The put option was written in London under the 1992 ISDA Master Agreement (‘master agreement’), a standard template for over-the-counter derivative transactions published by the International Swaps and Derivatives Association (ISDA).The agreement was ended automatically on 15 September 2008 when LB first filed for formal insolvency protection.Enasarco, under pressure from the Italian government and media, eventually found a replacement for the put option, which it purchased itself on 6 May 2009.The master agreement sets out that, when a transaction terminates early, the non-defaulting party must calculate the termination amounts to be paid.When they sign the deal, parties choose one of several possible methods of calculation provided for in the master agreement.In their agreement, LBF and ARIC selected the ‘loss’ method of calculation, which allows the non-defaulting party to calculate the termination payment by reference to its loss of bargain – i.e. the cost of replacing the terminated transaction.The master agreement provides that the non-defaulting party must calculate its loss “reasonably” and “in good faith” and that the calculation should be as of the early termination date, or as soon as reasonably practicable thereafter.ARIC calculated its loss to be approximately $61m, based on the price Enasarco had paid for the replacement put option.LBF disagreed with this calculation, contending instead that, had the calculation been performed correctly, it would have resulted in a payment of approximately $42m from ARIC to LBF.However, the judge found that ARIC’s loss had been calculated reasonably and as soon as practicable following the early termination date.He also made the following comments of particular interest to the wider market:Where an SPV is party to a derivative that is terminated under a master agreement as part of a structured product, its loss can be calculated by reference to the cost of a replacement transaction entered into by the investor. In addition, the terms of the replacement transaction do not necessarily have to be identical to those of the original.A calculation of loss made “as of” a date several months after the early termination date may still be “as soon as reasonably practicable” as stipulated by the master agreement. In this case, although LBF contended that ARIC (or Enasarco) could have obtained a quotation for a replacement transaction earlier than Enasarco actually did, the judge was satisfied that the turmoil in the markets after LB’s bankruptcy, and the difficulties with the transaction structure, meant that no such quotation could have been obtained before at least the end of October 2008, and probably later.Furthermore, had it been possible to obtain a quotation earlier in 2009 than 6 May, it would have made no difference to the price or the resulting loss calculation.Enasarco’s determination of the amount of loss was not “irrational”.The judge said the requirement for the non-defaulting party’s loss to be calculated “reasonably” does not mean that it has to arrive at the most reasonable result, only that it must not arrive at a figure that no reasonable party in the same circumstances could come to.The ruling has important implications for the wider derivatives market, according to Simon Fawell, partner at Sidley Austin, the lawyers who represented Enasarco.Fawell said: “The ruling is an important one for non-defaulting parties under the 1992 ISDA Master Agreement, as it clarifies how the English court will interpret the calculation of loss following early termination.“In particular, the finding on what is a reasonable determination of loss makes it much harder for those determinations to be challenged.”And he said the judge’s finding that ARIC was entitled to calculate its loss on the basis of a quotation obtained by Enasarco was a practical one for structured transactions.“The judge made clear it was unrealistic to expect Enasarco to leave it to an SPV to obtain a quotation for a replacement transaction and calculate the loss,” he said.“Enasarco was the party with an economic interest, and ARIC, as an SPV, had neither the staff nor the resources to undertake those tasks. Had the judge found differently, it would have made the use of SPVs in this type of structure much less attractive to investors.” Fondazione Enasarco, the Italian pension fund for sales representatives, has won a $61.5m (€55.3m) payout from Lehman Brothers SA (LB) for payments due to it following the terminaton of a put option when LB went bust in 2008.The case, heard in the English High Court, concerned a structured investment arranged by LB that provided Enasarco with exposure to hedge funds within its investment portfolio, now worth €6.9bn.The deal was structured through two special purpose vehicles (SPVs): Anthracite Rated Investments (Cayman) (ARIC) and Anthracite Balanced Company (Balco).Enasarco’s €780m hedge fund investment was protected by a put option purchased by ARIC from Lehman Brothers Finance (LBF), a company incorporated in Switzerland.
