trustee selling the share shares to itself and the other two banks, referred to above, for a total sum of US$777 million, which is their estimation of the current market value of the FEB shares in Speed.  The purchasers are therefore entitled to be registered as shareholders.  EMTV's only legitimate concern is to prevent any dealings with its shares in Speed, pending trial, not FEBFEB's shares.

(i)            He accepts that it is arguable that there may be technical defects in what has occurred, although, of course, it that is not admitted by the Banks.banks.  For example, it is said that the use of the EMTV power of attorney to join in the appointment of the new directors, and that the use of the same power of attorney to waive EMTV's pre-emption rights under the Articles of Association are capable of challenge.  It is further said that the failure of the purchasers to agree to be bound by the shareholder's agreement, which was to protect EMTV's position as a minority shareholder in Speed, is a breach of the Company's Speed's obligations.  

(ii)        As to the laterlatter point AdvocateMr Thompson said that the Banksbanks would be willing to agree to be bound in most respects pending the main action.  As to the other points, they were technical objections upon which the Court could not rule at this stage either.  Either way they conferred no right on EMTV to stop the transfer of the FEB shares.  EMTV was in no financial position to exercise its rights of pre-emption and the defendant and the Banksbanks, stepping into the stepsshoes of FEB, had the right to be registered as a shareholder.shareholders.

(iii)       It is vital to the Banks'banks' interests - and those of EMTV - that they become the registered shareholders of Speed.  It is in the public domain, he said, that these are important times for the Formula 1 Group.  There is at present a concorde agreement Concorde Agreement which comes to an end in 2007.  Negotiations are now beginning for the renewal agreement with the Federation Internationale des Automobile (FIA), the Formula 1 racing teams and the car manufacturers.  The teams are pressing for considerable changes which would include greater financial participation in the Formula 1 Group.  Some of the car manufacturers have threatened to withdraw from Formula 1 and set up a rival racing circuit.  The outcome of the negotiations will therefore be extremely significant for the value of Speed's shares in Formula 1 and therefore the recovery by the Banksbanks of their debt from FEB.

(iv)      In the absence of the Banksbanks there is no one to take the lead in respect of the majority of 75% interest, through SLEC, in the Formula 1 Group.  The Kirch Group is insolvent; EMTV is only a minority shareholder and is anyway not in a particularly strong financial position.  There is therefore a vacuum.  The other parties to the negotiations have made it clear that they are not going to progress matters until they are satisfied that the three Banksbanks really are in the driving seat and have a controlling interest in Formula 1 through their shareholding in Speed.  It is vital, therefore, says AdvocateMr Thompson that the shares be registered in their name, so that the negotiations, which are urgently required if the risk of any break-away is to be contained, make take place.  Although the Court has ordered a speedy trial of the main issue, - indeed it is to be heard on the 4th and 5th February, - matters cannot be delayed until then.

(v)       The defendant accepts that nothing must be done which might prejudice the value of EMTV's minority shareholding in case EMTV is successful in contending that the security interest is invalid, and it therefore remains as a minority shareholder.  The defendant has therefore offered undertakings.  It began by offering undertakings that it would not dispose of its shares in SLEC pending trial or further order of the court.Court.  During the course of the hearing the undertakings were added to; indeed there were some late additions in Advocate Thompson's reply, so that they are now in the following form, which, for the avoidance of doubt, we think we should set out.  The undertakings are in fact to be given by the defendant and all the Intervenors.

First,The original undertakings contained in the letter from Ogier and Le Masurier of the 12th December, in the following terms, the :

"(1)  The relevant parties each undertake not to agree to or otherwise procure the disposal by Speed Investments Limited of any shareholding that company holds in SLEC Holdings Limited pending resolution of the action by the Royal Court of Jersey between EMTV and by Bayerische Landesbank without further order of the Court save that each of the above reserves their rights to bring any application to the Royal Court to vary this undertaking"

The second undertaking in that letter is that:

"the same parties each undertake not to agree to or otherwise procure the registration or otherwise give effect to any dealings in the shares of SLEC Holdings Limited or to the disposal of any of the assets of SLEC Holdings Limited otherwise than in the ordinary course of business save again that each of them reserves their rights to bring any application to the Royal Court to vary this undertaking.  There is a further reservation which applies to all of the matters.." 

