EFiled: May 13 2020 04:30PM EDT
Transaction ID 65635275
Case No. 2020-0351-JRS

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
CARLYLE ROUNDTRIP, L.P.,
Plaintiff,
C.A. No. 2020-0351-JRS

v.
JUWEEL INVESTORS LIMITED, in
its own capacity and in its capacity as
Seller Representative, and GBT
JERSEYCO LIMITED,

REDACTED PUBLIC VERSION
E-filed: May 13, 2020

Defendants.

VERIFIED COMPLAINT
Plaintiff Carlyle Roundtrip, L.P. (“Carlyle”), by and through its undersigned
attorneys, for its Complaint against Defendants Juweel Investors Limited (“Juweel”
or “Sellers,” in Juweel’s own capacity and in its capacity as Seller Representative
for the sellers identified in the Share Purchase Agreement dated December 16, 2019
(the “SPA”)) and GBT JerseyCo Limited, which operates American Express Global
Business Travel (“AmEx GBT” or the “Company”), alleges the following based on
knowledge with respect to its own acts and upon information and belief as to other
matters concerning the transaction agreed to in the SPA.1

1

All capitalized terms not defined herein have the same meaning as in the SPA, a
true and correct copy of which is attached as Exhibit A (Share Purchase Agreement,
Dec. 16, 2019), or the Definitions to the SPA, a true and correct copy of which is

 Nature of the Action
1.

AmEx GBT is a corporate travel management business owned 50% by

American Express Travel Holdings Netherlands Coöperatief U.A. (“AmEx”), an
indirect subsidiary of the American Express Corporation, headquartered in New
York, and 50% by private investors. On December 16, 2019, Carlyle and other
purchasers (the “Purchasers”) agreed to indirectly buy shares in AmEx GBT from
existing investors in a leveraged recapitalization deal (the “Transaction”).
2.

Shortly after signing, the COVID-19 pandemic brought travel to a

global standstill and decimated AmEx GBT’s business. Within just a few months,
AmEx GBT went from being a profitable, cash-rich company

to one that—

—is bleeding

of

dollars every week. AmEx GBT’s weekly sales volumes have
According to management’s forecasts, AmEx GBT’s 2020 EBITDA
will be
After giving effect
to the Transaction terms, AmEx GBT is

There can

attached as Exhibit B (“Definitions,” Exhibit A of Share Purchase Agreement, Dec.
16, 2019).
2

Free Cash Flow calculated as operating cash flow less CapEx and
2

 be no serious question that the COVID-19 pandemic has had a Material Adverse
Effect (“MAE”) on AmEx GBT’s financials and results of operations.
3.

Indeed, this

financial situation left AmEx GBT so

for

cash that the Sellers and AmEx GBT devised a plan between signing and closing to
transform the parties’ leveraged recapitalization transaction into an
for AmEx GBT. In violation of express limitations on the use of the Transaction
financing and the terms of the deal, the Sellers planned to seize

from

the financing for the Transaction, divert the cash to AmEx GBT’s balance sheet, and
then burn through it for the rest of 2020 to cover the Company’s

operating

losses caused by the COVID-19 pandemic. This plan bears no resemblance to the
leveraged recapitalization transaction the parties agreed to in December of 2019.
4.

An inviolable term of the parties’ agreement—documented in the

parties’ early term sheets and set forth at length in the SPA—required that AmEx
GBT refinance its debt and pay a specified

at

closing in order to achieve a carefully defined capitalization structure. These critical
aspects of the deal function as the Purchasers’
Failure to maintain this capital structure increases the Purchasers’ price and
permanently dilutes their returns. All parties understood the significance of the
refinancing provisions and that is why they are an express, stand-alone closing
condition. No one—neither the Sellers nor the Purchasers—contemplated that the
3

 Sellers would retain funds earmarked for the Transaction on AmEx GBT’s balance
sheet to keep the Company

These machinations would

increase the Purchasers’ price by more than
in a

AmEx GBT worth a

dollars for shares
Yet this is precisely

what the Sellers and AmEx GBT planned in secret and then demanded be
implemented in connection with the closing.
5.

Given their violation of the most fundamental aspects of the

Transaction, the Sellers and AmEx GBT hid this plan from the Purchasers until days
before April 30, 2020—the putative contractual closing date (provided that all
closing conditions were satisfied).3 On April 8, 2020, in response to direct questions
about the financial viability of AmEx GBT, the Sellers vaguely alluded to a plan to
divert funds from the deal financing. Carlyle immediately requested clarity and
details around this plan. The Sellers ignored these requests. Then on April 16, 2020,
the Sellers delivered a “draft closing statement” that neither plainly disclosed nor
explained the plan to divert

dollars from the Transaction onto AmEx

3

The SPA provides that any closing would occur on the last day of the month in
which the closing conditions had been satisfied or waived. The Sellers originally
asserted that the closing would occur on April 30, 2020. On April 27, 2020, the
parties agreed—at the Sellers’ request—that “subject to the satisfaction of the
conditions set forth in Section 8,” the closing would occur on May 7, 2020. As
described herein, the Sellers have not satisfied numerous closing conditions set forth
in Section 8, and none of the closing conditions have been waived.
4

 GBT’s balance sheet, but which provided notes from which the Purchasers could
infer that this was now the Sellers’ intention.
6.

The draft closing statement suggested that as a result of this misuse of

the funds, and the resulting violation of the leverage ratio protections in the SPA, the
Sellers were now unilaterally imposing a

increase in price the

Purchasers would pay at closing. It was by then 14 days before the April 30, 2020
closing date insisted upon by the Sellers.
7.

It was only on April 22, 2020, in a letter from the Sellers’ litigation

counsel responding to a request from Carlyle, that the Sellers finally confirmed for
the first time that indeed their plan was to divert
Transaction financing to the balance sheet

dollars of
AmEx GBT.4 This

“disclosure” came just 8 days before the Sellers’ purported April 30, 2020 closing
date.
8.

As set forth below, the Sellers’ plan to sell their shares under these

circumstances fails to satisfy a host of conditions precedent to closing in the SPA.
9.
diversion of

First, AmEx GBT’s own perilous forecasts—coupled with their
dollars from the Transaction onto AmEx GBT’s balance

4

See Ltr. from M. Dontzin to J. Polkes (Apr. 22, 2020). A true and correct copy of
this letter is attached as Exhibit L.
5

 sheet and the unprecedented,

cost-cutting measures they are undertaking—

shows that the pandemic has caused AmEx GBT to suffer an MAE under the SPA.
The COVID-19 pandemic has had a devastating and long-term financial effect on
AmEx GBT, and
The nearly universal consensus of participants in
the travel industry is that the shattering downturn caused by the pandemic will last
several years, and indeed, that the industry may never return to the pre-pandemic
normal.
10.

While the SPA’s definition of an MAE contains carve-outs reallocating

certain risks to the Purchasers, glaringly absent is a carve-out for pandemics (or acts
of God); thus confirming that the parties to the SPA allocated the risk of a pandemic
to the Sellers. The Sellers, whose counsel sent the first draft of the SPA, explicitly
foresaw the grave risk of a pandemic to AmEx GBT and could have tried to negotiate
a pandemic carve-out. Pandemic carve-outs are well-known and often used in
comparable M&A deals. Further, AmEx GBT Chairman Greg O’Hara (who acts for
and represents the private investors in AmEx GBT and negotiated the Transaction
on behalf of the Sellers, some of whom also are Purchasers) publicly acknowledged
well before the SPA was signed that a pandemic posed an existential risk to AmEx
GBT’s business.

6

 11.

The Sellers cannot now rewrite the deal and reallocate the pandemic

risk they kept for themselves. In so doing, the Sellers would upend the settled
expectations of the many sophisticated parties who have signed similar marketstandard agreements, but who, unlike here, bargained for pandemic carve-outs in
their agreements. The Sellers therefore fail to satisfy the condition precedent to
closing that no MAE has occurred.
12.

Second, the Sellers’ plan to transform the Transaction from a leveraged

recapitalization transaction into

financing is also independently

prohibited by the SPA. Critical investment protections lie at the heart of the parties’
deal; each of which require AmEx GBT to raise certain amounts of debt and maintain
a carefully specified leverage ratio in connection with the Transaction. The Sellers’
plan violates the SPA by (i) failing to make the specified

immediately

before closing and instead diverting those funds to cover AmEx GBT’s COVID-19
operating losses outside of the ordinary course and inconsistent with past practice;
and by (ii) failing to achieve anything remotely close to the required net leverage
ratio at closing. The Sellers and AmEx GBT have not fulfilled their obligation to
consummate the Transaction refinancing under the SPA and thus fail to satisfy
another express condition precedent to closing.
13.

Third, in light of all of this, AmEx GBT also has not met the SPA’s

requirement to run its business in the ordinary course consistent with past custom
7

 and practice. Unilaterally manipulating a recapitalization into a

financing to

is hardly running a business in the ordinary course; nor are the
cost-cutting measures that AmEx GBT has implemented. AmEx GBT’s
actions show a business operating in

not one operating in the ordinary

course. The Sellers thus fail to satisfy yet another specific condition precedent to
closing.
14.

Fourth, the failure of AmEx GBT’s officers to certify the accuracy of

AmEx GBT’s representations that there has been no MAE and that AmEx GBT has
operated in the ordinary course also fails to satisfy an express condition precedent
to closing. The SPA clearly requires the individual officers to provide certifications.
These officers evidently (and understandably) have developed cold feet and AmEx
GBT has refused to provide the individual certifications to the accuracy of these
representations in the officers’ names, with the Sellers now taking the position that
the officers may certify “on behalf of GBT.” If this were the case, the SPA would
not call for certifications from multiple officers, it would call for one authorized
certifier, as the agreement does elsewhere. The Sellers and AmEx GBT refused the
Purchasers’ demands to provide these certifications, and thus fail to satisfy another
specific condition precedent to closing.
15.

Fifth, as detailed below, Carlyle promptly raised its concerns with the

Sellers that an MAE had occurred and repeatedly requested information concerning
8

 whether the Sellers could meet the conditions precedent to closing. Instead of
acknowledging the seriousness of Carlyle’s concerns, the Sellers obfuscated and
stonewalled, refusing to provide information—such as forecasts beyond 2020—
while they developed their plan to misuse the Transaction financing. The Sellers
have not satisfied their obligation to provide access and investigation in all material
respects, which is a condition precedent to closing. The Sellers also have not satisfied
their obligation to use commercially reasonable efforts to fulfill the closing
conditions, which also must be complied with in all material respects as a condition
precedent to closing.
16.

