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US judge rules against RBC in Rural/Metro case

10 Mar 2014

court 5_sqA US judge ruled that Royal Bank of Canada (RBC) advised Rural/Metro Corp shareholders to agree to a buyout by private equity firm Warburg Pincus, which undervalued the business.

Vice chancellor of the Delaware Chancery Court Travis Laster said RBC was acting as an advisor for Warburg and was eager to collect fees from the deal.

Warburg acquired the ambulance operator for $438m in June 2011.

Laster said, “Senior bankers at RBC were engaged in a full-court press to convince Warburg to include RBC in the financing package. While those fevered efforts were under way, RBC was simultaneously revising its valuation of Rural downward.”

“RBC created the unreasonable process and informational gaps that led to the board’s breach of duty.”

Last August Rural/Metro filed for Chapter 11 bankruptcy after failing to make an interest payment on its debts in July.

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