The further undertakings are as follows:

"(2) that save with respect to clause 6.2 of the Speed Shareholders Agreementt undertakings, to abide by all provisions of the Agreement which remain relevant to the relationship between EMTV and the majority shareholder,

(3) undertakings not to sell and/or to transfer or otherwise deal with the Speed Shares formally owedformerly owned by FEB. 

(4) Not to change the composition of the Board of Speed and/or to seek to ratify the appointments of Thomas Bernard, Thomas Fischer, Klaus Diederichs and Dr Dietrich Wolf as directors of Speed. 

(5)  Not to take any steps to remove Mr Bernard Claton (?sp)Werner Klatten as a director of Speed, SLEC or Formula I Holdings Limited. 

(6) Not to effect any changes in the Memorandum and Articles of Association of Speed. 

(7) Not to sell, pledge, transfer or in any other way encumber or alienate Speed ShareholdingSpeed's shareholding in SLEC. 

(8)  Not to act in conjunction with Bambino Holdings Limited in order to seek to effect any reorganisation or reconstruction of the Formula 1 Group of companies with the purpose of seeking to render the direct shareholding of EMTV in Speed and EMTV's indirect shareholding in SLEC of no or reduced value or having that effect. 

(9)  Not to take any steps to wind up Speed or, notwithstanding, the terms of the SLEC Shareholder's Agreement dated 12th May, 2000, to wind up SLEC (except in the case of insolvency in either case.). 

(10) Not to take any steps with a view to Speed issuing any further shares.  ."

As stated they are all the undertakings are subject to the qualification that the parties rely on the undertaking provided by EMTV in support of this its application for an injunction in the event that they suffer loss or damage as a result of the making of either the injunction or the undertakings and they also reserve the right to apply to the Court to require EMTV to fortify theirits undertaking in damages.

(vi)      The defendant strongly denies any intention to breach the second injunction at the Board Meeting of Speed held on 10th December.  It is said that there was confusion as to the terms of the injunction and as to the how the courtCourt could forbid the transfer of the FEB shares when there was no dispute over that security agreement.  The Board resolution as passed made it absolutely clear that the approval of the transfer of the FEB shares was conditional upon such transfer not being prohibited by the second injunction.  It now having been established that the second injunction did indeed prohibit such a transfer and, it had not gone ahead.  The banks were international financial institutions of the highest repute and would never knowingly breach an injunction.  Indeed they wishwished to offer appropriate undertakings instead of injunctions in the present case.

(vii)     As to the balance of convenience the defendant says that the banks would suffer far more un-compensatable damage than EMTV.  If the injunctions are maintained there is a real risk that they wouldwill not be able to realise the full value of the Formula 1 Group and recoup their loans of approximately $1.6 million.billion.  EMTV is not in a financial position to compensate fromfor its undertaking in damages to that extent.  On the other hand EMTV is unlikely to suffer loss.  The banks wish to get as much value as possible from Formula 1 which would benefit EMTV just as much as the Banks.banks.  In the unlikely event of the lifting of the injunctions causing EMTV loss it is said that that loss would not be as great as that of the Banks banks because EMTV only has a 22.3% interest; and in any event the banks would be in a position to pay damages.

(viii)    Finally Mr Thompson raised certain matters in his skeleton argument alleging a failure to make full and frank disclosure on the part of EMTV when seeking the various injunctions.  Suffice it to say that we do not think that there was any material failure in the present case.

19.      The Plaintiff's contentions can be summarised as follows, although.  Although a number of other contentions were originally made however, these gradually were addressed as the terms of the undertakings which the banks were willing to offer changed.  We will therefore only deal with the remaining points:

(i)        the defendantsdefendant's explanation as to the events of a the Board meeting of Speed on 10th December, was not satisfactory.  The text of the injunction was made available before the close of the meeting; the meeting should not have continued and even the conditional transfer was a technical breach of the injunction because it amounted to the taking of a step in relation to the matter.  The EMTV was therefore entitled to the injunctions in the present form in order to fully to protect itself in the light of what had occurred.