Accordingly, Carlyle seeks a declaration that it has no obligation to

close the Transaction because conditions precedent to closing have not been satisfied
for one or more of the following reasons, among other failures by the Sellers and
AmEx GBT to satisfy the SPA’s requirements: (1) AmEx GBT has experienced an
MAE under the SPA; (2) AmEx GBT and the Sellers have failed to consummate the
refinancing and

as required by the SPA; (3) AmEx GBT has not operated

in the ordinary course of business in all material respects as required by the SPA; (4)
the Purchasers have not received the AmEx GBT officers’ certifications required by
the SPA; (5) the Sellers are unable to accurately bring down representations and
warranties at closing as required by the SPA; (6) the Sellers and AmEx GBT have
failed to comply in all material respects with their covenant to provide access and
9

 investigation to the Purchasers as required by the SPA; and (7) the Sellers and AmEx
GBT have failed to use commercially reasonable efforts to satisfy the conditions
precedent to closing in all material respects as required by the SPA. Carlyle further
requests that the Court grant any other relief the Court deems appropriate.
Parties
17.

Carlyle Roundtrip, L.P., a party to the SPA, is an exempted limited

partnership registered with and organized under the laws of the Cayman Islands.
Carlyle Roundtrip L.P.’s funding commitments are from the following entities, all
advised by SEC-regulated affiliates of The Carlyle Group Inc.: Carlyle Granite AIVR, L.P., CGP AIV-R L.P., and CGP II AIV-R, L.P.
18.

Juweel Investors Limited (“Juweel”) is a Cayman Islands limited

company and a Seller under the SPA. Juweel is an investment vehicle led by the
private equity fund Certares. Certares is headed by Greg O’Hara, who is both
Certares’ founder, as well as AmEx GBT’s Chairman. Juweel also acts as Seller
Representative under the SPA.
19.

GBT JerseyCo Limited, a party to the SPA, is a Jersey company limited

by shares. It is the holding company of American Express Global Business Travel,
a travel management company providing travel management services primarily to
large and midsized businesses.

10

 Jurisdiction and Venue
20.

The parties have consented to the Court’s jurisdiction under Section

11.5 of the SPA:
Each party to this Agreement hereby irrevocably submits to the
jurisdiction of Court of Chancery of the State of Delaware or, if
the Court of Chancery of the State of Delaware declines to accept
jurisdiction over a particular matter, any federal court located in
the State of Delaware, or, if both the Court of Chancery of the
State of Delaware and the federal courts located in the State of
Delaware decline to accept jurisdiction over a particular matter,
any state court of the State of Delaware having subject matter
jurisdiction (the “Chosen Courts”) solely in respect of the
interpretation and enforcement of the provisions of this
Agreement and of the Transaction Documents and in respect of
the Transactions.
Factual Allegations
A.

The COVID-19 Pandemic Has Destroyed AmEx GBT’s Business
and Caused a “Material Adverse Effect” Under the SPA
21.

The parties to the SPA agreed that the Purchasers would have no

obligation to close the Transaction if an MAE occurred between signing and closing.
Under Section 8.2(d) of the SPA, a condition precedent to Carlyle’s obligation to
close the Transaction is that “no Material Adverse Effect shall have occurred” since
the date of the SPA. Further, Juweel’s representation regarding AmEx GBT under
Section 2.7 that “there has not occurred any Material Adverse Effect” is required to
be brought down at closing as a separate condition precedent under Section 8.2(a).
Additionally, Section 8.2(f) mandated as another express condition precedent to
11

 closing that AmEx GBT officers individually certify at closing that no MAE has
occurred.
22.

The SPA defines a “Material Adverse Effect” as:
any event, change, effect, occurrence, circumstance, state of facts
or development that, individually or in the aggregate, is or would
reasonably be expected to be materially adverse to the assets,
properties, financial condition or results of operations of GBT
Holdco and its Subsidiaries (including, for these purposes, their
respective interest in the GBT Joint Ventures), taken as a whole
....

23.

The impact of the COVID-19 pandemic on AmEx GBT is severe,

durationally significant, and indisputably constitutes an MAE. Indeed,

i.

The Pandemic Substantially Threatens AmEx GBT’s Earnings
Potential

24.

AmEx GBT provides travel management services, like airfare and hotel

booking, to large and midsized businesses. It also provides meeting and event
planning and travel consulting services. As of December 2019, AmEx GBT had
more than 18,000 employees across a network of more than 140 countries and
managed more than $35 billion of corporate travel every year.
25.

The Transaction’s

valuation of AmEx GBT reflects that, at

the time the parties negotiated and entered into the SPA, AmEx GBT was a strong

12

 and profitable business with a multi-year history of revenue and margin growth.
From 2016 to 2018, AmEx GBT’s revenue
26.

A December 2019 presentation estimated AmEx GBT’s year-end 2019

financials and laid out the Company’s 2020 Annual Operating Plan (the “AOP”). As
reported in the presentation,

27.

AmEx GBT projected that this success would continue into 2020 and

beyond. The AOP projected 2020 revenue of
EBITDA of

and 2020 adjusted

and that AmEx GBT’s performance would continue to

improve in 2021 and 2022. AmEx GBT also estimated that it would end 2019 with
a cash balance of

and that it would use some of this cash in 2020 to

fund
28.

The COVID-19 pandemic changed all of that. As everyone now knows,

a novel coronavirus surfaced in China and a global pandemic ensued. By May 2020,
worldwide reported cases of those infected with COVID-19 was more than 3.85
million. As COVID-19 spread rapidly, airports, airplanes, and hotels—along with
other aspects of travel—quickly came to be viewed as high-risk locations for
transmission of the virus. To avoid contamination, companies acted quickly to

5

AmEx GBT’s revenue for 2019 was later confirmed to be
13

.

 restrict non-essential employee travel and individuals began aggressively avoiding
travel and airplanes.
29.

The COVID-19 pandemic has caused an unprecedented contraction in

the travel industry far more severe than that resulting from any prior natural disaster,
terrorist attack, or other disruption. Overall U.S. travel demand has fallen by more
than 95% due to the pandemic.6 The number of U.S. domestic flights during the first
week of April 2020 was down 50% from the same week the previous year. This
number is artificially inflated due to U.S. federal mandates that airlines maintain
flights in order to be eligible for financial assistance.7 Without those mandates,
domestic flights would be down even more than 50%. Globally, flights were down
80% as of early April.8 The few remaining flights are close to empty: on April 16,
2020, the U.S. Transportation Security Administration screened just 95,000

6

David Shepardson, Delta, JetBlue and Spirit Want to Cut More Flights Despite
Bailout Requirements, REUTERS (Apr. 28, 2020), https://skift.com/2020/04/28/deltajetblue-and-spirit-want-to-cut-more-flights-despite-bailout-requirements/.
7

David Slotnick, Coronavirus demolished air travel around the globe. These 14
charts show how empty the skies are right now, BUSINESS INSIDER, (Apr. 22, 2020)
https://www.businessinsider.com/air-traffic-during-coronavirus-pandemicchanges-effects-around-the-world-2020-4.
8

Press Release, IATA, COVID-19 Puts Over Half of 2020 Passenger Revenues at
Risk, (Apr. 14, 2020) https://www.iata.org/en/pressroom/pr/2020-04-14-01.
14

 passengers, down 96% from 2.6 million on the same day in 2019.9 The International
Air Transport Association has called this the airline industry’s “deepest crisis ever,”
with a decline in passenger volume far worse than the decline following the attacks
on 9/11.10
30.

Corporate travel has almost totally stopped. A recent survey by the

Global Business Travel Association found that 96% of its member companies have
canceled or suspended all or most international business travel regardless of location,
and 82% have canceled or suspended all or most domestic business trips. As of April
15, 2020, U.S. Travel Association data forecasts an expected loss of $1.2 trillion in
travel-related economic output in 2020, which would be nine times the impact of the
9/11 attacks.11

9

David Slotnick, Coronavirus demolished air travel around the globe. These 14
charts show how empty the skies are right now, BUSINESS INSIDER, (Apr. 22, 2020)
https://www.businessinsider.com/air-traffic-during-coronavirus-pandemicchanges-effects-around-the-world-2020-4.
10

Reade Levinson, Airlines facing what official calls 'deepest crisis ever', Reuters
(Apr.
1,
2020),
https://www.reuters.com/article/us-health-coronavirusflights/airlines-facing-what-official-calls-deepest-crisis-ever-idUSKBN21J5NC
11

Oxford Economics, The Impact of COVID-19 on the United States Travel
Economy
(Apr.
15,
2020),
https://www.ustravel.org/sites/default/files/media_root/document/Coronavirus2020
_Impacts_April15.pdf
15

 31.

The decimation of the travel industry as a result of the COVID-19

pandemic materially threatens AmEx GBT’s earnings potential and indeed,

32.

Though AmEx GBT had provided snapshots of information before, on

March 30, 2020, AmEx GBT provided Carlyle for the first time with forecasts and a
liquidity analysis reflecting the devastating effect of COVID-19 on AmEx GBT’s
business as well as updated year-over-year sales volume declines. The forecasts were
shocking.
AmEx GBT’s March 30 analysis forecasted 2020
revenue, EBITDA, cash flow, and year-end cash balance based on two scenarios: (1)
an “Industry Case,” which assumed

and (2) a “Conservative Case,” which assumed that

33.

AmEx GBT later informed Carlyle that it was only using the more

dire—but, as explained in the next section, still overly optimistic—Conservative
Case for its internal planning. That March 30, 2020 Conservative Case projected
2020 revenue of
EBITDA of
16

 and Free Cash Flow of
Critically, under this scenario,

34.

Stress-testing AmEx GBT’s forecasts for additional, unacknowledged

downward pressures shows that even minor increases in the magnitude of COVID19’s impact have a drastically negative impact on AmEx GBT’s performance. For
example,

35.

The extreme steps AmEx GBT is taking in response to the COVID-19

pandemic further illustrate the severity of the pandemic’s effect.

These
measures include

17

 36.

The AmEx GBT analysis, however, contains a glaring omission which

renders its forecasts far too optimistic. It ignores the impact that the Transaction
itself would have on the Company’s cash flow and cash balance. Due to the new
indebtedness that the Transaction requires AmEx GBT incur, GBT will need to make
interest and principal payments. And the Transaction requires a substantial
immediately before
closing. Layering these cash outlays on AmEx GBT’s

shows

that,

37.

AmEx GBT has thus transformed from a consistently profitable cash-

generating business into a business with
There can be no doubt that the impact of the pandemic on
AmEx GBT’s business is material and adverse.
ii.

The Pandemic’s Impact on AmEx GBT Is and Will Be Durationally
Significant

38.

