October 12, 2017 / 11:01 PM / a year ago

Judge finds Amur defaulted on Pine River credit agreement

WILMINGTON, Del., Oct 12 (Reuters) - A Delaware judge ruled on Thursday that an affiliate of Amur Finance Co, a financing firm, had defaulted on a $167 million credit agreement with a unit of Pine River Capital Management, which is closing its master hedge fund in the wake of client withdrawals.

Delaware Vice Chancellor Joseph Slights found that Amur Finance IV LLC distributed cash to Amur Finance Co from an account created under a 2013 credit agreement in way that amounted to an event of default.

According to papers filed by Pine River, that clears the way for the lender to seek immediate repayment of the loan, which otherwise matures in 2023.

Amur and its attorney and Pine River did not immediately respond to requests for comment.

Amur has alleged that Pine River was desperate to declare a default to seize collateral and sell it to pay off its investors, according to the 46-page opinion.

Pine River, which earned a spectacular 93 percent gain in 2009 on its Pine River Fixed Income Fund, lost about 68 percent of its assets in the 12-month period between July 2016 and July 2017, according to data compiled by HSBC.

In September, Pine River told investors it would shutter its Pine River Fund after clients continually pulled money out, shrinking its assets to $960 million when senior executives decided to liquidate it. The fund managed $2.99 billion in July 2016.

The Minnetonka, Minnesota-based firm has also lost several partners and executives this year.

Pine River sued Amur in February and was seeking a declaration that the Amur unit that was the borrower under the credit agreement breached the agreement by distributing about $94,000 a month to Amur Finance Co. Pine River said the payments amounted to improper siphoning of collateral to the parent company, a privately held company based in White Plains, New York.

Amur argued the funds being distributed were dividends paid to the parent from another Amur affiliate and were not collateral under the credit agreement. It also said the parties had an oral agreement allowing the monthly distributions, which it said had been made for years without complaint by Pine River.

The judge sided with Pine River and determined the distributions were collateral, and therefore violated the credit agreement and amounted to a default.

Reporting by Tom Hals in Wilmington, Del.; Editing by Matthew Lewis

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