“I knew I had to keep my momentum up. I was a little hesitant about going to the top,” he said. “There was a lot of moisture on the bottom. I knew if I could just hit it right I could hold the bottom better. I knew where to enter and where to come off.” Braaksma passed veteran Bob Moore on the 18th of 25 laps, then led the defending track champion through lapped traffic and across the finish line. The win paid $1,500 and put Braaksma on the ballot for the upcoming Fast Shafts All-Star Invitational. The only caution of the contest came on lap seven; Moore took over second following the restart and caught Stephan two laps later. Chris Abelson, Stephan and Jason Brees completed the top five. The main event field was represented by drivers from six states and Monday marked the first opening event held outside Iowa in the 11-year history of the tour. Gates open at 5 p.m. Racing follows 7 p.m. hot laps. Also running are IMCA Sunoco Stock Cars, IMCA Sunoco Hobby Stocks, Karl Kustoms Northern SportMods and Mach-1 Sport Compacts. “I remember when I was younger watching the Dirt Knights and wondering what it would be like to race with them,” Braaksma said after loading up the car, trophy and check. “I definitely didn’t think I’d be where I am now.” Feature results – 1. Ethan Braaksma, Newton, Iowa; 2. Bob Moore, Sioux City, Iowa; 3. Chris Abelson, Sioux City, Iowa; 4. Ricky Stephan, South Sioux City, Neb.; 5. Jason Brees, Meriden, Iowa; 6. Troy Cordes, Dunkerton, Iowa; 7. Corey Dripps, Reinbeck, Iowa; 8. Al Hejna, Clear Lake, Iowa; 9. Matt Bonine, Onawa, Iowa; 10. Kollin Hibdon, Pahrump, Nev.; 11. Chad Ten Napel, Sioux City, Iowa; 12. Sean Barragan, Sergeant Bluff, Iowa; 13. Jay Noteboom, Hinton, Iowa; 14. Kyle Brown, Madrid, Iowa; 15. Jeff Berens, Dakota Dunes; 16. Jason Schneiders, North Sioux City; 17. Darin Roepke, LeMars, Iowa; 18. Dylan Thornton, Santa Maria, Calif.; 19. Devon Schlumbohm, Sioux Falls; 20. Chris Mills, Sioux City, Iowa; 21. Chris Clark, Jackson, Wy.; 22. David Brown, Kellogg, Iowa; 23. Shane DeMey, Denison, Iowa. Braaksma was the fourth different leader in the tour lidlifter. Troy Cordes led the first circuit before Ricky Stephan sped by. JEFFERSON, S.D. (July 20) – Ethan Braaksma grew up watching the IMCA Modified Dirt Knights and wondering what it would be like to race with them. On Monday night, the young Iowan became a first-time winner when the 2020 Speed Shift TV Dirt Knights Tour opened at Park Jefferson Speedway. Ethan Braaksma impressed in winning the Monday night Speed Shift TV Dirt Knights Tour opener for IMCA Modifieds at Park Jefferson Speedway. The checkers came in just his career fourth tour start. (Photo by Jim Steffens) Other winners at Park Jefferson were Mike Moore in the IMCA RaceSaver Sprint Cars, Justin Luinenburg in the IMCA Sunoco Stock Cars, Andy Hoffman in the IMCA Sunoco Hobby Stocks and Cody Thompson in the Karl Kustoms Northern SportMods. Braaksma had started fifth and was up to second before midway. He completed his own pass for the lead and pulled away from the pack the last eight times around the oval. Night two of the tour takes the Dirt Knights to Buena Vista Raceway in Alta, Iowa, for a $1,000 to win, Fast Shafts All-Star Invitational ballot qualifying event on Wednesday, July 22. That race program will be broadcast by Speed Shift TV. Braaksma had raced a Karl Kustoms Northern SportMod for four years before moving to the Modified last season. He made his first tour start at Park Jeff last July, breaking and pulling off the track after just a couple laps.