The COVID-19 pandemic’s impact on AmEx GBT’s earnings potential

is not just severe, it is also long-lasting. Its impact will persist over the course of
several years, not months.

18

 39.

For starters,

it has a years-long road to recovery ahead of it.
40.

AmEx GBT’s own March 30, 2020 “Conservative Case” liquidity

analysis makes clear that the impact of COVID-19 is far from a one- or two-quarter
blip.

41.

But AmEx GBT’s “Conservative Case,” which envisions
presents a recovery trajectory that is

unsupportable in light of the industry consensus, which envisions a multi-year path
to recovery with permanent structural changes decreasing the demand for corporate
travel. AmEx GBT will be particularly hard hit by COVID-19’s impact on
international business travel.
42.

Even the Chief Executive Officer of American Express Corporation—

which through subsidiaries owns 50% of AmEx GBT—publicly acknowledged the
COVID-19 pandemic will have a durationally significant impact. During American
19

 Express’s quarterly earnings call on April 24, 2020 CEO, Stephen Squeri bluntly
stated that “it’s probably going to take three years for travel to come back.” 12 Mr.
Squeri explained that there will be a notable decrease in business travel due to virtual
work, because “you’ve got multiple components. You’ve got restaurants, you’ve got
hotel, you’ve got car rental, and you do have air. And so, I think we’ve all learned
in this environment how to work virtually . . . . it is amazing to see everybody on the
WebEx screen, and quite honestly, I think there’ll be more of that.” Thus, the CEO
of American Express Corporation—again, the ultimate owner of 50% of AmEx
GBT—admits that the corporate travel industry faces a far steeper road to recovery
than consumer travel, which he predicts “will come back over time.” Rather than a
travel industry recovery in

(as AmEx GBT put forth in the

projections provided to the Purchasers), Mr. Squeri publicly disclosed that American
Express is forecasting three years.
43.

Industry groups are in accord: the International Air Transport

Association (“IATA”)—the very industry group on which
—

12

American Express Co (AXP) Q1 2020 Earnings Call Transcript, Motley Fool
Transcribers
(Apr.
24,
2020),
https://www.fool.com/earnings/calltranscripts/2020/04/24/american-express-co-axp-q1-2020-earnings-call-tran.aspx.
Emphasis in quotations is added in the Complaint unless otherwise noted.
20

 have now revised their projections downward, projecting that demand will recover
to only 67% by the end of the year. IATA also revised downward its 2020 revenue
projections from

to

55%.13 AmEx GBT has already acknowledged that its forecasts should be based on
more conservative estimates than IATA but has failed to provide the Purchasers with
an updated forecast adjusting its assumptions to IATA’s downward revisions.
44.

IATA also identified troubling signs for any long-term recovery based

on a slow return in demand in countries where the outbreak has abated. Although
new COVID-19 cases in China are now reported as close to zero, airline flights have
leveled out at about 30,000 per week, up from February’s low of 15,000, but still a
shadow of the 80,000 flights per week before the pandemic. In Australia, too, new
COVID-19 cases have dropped to almost zero, but flight demand has shown no sign
of returning. IATA also reported the results of a survey it conducted in which 40%
of passengers said that, even following an announcement that the outbreak had been
contained, they would still wait at least six months before traveling again.14

13

COVID-19
Updated
Impact
Assessment,
April
14,
2020,
https://www.iata.org/en/iata-repository/publications/economic-reports/covidfourth-impact-assessment/
14

COVID-19 Assessing Prospects for Domestic Markets, April 21, 2020,
https://www.iata.org/en/iata-repository/publications/economic-reports/covid-19assessing-prospects-for-domestic-markets/
21

 45.

AmEx GBT’s prediction of

also cannot be squared with

the assessments of the leadership of every major airline—AmEx GBT’s customers
and suppliers

—as disclosed in recent

investors’ meetings and public statements. These industry insiders uniformly view
the COVID-19 pandemic as the greatest crisis ever faced by the industry and expect
a recovery measured in years, not months.
46.

On an April 22, 2020 earnings call, the CEO of Delta Air Lines—
—explained the industry’s situation in dire terms,

expressing the view that the industry will not see a “sustainable recovery” for “up to
three years”:
These are truly unprecedented times and the path to recovery is
uncertain[] and will likely be choppy. And while we all wish we
could predict the pace of the recovery, the truth is, our recovery
will be dictated by our customers feeling safe, both physically
and financially to begin to travel at scale. Given the combined
effects of the pandemic and associated financial impact on the
global economy, we believe that it could be up to three years
before we see a sustainable recovery. And to succeed throughout
that environment, we will likely need to resize our business in
the near term to protect it in the long term.15

15

Delta Air Lines Inc (DE) (DAL) Q1 2020 Earnings Call Transcript, Motley Fool
Transcribers
(Apr.
22,
2020),
https://www.fool.com/earnings/calltranscripts/2020/04/22/delta-air-lines-inc-de-dal-q1-2020-earnings-call-t.aspx
22

 47.

The CEO of United Airlines—

—

also painted a particularly dire picture for the future of air travel during the
company’s May 1, 2020 earnings call. He acknowledged that the decline in demand
for air travel has exceeded the company’s worst expectations and even United’s most
pessimistic projections have failed to accurately capture the depth and duration of
the crisis. United’s President announced the company is reducing capacity by 90%
in May given that “[n]obody knows when this will end.”16 The company reported
that net new bookings are down essentially 100% and there are no meaningful signs
of recovery on the horizon. As such, United is planning for the worst: to continue in
an environment with no recovery, at essentially zero net passenger revenue for the
rest of the year into 2021 and beyond, unless the virus is contained.
48.

The CEO of American Airlines—

—likewise made clear on its April 30, 2020 earnings call17 that any nearterm bounce-back is dissociated from reality: “[W]hile no one has a perfect crystal
ball, I think we all expect that recovery will be slow and demand for air travel will

16

Edited Transcript of UAL earnings conference call or presentation 1-May-20
2:00pm GMT,
Thomson
Reuters StreetEvents
(May 1, 2020),
https://finance.yahoo.com/news/edited-transcript-ual-earnings-conference233208085.html
17
American Airlines Group (AAL) Q1 2020 Earnings Call Transcript, Motley Fool
Transcribing
(Apr.
30,
2020),
https://www.fool.com/earnings/calltranscripts/2020/05/02/american-airlines-group-aal-q1-2020-earnings-call.aspx
23

 be suppressed for quite some time.” As he explained, “The uncertainty about the
future weighs on everyone and for a good reason. There’s no way to overstate the
gravity of the situation for the airline industry.” American Airlines also announced
plans to accelerate retirement of aircraft from its fleet—indicating long-term
structural changes to the supply of air travel.
49.

The International Airlines Group (“IAG”), a multinational airline

company that operates British Airways—another top AmEx GBT supplier—and
other major European airlines, announced its first quarter 2020 results on April 28,
2020 and similarly predicted a drawn out recovery: “Recovery to the level of
passenger demand in 2019 is expected to take several years, necessitating Groupwide restructuring measures.”18 On May 7, the Financial Times reported that IAG’s
chief executive had reiterated, “We do not expect passenger demand to recover to
the level of 2019 before 2023 at the earliest.”19
50.

The CEO of Lufthansa—yet another of AmEx GBT’s top suppliers—

predicted a comparably slow recovery. In a webcast to employees on April 24, 2020

18

Tanya Powley & George Parker, British Airways to cut up to 12,000 jobs as
aviation
outlook
darkens,
Fin.
Times
(Apr.
29,
2020),
https://www.ft.com/content/8529c498-fbf1-4eca-a468-9b26b4ec7a97
19

Miles McKormick, British Airways parent IAG warns of further revamp to survive
pandemic hit, Fin. Times (May 7, 2020), https://www.ft.com/content/a324d3d94a21-48c3-9a05-e25477dd529e.
24

 Lufthansa’s CEO stated that the company, which has already furloughed almost
90,000 of its 135,000 employees, was unlikely to return to “normality” until 2023.20
51.

On an earnings call on April 28, 2020, Southwest Airlines’ CEO

explained that the company is preparing for three scenarios.21 Under the most
optimistic scenario, demand would only begin to return at the end of 2020—a far cry
from

predicted by AmEx GBT. Under Southwest’s more

conservative forecast, demand would remain low for the indefinite future, especially
for business travel:
We’ve seen the same pattern in the previous three recessions that
I experienced, where business travel is cut very sharply . . . .
[W]e’re seeing that now for different reasons . . . . But the
recovery [of] business travel, overall, was many years . . . . [W]e
are fully expecting that traffic will recover. But it will recover
over a long period of time. And we’re sort of in the depths of this
problem right now. And it’s hard to see through to the other side.
But this too shall pass . . . there’s every reason to have hope and
confidence . . . [b]ut realistically, we just can’t expect that things
are going to be back to normal in 6 or 12 months. I don’t believe
that for a minute . . . . [I]f it’s a v-shape recovery, well, we’ll all

20

Lufthansa warns of 10,000 job cuts as Covid-19 bites, Irish Times (Apr. 24, 2020),
https://www.irishtimes.com/business/transport-and-tourism/lufthansa-warns-of-10000-job-cuts-as-covid-19-bites-1.4237445
21

Edited Transcript of LUV earnings conference call or presentation 28-Apr-20
3:30pm GMT,
Thomson
Reuters StreetEvents
(May 4, 2020),
https://www.yahoo.com/news/edited-transcript-luv-earnings-conference035805404.html
25

 high-five each other and we’ll go buy some more airplanes. But
I don’t think that’s the most likely outcome right now.22
52.

Other participants in the aerospace industry are no more optimistic.

Boeing’s CEO cast the pandemic’s effect on the travel industry in stark terms during
the company’s April 27, 2020 shareholders’ meeting. He said that air travel will take
two or three years to recover to 2019 levels. “We are in an unpredictable and fastchanging environment, and it is difficult to estimate when the situation will
stabilize,” he added. “When it does, the commercial market will be smaller, and our
customers’ needs will be different.”23 Boeing’s CEO echoed these remarks on an
earnings call two days later: “it will take two to three years for travel to return to
2019 levels and it will be a few years beyond that for the industry to return to longterm growth trends.” In some ways, he noted, the pandemic’s effect will be
permanent: “[O]ur industry is going to look very different as a result of this

22

Id.

23

Leslie Josephs, Boeing CEO says air travel recovery could take two to three years;
board
wins
approval,
CNBC.com
(Apr.
27,
2020),
https://www.cnbc.com/2020/04/27/coronavirus-boeing-ceo-says-air-travelrebound-could-take-2-or-3-years-board-approved.html
26

 pandemic and the economic impact it has had on airlines and schedules around the
world.”24
53.

