The plaintiff, a junior oil and gas exploration company, sued the defendant underwriter for breach of a 'bought deal' engagement letter.
The defendant failed to close the transaction, arguing the letter was merely an agreement to agree and relying on 'out clauses' due to a drop in oil prices.
The court found the engagement letter was a binding contract and that the defendant could not rely on the out clauses, as it had not negotiated an underwriting agreement and the drop in oil prices did not constitute a material adverse change or disaster.
The plaintiff was awarded over $16 million in damages, representing the difference between the contract price and the replacement financing price, plus interim loan costs.