Rory McIlroy is recovering well from the ankle injury which has prevented him from defending his Open title this week, although no date has been set for his return. Press Association McIlroy ruptured an ankle ligament playing football with friends on July 4 and announced four days later he would not compete at St Andrews as he took a “long-term” view of the injury. Ryder Cup captain Darren Clarke suggested that meant McIlroy would not return until “early next year” as he accepted an award on his fellow Northern Irishman’s behalf at the Old Course on Tuesday. But it is understood Clarke’s comment was meant as a joke and a spokesman for McIlroy told Press Association Sport: “There was no basis for Darren’s comments. Rory’s rehabilitation is progressing well but his return date is not yet known.” McIlroy, who could be unable to defend the WGC-Bridgestone Invitational on August 6 and the US PGA Championship the following week at Whistling Straits, will be replaced as world number one if Masters and US Open champion Jordan Spieth succeeds him as Open champion on Sunday.
Re: “Enron execs Skilling, Lay convicted of conspiracy” (May 26): I was delighted to hear of the guilty verdicts for Kenneth Lay and Jeffrey Skilling. These men destroyed people’s lives and now must pay the price. I hope that the appeal process fails and that they spend what’s left of their pathetic lives in the state penitentiary, not some cozy federal institution, though we all know that won’t happen. I say throw them in there with the murderers and rapists. They should both be reminded that you get what you deserve in life, not what you can get away with. – Mauricio W. Muraro AD Quality Auto 360p 720p 1080p Top articles1/5READ MORE11 theater productions to see in Southern California this week, Dec. 27-Jan. 2Sun Valley Chipping in Re: “Stars come out for farmers” (May 25): So Mr. Laura Dern (Ben Harper)laments that he doesn’t have “super, deep, stupid, dough” to buy the land outright from its legal owner – who, by the way, originally lost it to the city through eminent domain. Perhaps he can ask his wife (or Darryl Hannah), next time she’s at one of those award shows, to ask her colleagues if they would be willing to chip in. I know all those limos cost around $100 per hour and I’m pretty sure that each woman’s designer gown cost more than my car and the jewelry costs more than my house. I guess it just depends on one’s definition of “super, deep, stupid … .” – Mark A. Overturf Reseda Give it a try Re: “And a raise?” (Your Opinions, May 25): Tim O’Brien would love to have one of those highly-paid teaching jobs? What’s stopping him? All he has to do is go to college for five years. Then, during his two months off, he can work on his master’s degree so he can move up the salary schedule enough to earn that cushy salary. But he’ll have to contribute 8 percent of his salary to help fund that great pension plan. LAUSD teachers received a total pay raise of 7 percent over the last five years. Fourteen percent for this year sounds about right to me. – Michael R. Thorpe Glendale Bring him on I just examined my official sample ballot for the coming June 6 election. It does not list any Democratic candidates presumably because I am a registered Republican. My memory tells me that I had a choice of candidates in all parties in the past. Did we change our voting system? I totally despise President George W. Bush and intend to vote against any candidate who may be on his side. Please explain. – Joseph P. Gleason Woodland Hills Just peachy Re: “Mayor resurrects office to assist immigrants regardless of status” (May 24): So now the mayor is reviving an office to get municipal services to immigrants with the Office of Immigrant Affairs. Isn’t that just wonderful! Why don’t we just give them all jobs, houses and cars and be done with it? Has Villaraigosa ever looked up the word “illegal”? It means “against the law.” My taxpayer money is going for this? – Barbara Thunell Canoga Park Holden responds Re: “Major disappointment” (May 19): I served on the City Council for 16 years, from 1987 to 2003. I have firsthand knowledge that on any given day eight members of the council with the concurrence of the mayor can spend that money any way they choose. The trash hike is nothing more than an illegal tax because the right to vote on the issue has been denied the people. Your editorial is correct; this tax hike was not needed to hire 1,000 additional police officers. Everybody knows there’s a slush-fund buried in the city’s budget. The mayor and the council working together are aware that general managers request positions within their departments and have no intentions on filling those positions during the budgetary year. If the council has the will to be fair, they can easily find $400 million-plus in hidden unfilled positions and other hidden fat in the budget, then use that money to hire more police officers. – Nate Holden Former City Councilman Los Angeles160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!