On a May 7, 2020 earnings call, Air France-KLM—
—likewise gave little reason for optimism. The airline

explained that it has suspended 95% of planned capacity and implemented stringent
cash-preservation measures. A press release explained that Air France-KLM
anticipates a “prolonged negative impact on passenger demand, not expected to
recover to pre-crisis levels before several years.”25
54.

Therefore, the industry consensus is clear: air travel will take years to

recover. That is, assuming it ever recovers to pre-pandemic levels. Also, as these
comments indicate, AmEx GBT will be on the lagging edge of any recovery because
of its focus on corporate travel, among other reasons. Corporations, which are risk
averse, now have viable alternatives to requiring their employees to travel, and may
keep travel at a minimum for the foreseeable future. Moreover, lasting behavioral
changes may permanently depress AmEx GBT’s revenue and challenge its business

24

Boeing Co (BA) Q1 2020 Earnings Call Transcript, Motley Fool Transcribers
(Apr. 29, 2020), https://www.fool.com/earnings/call-transcripts/2020/04/29/boeingco-ba-q1-2020-earnings-call-transcript.aspx
25

AirFrance-KLM Group, First Quarter 2020 (May 7, 2020),
https://www.airfranceklm.com/sites/default/files/q1_2020_press_release_en_final_
0.pdf.
27

 model. As American Express publicly discussed, widespread adoption of remotework technology will render certain business travel unnecessary.
55.

AmEx GBT thus has suffered a material, durationally significant

decimation of assets, properties, financial condition, and results of operations arising
from the COVID-19 pandemic. In other words, AmEx GBT has suffered an MAE
under the terms of the SPA.
iii.

The SPA’s MAE Provision Allocates the Risk of a Pandemic to the
Sellers

56.

The SPA includes a number of carve-outs to the MAE:
[N]one of the following shall be deemed to constitute, and none
of the following (or the effects thereof) shall be taken into
account in determining whether there has been, a Material
Adverse Effect: any adverse change, event, development, effect,
occurrence, circumstance or state of facts arising from
(i) general business or economic conditions,
(ii) national or international political or social conditions,
including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national
emergency or war, or the occurrence of any military or terrorist
attack upon the United States, or any of its territories, possessions
or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States,
(iii) financial, banking or securities markets (including any
disruption thereof and any decline in the price of any security or
any market index),
(iv) changes in GAAP,
(v) changes in Legal Requirements,
28

 (vi) the negotiation, execution and delivery of this Agreement,
the identity or business plans of the Purchasers or their respective
Affiliates or the announcement or consummation of the
Transactions, including any impact thereof on relationships,
contractual or otherwise, with customers, suppliers, distributors,
partners or employees or
(vii) the taking of any action expressly required under the
Transaction Documents (other than as required pursuant to the
first sentence of Section 5.2) or at the Purchasers’ written
direction,
except to the extent, with respect to clauses (i) through (v) above,
that any such event, change, effect, occurrence, circumstance,
state of facts or development disproportionately and adversely
affects GBT Holdco, its Subsidiaries and/or the GBT Joint
Ventures relative to other participants in the industries in which
GBT Holdco, its Subsidiaries and/or the GBT Joint Ventures
participate.
57.

Commonly used MAE carve-outs, like those included here, serve a

universally recognized function in the M&A marketplace: they reallocate the risk of
specific events from the sellers, who bear the general risk of an MAE, back to the
purchasers. The menu of common carve-outs represents a set formula for allocating
deal risk developed and understood by a sophisticated marketplace. Accordingly, the
decision of which carve-outs to include and exclude—that is, which MAE risks are
reallocated to the purchaser and which remain with the seller—is an important aspect
of deal negotiations.
58.

Here, the parties agreed not to reallocate the risk of an MAE arising

from a pandemic to the Purchasers—it instead remained with the Sellers. The SPA
29

 unambiguously contains no carve-out for an MAE caused by a pandemic or act of
God. Such carve-outs are well known in the market generally, and the Sellers could
have sought to include one and thereby reallocate the risk of a pandemic to the
Purchasers. The Sellers did not.
59.

In October 2018, a reporter for The Beat—a corporate travel insider

publication—published an interview he conducted of Greg O’Hara. In this interview,
Mr. O’Hara spoke directly about the risk of a pandemic on the travel industry. “The
next thing I’m worried about,” he stated in the interview, “is some kind of global
pandemic: People don’t want to get onto small tubes. They don’t want to stay in
hotels. They don’t want to go to public spaces. They want to cocoon. I don’t foresee
one, but if there were any kind of global pandemic, we have a problem.”26
60.

Despite Mr. O’Hara’s express acknowledgement that the pandemic

posed a significant risk to AmEx GBT, the Sellers never asked for an MAE carveout reallocating that existential risk to the Purchasers. And it was not for lack of
opportunity: the Sellers provided the first draft of the SPA, and the agreement went
through several iterations. Neither the first draft nor any later draft included a
pandemic or act of God carve-out.

26

Interview by Jay Boehmer with Greg O’Hara, Centares Founder & AMEX GBT
Chairman (Oct. 10, 2018), https://www.thebeat.travel/Interviews/INTERVIEWGreg-OHara-With-Tom-Klein
30

 61.

The Sellers’ failure to obtain a pandemic carve-out is especially glaring

in light of the Sellers’ deal counsel’s prior inclusion of just such a carve-out for the
benefit of AmEx GBT in AmEx GBT’s 2018 credit agreement, which was used as
the template for the credit agreement in the Transaction. The credit agreement
relieves AmEx GBT from certain financial covenants if AmEx GBT experiences a
“Travel MAC,” which the agreement defines as:
any event that (i) is not reasonably foreseeable or otherwise
caused by or under the control of [GBT] … including but not
limited to, acts of God, fires, floods, volcanic eruptions,
explosions, riots, wars, hurricanes, terrorism, or any other event
that results in the issuance of any public declarations or
emergency travel advisories by the ICAO or the WHO, and (ii)
has a material and disproportionate adverse effect in the
aggregate on the travel or tourism industry.27
62.

The Travel MAC predates the SPA and is an explicit acknowledgement

by AmEx GBT that certain “acts of God,” including public health emergencies,
would significantly impair its business and that it needed additional protection
against them. The explicit inclusion of the Travel MAC language in AmEx GBT’s
credit agreement proves that the Sellers’ counsel was fully aware and capable of
drafting provisions that protect the Sellers in the event of a pandemic but chose not
to do so in the SPA.

27

An excerpted true and correct copy of the Credit Agreement between AmEx GBT
and lenders is attached as Exhibit D.
31

 63.

A pandemic carve-out was very much on the menu of market-standard

risk allocation provisions at the time the SPA was negotiated, as made clear through
numerous comparable deals negotiated around the same time that included just such
a carve-out. Pandemic carve-outs first emerged in MAE provisions about a decade
ago and have since become commonplace.
64.

Further, widespread public conversation about the risk of a pandemic

demonstrates that the absence of such a carve-out was a risk the Sellers knowingly
accepted. Over the past several decades, warnings have been clear and consistent
from both U.S. government leaders, scientists, and global health officials: a
pandemic was coming. The opening paragraph of the National Biodefense Strategy
White House briefing on August 9, 2018 emphasized that in “today’s interconnected
world, biological incidents have the potential to cost thousands of American lives,
cause significant anxiety, and greatly impact travel and trade.”28
65.

Indeed, after other recent disease outbreaks such as SARS, H1N1, and

Ebola, numerous articles noted that a future pandemic would significantly impact
global travel. As early as 2005, a report published by the Congressional Budget
Office, entitled A Potential Influenza Pandemic: Possible Macroeconomic Effects

28

Executive Office of the President, National Biodefense Strategy 2018, Forward
(2018), https://www.hsdl.org/?abstract&did=815921
32

 and Policy Issues, discussed the potential effects of an influenza pandemic like
SARS and noted that, as a future pandemic progressed, “international travel would
dramatically decline.” The report used SARS as a reference and noted that “at the
peak of the SARS outbreak in April 2003, airline passenger arrivals in Hong Kong
had declined by nearly two-thirds relative to their levels in March.”29
66.

The SPA was negotiated by sophisticated practitioners who are

expected to have negotiated for points of contractual importance reflecting the
agreed-upon allocation of risk between the Sellers and the Purchasers. As illustrated
by the numerous comparable agreements that include a pandemic carve-out separate
from and in addition to the generic carve-outs included in the SPA, when parties to
other agreements sought to reallocate pandemic risk to the purchasers, they did so
through express pandemic carve-outs. Interpreting generic carve-outs, such as the
ones here, to cover a pandemic would render superfluous the pandemic carve-outs
in every single contract negotiated by sophisticated parties that includes them. This
would meaningfully alter the way in which sophisticated parties have priced
pandemic risk into their transactions.

29

Congressional Budget Office, A Potential Influenza Pandemic: Possible
Macroeconomic
Effects
and
Policy
Issues
10
(2005),
https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/reports/12-08birdflu.pdf
33

 67.

Even the Sellers’ deal counsel is in agreement. In a March 2020 post on

its website, it expressly acknowledged that attempts to “rely on more general carveouts such as calamities, natural disasters or acts of God”—which in fact are even
more specific and targeted than the general carve-outs in the SPA upon which the
Sellers seek to rely—should lead courts to “reasonably question whether these
concepts capture a health crisis such as the coronavirus outbreak.”30 Both the Sellers
and their counsel were fully aware of the specific risk a pandemic posed for AmEx
GBT’s business, were aware of the existence and importance of a pandemic carveout, but made no effort to negotiate for this common, specific exception.
68.

In addition, any attempt by the Sellers to shoehorn the effects of the

pandemic into the existing, generic carve-outs in the SPA is belied by the negotiating
history of the SPA. The parties negotiated over how close the relationship must be
between an adverse effect and an enumerated carve-out. Here, the Sellers agreed to
a tight fit—narrowing exceptions to the definition of an MAE only to events directly
“arising from” the enumerated carve-outs. This narrowed ambit for the carve-outs
was aggressively bargained for, with the Sellers repeatedly pushing for—though
never receiving—a broader reach. The Sellers twice proposed—and Carlyle twice

30

Dechert LLP, COVID-19 and “Material Adverse Effect” Provisions (Mar. 16,
2020),
https://www.dechert.com/knowledge/hot-topic/coronavirus-businessimpact/covid-19-and--material-adverse-effect--provisions.html
34

 rejected—that the risks carved out from the MAE be arising from “or relating to”
the enumerated carve-outs. The Sellers’ repeated attempt to broaden the reach of the
carve-outs makes clear that the parties intended the MAE carve-outs to operate
narrowly.
69.