(ii)       EMTV accepted that the FEB security Agreement was not as yet under attack and that it could not act as agent for any liquidator of FEB.  The But the registration of the FEB shares would cause or could cause prejudice to EMTV.  Thus firstlyFirstly the four directors were appointed using in part the power of attorney under the EMTV security agreement that .  That was challenged if .  If EMTV was right, the appointment of the directors of Speed was invalid.  Secondly, the directors were acting in the interests of the banks rather than Speed,; thus they were willing to register the transfer of shares without the transferees signing a deed of adherence to the shareholder agreement between EMTV and FEB and Speed as required by that Agreement.agreement.  This would amount to a breach of contract on the part of Speed.  Similarly the Directors directors had not challenged the SLEC security agreement conferring a security interest over Speed's shares in SLEC, despite the fact that that agreement was in virtually identical form to the agreement in dispute in these proceedings.

(iii)      The reasons given by the Banks as to banks for the need to be registered shareholders in Speed was not made up.out.  It was said that the racing teams, the manufacturers and the others would not negotiate with them unless they were the registered shareholders in Speed.  That contention was shown to be wrong by the uncontested evidence that all parties were going to meet on the 11th December, but that this meeting had been called off by Mr Bernie EcclestonEcclestone for unconnected reasons.  The Banksbanks were not registered shareholders of Speed at that time; yet the other parties were apparently willing to meet them.

(iv)      The real reason that the Banks banks wished to become registered shareholders in Speed was to keep the up- side in the value of Formula 1.  They had made no secret of their intention to do this.  Thus they had fixed the market value of the FEB shares at $770,000,000. million.  If a successful outcome to the current Formula 1 issues was achieved the Banks banks would hope to realise a much greater market value.  They intended to keep the difference.  This could prejudice EMTV in the following way.  If, say, the true market value of the FEB shares is $1.6 billion then the banks have no claim against EMTV's shares in Speed as they will be repaid in full.  It is only because of the low assessed market value of the FEB shares in Speed that there was a claim or such a large claim against EMTV because FEB had not repaid the amount in full.

(v)       Advocate Robertson accepted that these matters could be dealt with by an action for damages if the banks Banks did not realise the true market value for the benefit of the debtor but it would be much more difficult to unravel if the shares had in the meantime been being registered in the names of the banks.Banks.  It would also be very difficult to calculate the loss because of the uncertainty of today's market value.

Decision.We come now to our decision.

1.            We can well understand why EMTV sought the second and third injunctions.  This was a fast moving situation with large sums of money at stake.  We think that it acted reasonably.  However, we do not believe that the defendant, or the directors, were in contempt of court.  We have seen the minutes of the meeting of Speed on the 10th December, which make it clear that any transfer is indeed conditional upon its not being prohibited by the injunction.  In retrospect it might have been preferable to take no further action once the exact terms of the injunction had been drawn to the Board's attention, but we are willing to accept that there may have been some uncertainty.

20.       We are willing to rely upon undertaking given by financial institutions of the standing of these banks Banks in the knowledge that any breach of the undertaking would attract exactly the same consequences as the breach of an injunction.

21.      In our judgment, we must return to first principles.  EMTV is challenging the security interest over its shares in Speed.  It is clearly entitled to the protection of those shares in the meantime.  On the face of it,  a transfer and registration of completely different shares formerly owned by FEB is not something which EMTV is entitled to prevent.  It is for FEB to challenge any such transfer.  On the face of it , therefore, one would not expect there to be grounds to prevent the transfer of shares other than those in dispute in the litigation in question.  However, we accept that, if it can be shown that EMTV will or may suffer prejudice in the ownership of its shares by reason of a transfer and registration of the FEB shares, then the Court may intervene to prohibit such a transfer particularly if such prejudice could not be remedied by an award in damages.  To that extent we reject Advocate Thompson's submission that EMTV simply lacks the locus standi to maintain the injunctions and fails on that score alone.

22.      So that brings us to the real issue.  Has EMTV shown that it may suffer such prejudice damage as a result of the registration of the FEB shares?  Had the banks Banks not been willing to give undertakings in their final form, we think that EMTV would have succeeded.  But it It seems to us that, in the light of the undertakings, EMTV is now fully protected to the extent that it is entitled to protection.  It is currently a minority shareholder with the protection, if the agreement in question remains binding, of a shareholders agreement with the majority shareholder.  That position will be maintained pending trial as a result of the undertakings.  Furthermore the underlying interest of Speed in Formula 1 cannot be disposed of, nor can the value of Speed's interest in SLEC be diluted.  As to the position of the directors in Speed that remains capable of challenge, as does the question of the shareholders agreement.

