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Enzymotec Ltd. (Nasdaq:ENZY), a developer, manufacturer and marketer of innovative bio-active lipid ingredients, reports that it was informed today that AarhusKarlshamn AB, or AAK, a Sweden-based, global producer of specialty oils that is Enzymotec’s joint venture partner in Advanced Lipids AB, submitted a claim for arbitration against the Company seeking certain declaratory relief with respect to the joint venture agreement.
As disclosed in detail in the company’s filings with the Securities and Exchange Commission, AAK is of the view that the Company’s disclosures in connection with its initial public offering violated the non-disclosure obligations related to Advance Lipids contained in the joint venture agreement. The company believes that its disclosures in connection with its initial public offering were in compliance with the joint venture agreement.
The company held various discussions with AAK on this matter over the past few months and did not reach an agreement. AAK has now submitted a request for arbitration to the International Chamber of Commerce in the Netherlands seeking a determination of the arbitrators that the company’s disclosure of information was an intentional, material breach of the joint venture agreement. The request indicates that AAK believes AL is exposed to likely damage in the future as a result of the level of disclosure that the company made about it; however, it does not provide any specific instance of this having occurred.
The request does not state a measure of damages, seek termination of the joint venture agreement or seek to determine what harm, if any, was caused to Advance Lipids or AAK. In addition, the request for arbitration seeks declaratory relief as to the correct interpretation of certain provisions of the joint venture agreement concerning the period of time during which the buy-sell mechanism included in the agreement may be triggered.
The company believes that the claims made by AAK are without merit and intends to vigorously defend its position. Under the joint venture agreement, pending such dispute, the parties are required to continue to conduct the operations of the joint venture in accordance with the agreement.