The MAE here self-evidently arises from the COVID-19 pandemic, not

from “general business or economic conditions,” not from any “political or social
conditions” (which the MAE definition makes clear applies to hostilities and
terrorism), and not from any “changes in Legal Requirements.” Each of these carveouts is also well known and commonly used to allocate particular risks, none of
which include the risk of a pandemic. Using these generic carve-outs as a backstop
for a party that fails to obtain a pandemic carve-out does violence to their commonly
known purpose, meaning, and usage.
70.

The Sellers retained the risk of a pandemic by failing to carve it out and

thereby reallocate it to the Purchasers. They cannot now rewrite the SPA and the
legions of other similar deals struck by similarly sophisticated market participants
that bargained for pandemic risk allocation.
iv.

The COVID-19 Pandemic Disproportionately and Adversely
Affects AmEx GBT Relative to Its Competitors

71.

Under the terms of the SPA, a general carve-out to the MAE does not

apply where the “event, change, effect, occurrence, circumstance, state of facts or
35

 development disproportionately and adversely affects GBT Holdco, its Subsidiaries
and/or the GBT Joint Ventures relative to other participants in the industries in which
GBT Holdco, its Subsidiaries and/or the GBT Joint Ventures participate.” That is,
even if a carve-out does transfer the risk of a particular event back to the purchaser,
the risk shifts back again to the seller if the impact on the company is
disproportionately negative compared to others. That is precisely the case here, as
the COVID-19 pandemic has disproportionately and adversely affected AmEx GBT
relative to other companies in the industries in which it participates. This means that
even if a carve-out applied (and none does) shifting the risk of the pandemic to the
Purchasers, this disproportionality “carve-in” would reallocate that risk to the
Sellers.
72.

The effects of the COVID-19 pandemic are not uniformly distributed.

As an April 2020 report by McKinsey explained, “even within sectors,” including
the travel sector, “there is significant variance between companies.”31
73.

Comparing AmEx GBT’s own forecast to publicly available

information on other participants in its industries confirms that AmEx GBT has

31

McKinsey & Co., COVID-19: Briefing materials (updated Apr. 13, 2020),
https://www.mckinsey.com/~/media/mckinsey/business%20functions/risk/our%20i
nsights/covid%2019%20implications%20for%20business/covid%2019%20april%
2013/covid-19-facts-and-insights-april-13.ashx
36

 suffered disproportionately. AmEx GBT’s own overly-optimistic analysis
forecasted

. This is far worse

than the analogous declines anticipated for the public firms that AmEx GBT itself
previously identified as direct comparators. Expanding this comparison—consistent
with the broad language of the SPA—to include a wider set of participants in the
industries in which AmEx GBT participates only exacerbates the disproportionality.
AmEx GBT’s EBITDA

than that predicted for

representative sets of travel management companies, online travel agencies, and the
transport and transportation services industries more broadly.
74.

As a result of the COVID-19 pandemic, AmEx GBT has thus

experienced an MAE to which no carve-out applies and which disproportionately
and adversely harms AmEx GBT. Accordingly, the Sellers cannot, under any
circumstances, satisfy the conditions precedent to Carlyle’s obligation to close set
forth in Sections 8.2(a) and (d).
B.

The Sellers’ Diversion of Transaction Funds to Cover
AmEx GBT’s COVID-19 Operating Losses Does Not Satisfy
the Refinancing Conditions Precedent to Closing
75.
Indeed, based on its own management projections,

accounting for the cash out flows required by the Transaction, AmEx GBT
So, the Sellers and
37

 AmEx GBT devised a plan to divert

in funds from the financing for the

Transaction and use it to

This

would transform a share sale transaction into an
of express limitations on the refinancing and

bail out, in contravention
obligations set forth in the

SPA. What is more, this self-help by the Sellers and AmEx GBT adds
to the purchase price for the shares.
76.

It was not until March 30 that AmEx GBT first provided Carlyle with

meaningful financial information about the impact of the pandemic on AmEx GBT.
As detailed above, the March 30 liquidity analysis revealed

This information was
troubling on its own, but layering on the anticipated effects of the Transaction,
AmEx GBT was

Accordingly, Carlyle scheduled a

call with AmEx GBT for Wednesday, April 1 to immediately discuss this concerning
information. AmEx GBT delayed to Monday, April 6, citing the rapidly developing
nature of the pandemic and the need to immediately address other pressing issues.
77.

The April 6 call—the first opportunity Carlyle had to discuss AmEx

GBT’s March 30 projections with the Company—only confirmed AmEx GBT’s
So just forty-eight hours later, on Wednesday, April 8, Carlyle informed Mr.
O’Hara that it appeared an MAE had occurred and offered him the opportunity to
38

 provide his views. Carlyle also requested that Mr. O’Hara and the Sellers
immediately provide additional information relevant to whether the Sellers and
AmEx GBT could satisfy the conditions precedent to closing the Transaction.
78.

This transparency was met with obfuscation from the Sellers. The

Sellers, starting with Mr. O’Hara himself, peremptorily denied that an MAE had
occurred and for the first time vaguely alluded to a plan to somehow use the
Transaction financing. Carlyle immediately requested clarity and details around this
plan. Carlyle followed up on its request on the April 8 call with a written request on
April 10 for any information on alternative use of the debt financing.32 The Sellers
stonewalled and delayed while concocting a plan to transform the Transaction into
financing for AmEx GBT.
79.

On the morning of April 16, Carlyle followed up again through its

counsel.33 It was not until later that day, over a week after Carlyle’s April 8 request,
that the Sellers provided any additional information on their plans for the
Transaction. But instead of addressing Carlyle’s concerns directly, the Sellers sent a
“draft closing statement” to Carlyle. After Carlyle was forced to (literally) read

32

See Email from T. Zachem to G. O’Hara (April 10, 2020) at 6. A true and
correct copy of this email is attached as Exhibit H.
33

See Ltr. From J. Polkes to G. Sinatra (April 16, 2020). A true and correct copy of
the letter is attached as Exhibit I.
39

 between the lines of the draft closing statement and sought clarification, the Sellers
finally admitted on April 2234—just eight days before the anticipated closing date—
that their new plan was to “holdback”

of dollars from the

Transaction’s required pre-closing

to cover AmEx GBT’s mounting

COVID-19 operating losses, thereby increasing the price the Purchasers would pay
for AmEx GBT
more than
80.

by
Carlyle responded to Seller’s admission by letter on April 29.35

As set forth below, the SPA’s refinancing and

provisions

were designed to prevent this abuse. The Sellers’ plan does not satisfy the deal’s
fundamental requirement that, at the time the Transaction closes, AmEx GBT must
(as defined in the SPA)—
an express, specific condition precedent to closing under Sections 8.1(c) and 8.2(b)
of the SPA.
i.

The Sellers Must Consummate the Refinancing
in Accordance with Section 5.10(d)

81.

A key term of the Transaction was that AmEx GBT would refinance its

existing debt and distribute out cash immediately before closing to achieve a

34

See Exhibit L at 5-6.

35

See Ltr. From J. Polkes to M. Dontzin (April 29, 2020). A true and correct copy
of the letter is attached as Exhibit N.
40

 This

was among the

first terms agreed to by the parties (reflected in term sheets as early as May 2019)
and is set forth in the SPA.
82.

The purpose and effect of this refinancing and

requirement

is to secure the portion of the AmEx GBT purchase price that would be paid for by
new equity, and the portion that would be paid for by new debt and balance sheet
cash. These requirements provide price and deal protection. The price Purchasers
would pay for their shares in GBT is calculated based, in part, on GBT’s debt
(including debt through the refinancing) and cash at closing. Under Section 1.1 of
the SPA, calculation of the purchase price starts at

and is decreased on a

dollar-for-dollar basis by debt and increased on a dollar-for-dollar basis by the
amount of cash the Company has at closing. Accordingly, if the leverage ratio goes
down, the Purchasers’ purchase price goes up (and its expected return goes down).
All parties understood the importance of these provisions.
83.

Indeed, these terms were so critical to the Transaction that the parties

agreed that consummation of the refinancing and

under Section 5.10

would be a standalone condition precedent to the parties’ obligations to close under
Section 8.1(c). Compliance with Section 5.10 in all material respects is also a
condition precedent to the Purchasers’ obligation to close under Section 8.2(b).

41

 84.

While the Transaction was being negotiated, AmEx GBT was also

considering

When the parties
executed the SPA, they did not know what the status of

would

be at closing and thus included alternatives for completing
refinancing and

depending on the then-status of the

Critically, neither alternative altered

Both paths lead

to the same result:
85.

The first scenario contemplated by the SPA is if good faith negotiations

for a

have ceased before the Transaction’s closing. Then, the
is deemed “abandoned,” and the Sellers are required to complete the

refinancing and

under Section 5.10(d)(i). Subsection (d)(i) expressly

requires AmEx GBT, immediately before closing, to borrow enough money and pay
to its existing equity holders that is large enough to bring AmEx GBT’s
Subsection
(d)(i) requires that, in all events, there must be at least

in Net

Indebtedness (as defined in the SPA) at the Transaction’s closing.
86.
and

The second scenario is if a

has not been abandoned

is expected to occur after the Transaction’s closing, Section
42

 5.10(d)(ii) applies. Subsection (d)(ii) requires AmEx GBT to make an initial
borrowing, the first tranche,

to its existing equity holders

immediately before closing, then, after closing, make a second borrowing, the
second tranche, to either pay for the

or, if that

is

abandoned after the Transaction’s closing, pay

to AmEx GBT’s new

equity holders (which the SPA calls

.36 The SPA requires

that

immediately after the closing
of the

at the anticipated purchase price related to the
at the anticipated closing date of

allows for

” While the provision

to take account for (i) the expected EBITDA of
and (ii) the anticipated purchase price of
nowhere does it allow for an adjustment based on the post-closing cash

flows of AmEx GBT.

36

The parties agree that Section 5.10(d)(iii) (addressing the scenario where
Roundtrip and the
close near simultaneously) does not apply.
43

 87.

If the

is triggered, Section 5.10(e) and the

shareholders agreement37 require AmEx GBT to consummate the second, postclosing borrowing and pay the

in an amount consistent with the

“Net Indebtedness” requirement:
shall mean

88.

This brings AmEx GBT’s Net Indebtedness in line with the

requirements of Section 5.10(d)(i) and effectively reimburses the Purchasers for the
greater amount paid at a closing under Section 5.10(d)(ii).
89.

In short, regardless of whether a

or a

occurs, Section 5.10(d)(ii) requires
(thereby preserving the equity value of the Transaction for the Purchasers). And the
SPA is clear that if the

is abandoned after the Transaction’s closing,

the Sellers and AmEx GBT must pay a

37

An excerpted true and correct copy of the Shareholders Agreement is attached as
Exhibit C.
44

 90.

