By Joseph Ax
Nov 30 A federal judge in Los Angeles issued a
limited preliminary injunction on Friday that allows the sale of
Los Angeles-based asset manager TCW Group Inc to private equity
firm Carlyle Group to proceed.
The ruling by U.S. District Court Judge Christina Snyder,
related to a claim by a former unit of TCW, EIG Global Energy
Partners, that it has the right to approve the transaction, had
both sides claiming victory.
In her ruling, Snyder ordered that a fund that is jointly
operated by EIG and TCW be placed into a trust, pending the
outcome of the arbitration case over whether EIG has the right
to approve the sale.
EIG, which has energy funds that compete with Carlyle funds,
claims it has the contractual right to approve the transaction
as part of its 2011 separation from TCW. It had sought a broader
injunction blocking the sale of TCW by Societe Generale
to Carlyle altogether.
In her written opinion, Snyder, of the U.S. District Court
for the Central District of California, said EIG's
interpretation is "more convincing" than TCW's argument. "The
Court finds that plaintiff has a strong likelihood of success on
the merits," she wrote.
Snyder said the trust, which ensures that the joint fund
will remain frozen until the arbitration is complete, is enough
to protect EIG's interests.
"We are extremely pleased with the ruling," Blair Thomas,
chief executive of EIG, told Reuters. "The judge has accepted
our arguments and our case in its entirety. We look forward to
moving forward to arbitration where we fully expect the
arbitrator to reach the same conclusion."
A Carlyle spokesman said the Washington D.C.-based firm
remains committed to the deal with TCW.
"We are gratified by the court's ruling which allows the
Carlyle transaction to proceed on schedule," a TCW spokesman
told Reuters. "We look forward to closing the transaction on a
The dispute involves a joint venture between EIG and TCW
that was put in place at the time of the spin-off.
In August, Carlyle had announced it was buying TCW from
Societe Generale, clearing up months of uncertainty over TCW's
ownership. But weeks later, EIG sued TCW, claiming it had the
right to weigh in on any change of control affecting the joint
So far, TCW has weathered the uncertainty well. Investors
have poured more than $5.2 billion into the firm's $19 billion
TCW Funds this year as of Oct. 31, according to Morningstar Inc
. Overall, the $135 billion firm has raised $9.3 billion
in net mutual fund flows in 2012, according to TCW.