23.      In the meantime, though, thought by reason of the undertakings, the directors  the Directors cannot do anything to prejudice the value of EMTV's minority shareholding in Speed.  In short, given the production of the undertakings in their present form, EMTV has not made out a sufficient case for prohibiting the banksBank from doing something which, on the face of it, they are entitled to do. given the production of the undertakings in their present form.  We have not forgotten EMTV's argument that the transfer will assist the banks'Banks' alleged strategy to keep the up- side in the value of the Formula 1 Group.  But, in our judgment the registration in the share registry is not significant in this context.  The significant event is that the security trustee has sold the FEB shares for $770 million,,000,000 which has fixed what it alleges to be the market value.  The 1983Security Interest Jersey Law undoubtedly envisages that a sale must be at of market value and that the debtor is entitled to any surplus over the amount of the debt.  If the security trustee has sold the shares at less than market value, the liquidator of FEB may well have a claim in damages. 

24.      If such a sale has also caused loss to EMTV it may be advised to bring a claim for damages against the security trustee and the banks.  But the Banks.  The event that has crystallised such a claim is the sale of the shares at the FEB shares in Speed to the banks,Banks not the formality of registering in the share register of SpeedShare Register the consequences of that sale.  There is therefore no reason to prohibit the registration.s.  The mere registration will not affect the legal position of EMTV.  In any event damages would appear to be an adequate remedy and the banksBanks can be assumed to pay any award.

25.      It is for the person who seeks an injunction to justify its grant or continuation.  It follows that, strictly speaking, what we have said is sufficient to require the discharge of the injunctions and their replacement by the undertakings.  However it is right that we should say that we do recognise the importance of the forthcoming negotiations over Formula 1.  Whilst we think that, for the reasons given by Advocate Robertson, the significance of the banksBanks becoming the registered shareholders in Speed may not be quite as great as they submit, we .  We fully recognise the need for the banksBanks to be seen to be in charge so that all the other parties may know whom they are dealing with as majority shareholder of Speed and thereby indirectly Formula 1.

26.      We think therefore that the banks'Banks wish to be registered as shareholders of Speed is wholly understandable and should only be interfered with on strong grounds.  We repeat that we consider EMTV acted reasonably in obtaining the injunctions;, they also acted reasonably in resisting the application in the light of the undertakings originally offered.  It was only once the form of the undertakings was clarified this morningover night that it became increasingly difficult for EMTV to say that it would be materially prejudiced prejudice in its capacity as a minority shareholder simply by reason of the registration of the transfers of the shares, the sale of the FEB shares having taken place.

27.      We therefore discharge injunctions 2.1 to 2.5, inclusive, upon the undertakings given by the defendants and the Intervenors in the form lodged with the Greffe.  The injunction originally in paragraph 1 has been replaced by an undertaking in matching form and that undertaking remains in force.  We direct that a copy of the undertakings should, and in due course, the Act should be served on the company's secretaryCompany Secretary of both Speed and SLEC to that they are aware of the undertakings.  They would therefore be in contempt of court if they were to assist any other party to breach any of those undertakings.

1.            We should add, for the sake of completion, that we were this morning handed a copy of a letter of today's date from the administratoradministration of FEB to the defendant giving notice that he may wish to allege that the FEB security agreement is invalid for the same technical reasons relied upon by EMTV in relation to its security interest. 

28.      At the time of preparing this judgment we have had no way of knowing what if any action FEB may take in connection with any such claim, but, in our judgment, it is not a matter which enables us to act to protect EMTV's interestslegitimate interest, when we are satisfied that those interests are fully protected by the orders we are making and the undertakings we are accepting. 

(Discussion follows with Counsel.)

29.      In case FEB decides to ask for Injunctions, it seems to me that it would be better that whoever is dealing with it that they know the position in relation to EMTV.  But, as I indicated earlier I would very much hope that if FEB does bring proceedings it can be dealt with constructively by the bank, giving them appropriate undertakings so that the value of the assets will not be diminished and the shares will not be moved on elsewhere.

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