All contemporaneous documents related to the Transaction reflect the

parties’ intention that AmEx GBT would make a pre-closing
and, if applicable, either

or make a

—all in order to satisfy the Transaction’s fundamental
net leverage requirement. Nowhere was it contemplated that
AmEx GBT would “holdback” and divert

dollars from the Transaction

to its balance sheet to
91.

First, AmEx GBT’s credit agreement sets forth specific uses of

proceeds from the credit facility for the Transaction:

payment of certain Transaction-related costs; and the making of a preclosing

in an amount not to exceed

Notably absent from the list is “holding back” and diverting

of

dollars to AmEx GBT to fund extra-ordinary operating losses.
92.

Second, AmEx GBT’s marketing materials to the Transaction’s lenders

further evidence the Sellers’ and AmEx GBT’s contemporaneous understanding of
how Section 5.10(d) works. On February 11, 2020, AmEx GBT disclosed to lenders
that

45

 38

93.

Third, in this same presentation to lenders, AmEx GBT also fully

memorialized its understanding of the purpose and application of the SPA’s net
leverage requirements set forth in Section 5.10(d)39:

94.

Fourth, AmEx GBT’s February 2020 confidential information

memorandum to lenders40 likewise confirms how the refinancing is supposed to
occur:

38

See Lender Presentation, American Express Global Business Travel (Feb. 11,
2020) at 6. A true and correct copy of the February 11, 2020 lender presentation is
attached as Exhibit E.
39

Id.

40

See Confidential Information Memorandum, American Express Global Business
Travel (Feb. 11, 2020) at 19. A true and correct copy of this memorandum is attached
as Exhibit F.
46

 95.

Fifth, pro forma calculations prior to April 16 do not incorporate cash

flow after closing of the Transaction, as the Sellers are now trying to do. Rather, the
Section 5.10(d) pro forma calculations that AmEx GBT disclosed to lenders in
February 2020 reflect

cash anticipated at closing of

the Transaction, not at the closing of the
96.

Rather than comply with Section 5.10(d) as the Sellers plainly know

was intended and is required under the SPA, the Sellers secretly developed their new
cash-grab plan. As detailed below, instead of leveraging up, the Sellers plan to
“holdback” and divert a

dollars in cash to AmEx GBT’s balance sheet in

connection with the Transaction—the diametrically opposite result of what the
leveraged recapitalization structure set forth in Section 5.10(d) contemplates. The
Sellers’ plan does violence to the deal the parties expressly negotiated and fails to
satisfy the leverage requirements of either Section 5.10(d)(i) or (d)(ii).

47

 ii.

The Sellers Fail to Satisfy Section 5.10(d)(i)

97.

As discussed above, Section 5.10(d)(i) applies if a

has

been “abandoned” before the Transaction closes.
98.

The

is deemed abandoned under Section 5.10 if “good

faith negotiations with respect to the

[] have ceased.” In that

scenario, immediately before closing, AmEx GBT must borrow money and pay a
in an amount sufficient to bring AmEx
GBT’s first lien net leverage ratio to

And in all events,

AmEx GBT must have an absolute amount of at least

of Net

Indebtedness at closing. The SPA makes clear that maintaining

of Net

Indebtedness at closing is a critical condition precedent, expressly providing “for the
avoidance of doubt” that the deal’s

“shall not be

deemed to have been complied with in all material respects if the Net Indebtedness
is less than
99.

”
There is no dispute that the Sellers do not comply with Section

5.10(d)(i). As set forth in the Sellers’ draft closing statement, instead of maintaining
of Net Indebtedness at closing, the Sellers plan to complete the
Transaction with Net Indebtedness near
leverage ratio.

48

dramatically below the requisite

 100. The Sellers are not complying with the SPA’s leverage requirements
(the fundamental price and investment protection that the Purchasers bargained for
and received) because

Complying with

Section 5.10(d)(i) renders AmEx GBT
101. Instead of admitting the obvious (the Sellers cannot satisfy the
refinancing closing conditions), the Sellers fake compliance by proceeding under the
fictitious notion that the

is still a possibility, assert that the

Transaction will thus proceed under Section 5.10(d)(ii), and then grab
of dollars from the Transaction to

at AmEx GBT. This

plan does not withstand even cursory scrutiny.
102. “Good faith” negotiations of a
103. AmEx GBT told Carlyle in presentations on March 20 and 30 that,
given the brutal impact of COVID-19 on AmEx GBT, it was
including
and was limiting its
and
This is an admission that all
definition includes
these

which by
There was no mention of an exception to

to pursue its largest and riskiest
Indeed, such an exception would be senseless and
49

 inexplicable.
pursuing a

during a crisis, except for
dollar

thus significantly increasing AmEx GBT’s exposure to a paralyzed travel industry
in the midst of an unprecedented global pandemic, and with AmEx GBT’s
precarious financial position and desire to

would be reckless.

104. The Sellers know this, which is why they are not actually negotiating
the

Notwithstanding what they say now, the Sellers repeatedly

admitted this to Carlyle over the past several weeks. They told Carlyle that AmEx
GBT “will focus on
”41 The Sellers’ counsel also confirmed that AmEx GBT “will
”42 Most tellingly,

focus on
AmEx GBT told the Transaction’s lenders that

43

In other words,

41

See Exhibit H at 2.

42

See Ltr. from M. Dontzin to J. Polkes (Apr. 19, 2020). A true and correct copy of
this letter is attached as Exhibit J.
43

See Lender Update, American Express Global Business Travel (April 16, 2020) at
7. A true and correct copy of the April 16, 2020 lender presentation is attached as
Exhibit G. See also Email from G. O’Hara to G. Karira (Apr. 22, 2020). A true and
correct copy of this email is attached as Exhibit M.
50

 105. The draft Transaction closing statements that the Sellers have provided
(an April 16 draft and a substantially similar April 22 draft) provide for a sham
, an apparent pretext solely to satisfy the refinancing provisions. These
documents imply that

is a fabrication. The

timing and price figures provided by the

Sellers and AmEx GBT are not real numbers that reflect an ongoing negotiating
process or anyone’s good faith judgment about when

106. Further, under Sections 5.2 and 5.10(e) of the SPA and a separate
shareholders’ agreement, the Purchasers consent is required for any
before or after the Transaction’s closing. This consent right is absolute and
unqualified. And that is not by accident.

Carlyle bargained for and received a
consent right over

Specifically, the shareholders

agreement requires under Section 3.3.1(a) that the approval of each principal
51

 shareholder (including Carlyle) for

and the agreement

expressly provides “for the avoidance of doubt” that
”44
107. Carlyle has informed AmEx GBT that it cannot and will not consent to
any

Specifically, on April 14, 2020, Carlyle informed the Sellers by

email:

45

In an April 20 letter, Carlyle’s counsel informed the Sellers’

counsel in unambiguous terms:
”46
Negotiations for
that will never happen are not in good faith.
108. In sum, Section 5.10(d)(i) applies. Section 5.10(d)(i) requires AmEx
GBT to borrow sufficient funds to raise its “Net Indebtedness” to at least
and to pay

44

See Exhibit C at 61.

45

See Exhibit H at 3.

to equity holders immediately prior to closing in

46

See Ltr. from J. Polkes to M. Dontzin (Apr. 20, 2020). A true and correct copy of
this letter is attached as Exhibit K.
52

 an amount that would put AmEx GBT’s leverage ratio at
immediately after

The Sellers’ plan fails to comply with this

condition precedent to closing under Sections 8.1(c) and 8.2(b) of the SPA.
iii.

Even if Section 5.10(d)(ii) Did Apply, the
Sellers’ Plan Does Not Comply with It

109. Even assuming, arguendo, that Section 5.10(d)(ii) applies, the Sellers
and AmEx GBT do not meet its requirements.
110. First, Section 5.10(d)(ii) requires AmEx GBT to make

at

closing that is “reasonably expected to result in GBT Holdco’s
immediately after the closing of the
at the anticipated purchase price related to the
the anticipated closing date of

”

at
set forth in the

Sellers’ draft closing statements does not comply with the SPA’s provisions because
the Sellers intend to reduce

amount by

of

dollars and divert that cash to AmEx GBT to cover COVID-19 operating losses
outside of the ordinary course and inconsistent with past practice.
111. Second, the Sellers’ plan does not meet the deal’s fundamental
requirement that AmEx GBT reach a
According to the draft closing statements, the Sellers intend to close with
of cash on AmEx GBT’s balance sheet and Net Indebtedness near
53

 The
Sellers’ plan—to “holdback”

dollars from the Transaction to

and then rapidly spend it all to potentially reach a leverage ratio at some
future point in time when the fictional

occurs—is not what the

contract permits or the parties intended. Indeed, the pro forma calculations prior to
April 16 calculated the leverage ratios do not account for post-Transaction closing
cash flow (as the Sellers are now trying to do). And the SPA’s requirement to use a
defined Adjusted EBITDA number for purposes of the calculation further reinforces
that the leverage ratio was supposed to be achieved at the Transaction Closing and
not take account of future operating cash flows.
112. Third, since the
the Sellers cannot possibly have a “reasonable expectation” that their
planned

would result in the required

113. Fourth, the Sellers have refused to instruct their designees on AmEx
GBT’s board approve a

“prior to closing” of the Transaction,

as required under Sections 5.10(d)(ii) and 5.10(e). As discussed above, the SPA
requires AmEx GBT to make

to the Purchasers if the

Transaction closes under Section 5.10(d)(ii) and the
54

is abandoned.

 If the deal is to close under subsection (d)(ii), as the Sellers insist, then Section
5.10(e) provides that the Sellers’ responsibility for effectuating
includes:
instructing their designees to the board of directors of GBT
Holdco to approve
prior to the Closing
. . . subject in each case to any applicable Legal Requirements,
including the good faith and reasonable exercise by such
directors of their applicable fiduciary duties at the time of such
approval.
114. The AmEx GBT board’s refusal to approve that
before closing is a further violation of Section 5.10(e). If AmEx GBT’s board
believes it cannot approve

consistent with its fiduciary

duties

, then the board must say

so. That would simply be further evidence that AmEx GBT has suffered an MAE.
115. Moreover, upon information and belief, the Sellers not only plan to
violate the SPA’s Refinancing provisions at closing (and thereby increase
Purchasers’ equity checks by more than

dollars) but also are

contemplating depriving the Purchasers of the fundamental benefit of their bargain
all over again in six months when they grab another

of Transaction

financing, in further violation of the SPA’s express closing conditions. Although
repeatedly affirming they will draw down the second tranche under Section
5.10(d)(ii), the Sellers and AmEx GBT nonetheless have demurred on whether they
55

 will in fact

asserting they will decide what to do

after closing. But as described above, the

and the

Sellers know this. And, significantly, the Sellers and AmEx GBT failed to use
reasonable best efforts to deliver, prior to closing of the Transaction, the AmEx GBT
board approval of

(which approves

of that

prior to closing of the Transaction, as required by the
SPA. This means AmEx GBT will be sitting on the
purchase

, neither using it to

nor distributing it to the Purchasers. They will draw down this second

tranche of the financing just as AmEx GBT is
The Sellers and AmEx GBT thus leave themselves the option of using
the second tranche Transaction financing as another
later this year, further decimating the Purchaser’s equity investment and return, in
violation of the SPA and Shareholders’ Agreement.
116. Finally, the Sellers’ attempt to “holdback”

million on AmEx

GBT’s balance sheet at closing (and their self-help option to do it all over again six
months later) is also in itself an admission of an MAE and implies the Sellers are

117. Completing the refinancing in compliance with Section 5.10 of the SPA
is a condition precedent to closing the Transaction under 5.10(d), Section 8.1(c)
56

 (which specifically mandates the completion of the refinancing in compliance with
Section 5.10(d)) and Section 8.2(b) (which requires AmEx GBT and the Sellers to
perform all of their covenants under the SPA in all material respects, including the
covenants in Section 5.10(d)). The Sellers have failed to satisfy each of these
conditions precedent to closing related to the Refinancing.
C.

AmEx GBT Has Ceased Operating in the Ordinary Course of Business
118. It would defy plain English and the terms of the SPA to say that AmEx

GBT—so weakened by the COVID-19 pandemic that its owners have felt compelled
to unlawfully turn a recapitalization transaction into an

—is

operating in the ordinary course of business. It plainly is not.
119. Under Section 5.2 of the SPA, AmEx GBT must operate its business in
the ordinary course, which the SPA defines as “with respect to any Person, the
ordinary course of business of such Person consistent with past custom and
practice.” Operating in the ordinary course is a condition precedent to closing under
Section 8.2(b) of the SPA.
120. The purpose of an ordinary course provision is to ensure that the
business the buyer is paying for at closing is essentially the same as the one it decided
to buy at signing. The

AmEx GBT that the Sellers are

currently pushing is most certainly is not the same company that Purchasers agreed
to buy at signing.
57

 121. For starters, transforming a recapitalization transaction into an
financing to temporarily

without consulting the

Purchasers cannot be an operation of the business in the ordinary course. While
Section 5.2 of the SPA exempts transactions contemplated by the SPA from the
“ordinary course” limitation, the Sellers are not proposing anything contemplated by
the SPA. They are trying to impose a

financing on Carlyle and the other

Purchasers and rewrite the terms of the Transaction.
122. Moreover, cost-cutting steps taken by AmEx GBT also show a stark
departure from the ordinary course. Since the first assessment it provided to Carlyle
about COVID-19’s impact, AmEx GBT has reported
plans to cut costs to mitigate its significant losses.

123. Just two weeks later, in a March 20 presentation, as discussed above,
AmEx GBT reported

58

 124. By the time of an April 16, 2020 presentation to lenders, the magnitude
of cash protection measures that AmEx GBT had identified and taken action on had
47

125. These drastic cost-cutting measures also demonstrate the durational
impact of the COVID-19 pandemic on AmEx GBT. Even if AmEx GBT were to
recover in line with the Sellers’ forecast (which for the reasons explained above, it
will not), these measures leave AmEx GBT without resources to bring in future
revenue. The Sellers are asking the Purchasers to buy the shell of a once-profitable
company.
126. These cost-slashing actions bear no resemblance to

The fact that
AmEx GBT claims it is instituting these actions to preserve cash and

47

See Exhibit G.
59

 due to the COVID-19 pandemic is not a contractual excuse: the covenant
in Section 5.2 of the SPA is absolute and includes no exception that relieves AmEx
GBT of its obligation to operate in the ordinary course.
127. Nor does the Sellers’ claim that AmEx GBT has implemented similar
measures in a past crisis hold merit. For one, there is no meaningful comparison
between the magnitudes of the effect of the COVID-19 pandemic on AmEx GBT
compared with any recent past crisis. The COVID-19 pandemic’s effect on travel is
expected to be exponentially more severe than that experienced after the 9/11
attacks, the 2008 financial crisis, the 2010 European ash cloud, or any other prior
disruption. But even assuming AmEx GBT may have cut costs (in a much less drastic
manner) during the financial crisis over a decade ago, that does not change the fact
that the measures AmEx GBT is currently undertaking or plans to undertake
completely transform the company the Purchasers agreed to buy.
128. Operation of AmEx GBT’s business in the ordinary course consistent
with past custom and practice in all material respects (under Section 5.2 of the SPA)
is a condition precedent to closing under Section 8.2(b) of the SPA. The
measures AmEx GBT is taking to cut costs, along with AmEx GBT’s manipulation
of a recapitalization deal into

funding of AmEx GBT paid by Carlyle and

the other Purchasers, is far afield of AmEx GBT’s ordinary course and past practice.
The Sellers have thus failed to satisfy this condition precedent to closing.
60

 D.

The Purchasers Have Not Received the Certification
from AmEx GBT’s Officers that the SPA Requires
129. Despite the Sellers’ insistence that no MAE has occurred, and that

AmEx GBT is supposedly operating in the ordinary course, they have refused to
provide certifications from AmEx GBT’s management attesting to that fact.
130. Under Section 8.2(f) of the SPA, the Purchasers’ obligation to close the
Transaction is conditioned upon the receipt of a certificate, signed by certain officers
of AmEx GBT, certifying that the representations and warranties contained in
Section 2 of the SPA remain true and correct in all material respects:
The obligations of each of the Purchasers to consummate the
Transactions are subject to the satisfaction or waiver, at or prior
to the Closing, of each of the following conditions . . . The
Purchasers shall have received a certificate, dated as of the
Closing Date and signed by each officer of GBT Holdco that
signed the Management Representation Letter, certifying as to
the matters set forth in Section 8.2(a), but only with respect to
the representations and warranties set forth in Section 2.
131. The representations and warranties that the AmEx GBT officers must
attest to include those contained in Section 2.7 of the SPA (Absence of Changes),
including that since December 31, 2018 an MAE has not occurred, and that since
June 30, 2019, AmEx GBT has operated in the Ordinary Course of Business.
132. The Sellers have refused to provide a certification from each AmEx
GBT officer in his/her personal capacity, insisting that the AmEx GBT officers need
only make the required certifications on behalf of AmEx GBT.
61

 133. This position is contrary to the shared contemporaneous understanding
of the parties. The text of the SPA is clear that each AmEx GBT officer must
individually certify as to the representations and warranties contained in Section 2
of the SPA. This is exactly what these officers did when AmEx GBT signed the
SPA, and there is no logical reason apparent in the SPA’s text or otherwise which
suggests that the requirement would have changed between signing and closing.
Indeed, the SPA itself refers to the signatories of the management representation
letter at the time the SPA was executed to identify who must make the same
representations at the time of the Transaction’s closing.
134. If the Sellers’ view were correct, Section 8.2(f) would simply require a
certification from AmEx GBT, as the SPA does in Section 8.2(e) with respect to
Juweel. There, the SPA requires that “Purchasers shall have received a certificate
from Juweel, dated as of the Closing Date and signed by an authorized signatory of
Juweel.” Unlike Section 8.2(e), however, Section 8.2(f) adds the language that the
certificate must be “signed by each officer of GBT Holdco that signed the
Management Representation Letter.” If signing “on behalf of GBT” were all that
was required, there would be no need for a signature from each of the identified
AmEx GBT officers. Rather, one authorized representative would suffice (as is the
case with Section 8.2(e)).

62

 135. The delivery of the certification described above is a condition
precedent to closing the Transaction under Section 8.2(f) of the SPA. The Sellers
have not satisfied this condition precedent to closing.
E.

The Sellers Are Unable to Accurately Bring Down the SPA
Representations & Warranties at Closing
136. The Sellers made representations at signing that, as a condition

precedent to closing under Section 8.2(a) must be “true and correct,” except when
failure to be so would not constitute an MAE. The Sellers’ representations regarding
“No Violations” under Section 2.3 and “Suppliers and Customers” under Section
2.21 cannot accurately be brought down at closing and this failure, individually and
in the aggregate, constitutes an MAE.
137. First, the Sellers’ plan to “holdback” funds from the Transaction
financing to fund extra-ordinary operating losses violates the permitted use of
proceeds set forth in the Credit Agreement, which are limited to “(i) the repayment
of existing Indebtedness and related obligations of GBT Group Services B.V. under
the Existing Credit Agreement, (ii) the payment of the Transaction Costs, and (iii)
the making of

—i.e.

requires

63

 ”48 This
provision is not satisfied by a diversion of Transaction financing proceeds to a single
entity (GBT JerseyCo Ltd) to cover

operating losses that AmEx GBT is

experiencing outside of the ordinary course of business as result of the COVID-19
pandemic.
138. AmEx GBT will be in default of the Credit Agreement, and therefore
the Sellers cannot accurately bring-down the representation under Section 2.3 of the
SPA that “consummation of the Transactions” will not “result in the violation of
breach of, or constitute . . . a default” under any contract to which AmEx GBT is a
party.
139. Second, given the devastating impact of the pandemic, the Sellers also
cannot accurately bring down their representation and warranty with regard to
suppliers and customers under Section 2.21 of the SPA, required as a condition
precedent to closing under Section 8.2(a). That provision requires the Sellers to
truthfully represent at closing that

48

See Exhibit D at 16.
64

 140. AmEx GBT’s own forecasts indicate projected 2020 revenue at

141.

Moreover, recent public disclosures by AmEx GBT’s suppliers and

customers confirm that GBT will continue to experience reduced revenues
from its top 20 material customers and suppliers. As explained above, many
of AmEx GBT’s top suppliers—including Delta Air Lines, United Airlines, and
American Airlines—have publicly disclosed in investor presentations and elsewhere
that they are experiencing and expecting unprecedented and prolonged revenue
declines. United has already announced a 90% cut in capacity and American Airlines
described the impact as “dramatic and has been unlike anything we’ve ever
experienced.” Indeed, many airlines are limiting their capacity by blocking seats to
increase social distancing. For example, Delta Air Lines announced that it would
leave empty 50% of first class and 60% of the main cabin.
142. The Sellers are unable to accurately bring-down the Section 2.21
representation at closing, and thus fail to satisfy the condition precedent to closing
set forth in Section 8.2(a) of the SPA.
65

 F.

The Sellers and AmEx GBT Failed to Comply in All Material Respects
with the Covenant to Provide Access and Investigation
143. In the months since the COVID-19 pandemic began, the Sellers have

refused to provide Carlyle with basic information it is entitled to under the SPA. The
information it did provide was given belatedly, and in bits and pieces, requiring
Carlyle to repeatedly follow-up and seek clarification.
144. Under Section 5.1, AmEx GBT must provide the Purchasers with
access to all books, records and properties of AmEx GBT and must provide
responses to all reasonable written requests from the Purchasers. The satisfaction of
Section 5.1 in all material respects is a condition precedent to the Purchasers’
obligation to close under Section 8.2(b).
145. As detailed above, the Sellers and AmEx GBT have stonewalled
Carlyle’s requests for information that it was entitled to under Section 5.1 of the
SPA. To take just one example, despite the devastating impact of COVID-19 on
AmEx GBT’s 2020 financials—and notwithstanding repeated requests from Carlyle
over the last month—AmEx GBT and the Sellers refused to forecast or provide an
operating plan beyond 2020. But at the same time, the Sellers were making rote legal
conclusions that the impact was not durationally significant (conclusions
presumably formed based on some longer term analysis). The only reasonable
conclusion to draw is that the Sellers and AmEx GBT either intentionally failed to
66

 deliver bad news reflecting that an MAE has occurred, or refused to create forecasts
and business plans that are necessary for operation of the business because those
documents would contradict their position that no MAE had occurred. This is not
the cooperation that the SPA mandates.
146. Furthermore, as also described above, in support of the fiction that the
remains viable and any closing can occur under Section 5.10(d)(ii),
the Sellers have made contradictory, vague, and incomplete disclosures in response
to the Purchasers’ requests for information concerning the status of the

147. The Sellers and AmEx GBT have failed to satisfy their obligations to
provide access and information under Section 5.1 and thus have failed to satisfy the
closing condition set forth in Section 8.2(b) in all material respects.
G.

The Sellers and AmEx GBT Failed to Comply in All Material Respects
with the Covenant to Use Commercially Reasonable Efforts to Fulfill
Conditions Precedent to Closing
148. The Sellers and AmEx GBT have an obligation under Section 5.4 to

use “commercially reasonable efforts to take, or cause to be taken, all lawful and
reasonable actions within such party’s control and to do, or cause to be done, all
lawful and reasonable things within such party’s control necessary to fulfill the
conditions precedent to the obligations of the other party(ies) hereunder and to
consummate and make effective as promptly as practicable the Transactions and to
67

 cooperate with each other in connection with the foregoing.” As a condition
precedent to closing under Section 8.2(b), this covenant must be complied with in
all material respects. The Sellers and AmEx GBT violated this covenant in numerous
ways.
149. First, as detailed above, the Sellers and AmEx GBT stonewalled
Carlyle’s requests for information that it was entitled to receive under Section 5.1 of
the SPA.
150. Second, the limited information that the Sellers and AmEx GBT did
produce was done belatedly and in drips and drabs. At each stage, Carlyle was forced
to try to read their minds. As detailed above, only when Carlyle confronted the
Sellers regarding the apparent implications of their draft closing statement did the
Sellers and AmEx GBT even acknowledge their intent to radically transform the
deal.
151. Third, the Sellers intentionally failed to consummate the refinancing
and

in accordance with Section 5.10. As detailed above, the Sellers

manufactured the pre-text of a

to holdback a

dollars

from the Transaction to cover COVID-19 operating losses. In so doing, the Sellers
violated the net leverage ratio that had guided the deal since its inception. Such an
act goes far beyond failing to use commercially reasonable efforts to fulfill the
conditions precedent to closing in Sections 8.1(c) and 8.2(b).
68

 152. In contrast, Carlyle was transparent from the start and gave the Sellers
multiple opportunities to meet the conditions precedent to closing. Carlyle shared its
concerns that an MAE had occurred on April 8—weeks before any closing would
occur—and invited the Sellers to explain how the Transaction would not render the
Company

When the Sellers failed to respond, Carlyle tried again, and

again. Even after the Sellers engaged in sleight of hand with the draft closing
statement, Carlyle laid out in its concerns in detail and again invited the Sellers to
explain themselves. The Sellers provided no substantive information in response and
issued an ultimatum for Carlyle to close. Since the Sellers had so plainly failed to
satisfy multiple closing conditions and were not using commercially reasonable
efforts to close the Transaction, Carlyle could not do so.
COUNT I
Declaration that Carlyle Has No Obligation to
Close the Transaction Because AmEx GBT
Has Experienced an Material Adverse Effect
153. Carlyle repeats and realleges the allegations of paragraphs 1–152 as if
fully set forth herein.
154. Under Section 8.2(d) of the SPA, Carlyle’s obligation to consummate
the Transaction is subject to the condition that, since the date of that agreement, no
MAE shall have occurred. Under Section 8.2(a), Sellers’ representation under
Section 2.7 that no MAE has occurred must be accurately brought down at closing.
69

 155. As alleged in detail above, as a result of the COVID-19 pandemic, an
MAE has occurred following the execution of the SPA and continues to occur.
156. AmEx GBT and the Sellers dispute whether an MAE has occurred as a
result of the COVID-19 pandemic following the execution of the SPA and whether
the related condition to closing has been satisfied.
157. As a result, an actual case or controversy exists between the parties that
is ripe for judicial determination.
158. Accordingly, Carlyle seeks a declaration that it has no obligation to
close the Transaction because, since the execution of the SPA, AmEx GBT has
experienced an MAE, the absence of which is a condition to closing under Sections
8.1(a) and 8.1(d) the SPA.
COUNT II
Declaration that Carlyle Has No Obligation to
Close the Transaction Because the Refinancing
Conditions of the SPA Have Not Been Satisfied
159. Carlyle repeats and realleges the allegations of paragraphs 1 through
152 as if fully set forth herein.
160. Under Sections 8.1(c) and 8.2(b) of the SPA, Carlyle’s obligation to
consummate the Transaction is subject to the condition that the refinancing and
will be completed in the manner required by Section 5.10(d).

70

 161. As alleged in detail above, the Sellers’ plan for closing the Transaction
does not comply with Section 5.10 of the SPA.
162. AmEx GBT and the Sellers dispute whether the Sellers’ plan for closing
the Transaction complies with Section 5.10 of the SPA and whether the related
conditions to closing has been satisfied.
163. As a result, an actual case or controversy exists between the parties that
is ripe for judicial determination.
164. Accordingly, Carlyle seeks a declaration that it has no obligation to
close the Transaction because the conditions precedent to closing under Section
8.1(c) and 8.2(b) that the refinancing and

occur in accordance with

Section 5.10 have not been satisfied.
COUNT III
Declaration that Carlyle Has No Obligation to Close
the Transaction Because AmEx GBT Has Not
Operated in the Ordinary Course of Business
165. Carlyle repeats and realleges the allegations of paragraphs 1 through
152 as if fully set forth herein.
166. Under Section 8.2(b) of the SPA, Carlyle’s obligation to consummate
the Transaction is subject to the condition that, since the execution of the SPA,
AmEx GBT has operated its business in the ordinary course and consistent with past
practice under Section 5.2 of the SPA.
71

 167. As alleged in detail above, AmEx GBT has not complied with Section
5.2 in all material respects.
168. AmEx GBT and the Sellers dispute whether AmEx GBT has complied
with Section 5.2 of the SPA in all material respects and whether the related condition
to closing has been satisfied.
169. As a result, an actual case or controversy exists between the parties that
is ripe for judicial determination.
170. Accordingly, Carlyle seeks a declaration that it has no obligation to
close the Transaction because AmEx GBT has not operated in the ordinary course
of business in all material respects, which is a condition to closing under Section
8.2(b) of the SPA.
COUNT IV
Declaration that Carlyle Has No Obligation to Close
the Transaction Because Purchasers Have Not
Received the Required Management Certificate
171. Carlyle repeats and realleges the allegations of paragraphs 1 through
152 as if fully set forth herein.
172. Under Section 8.2(f) of the SPA, Carlyle’s obligation to consummate
the Transaction is subject to the condition that it has received a certificate signed by
certain AmEx GBT officers certifying as to the accuracy of the representations about
AmEx GBT in Section 2 of the SPA.
72

 173. As alleged in detail above, Sellers and AmEx GBT have refused to
provide the certificate required by Section 8.2(f).
174. AmEx GBT and the Sellers dispute what constitutes satisfaction of the
condition to closing in Section 8.2(f) of the SPA and whether Sellers’ and AmEx
GBT’s interpretation satisfies that condition to closing.
175. As a result, an actual case or controversy exists between the parties that
is ripe for judicial determination.
176. Accordingly, Carlyle seeks a declaration that it has no obligation to
close the Transaction because Carlyle has not received the management certificate
required by Section 8.2(f) of the SPA.
COUNT V
Declaration that Carlyle Has No Obligation to Close
the Transaction Because Sellers Failed to Make
Accurate Representations at Closing
177. Carlyle repeats and realleges the allegations of paragraphs 1 through
152 as if fully set forth herein.
178. Under Section 8.2(a) of the SPA, Carlyle’s obligation to consummate
the Transaction is subject to the condition that “[e]ach of the representations and
warranties made by the Sellers and Juweel in this Agreement (without giving effect
to any qualifications as to materiality or Material Adverse Effect as set forth therein)
shall be true and correct as of the date hereof and at the Closing Date (or, if made as
73

 of a specified period or date, as of such period or date), except where the failure to
be so true and correct would not have, individually or in the aggregate, a Material
Adverse Effect.”
179. As alleged in detail above, the representation under Section 2.3
regarding No Violations is not true and correct at the Closing Date and the result has
an MAE.
180. As alleged in detail above, the representation under Section 2.21
regarding Suppliers and Customers is not true and correct at the Closing Date and
the result has an MAE.
181. The Sellers dispute that the representations are not true and correct at
closing and that they have failed to satisfy this condition precedent to closing.
182. As a result, an actual case or controversy exists between the parties that
is ripe for judicial determination.
183. Accordingly, Carlyle seeks a declaration that it has no obligation to
close the Transaction because the Sellers have not met the condition precedent to
closing under Section 8.2(a).
COUNT VI
Declaration that Carlyle Has No Obligation to Close
The Transaction Because The Covenant to Provide
Access and Investigation Has Not Been Complied with
in All Material Respects
74

 184. Carlyle repeats and realleges the allegations of paragraphs 1 through
152 as if fully set forth herein.
185. Under Sections 5.1 and 8.2(b) of the SPA, Carlyle’s obligation to
consummate the Transaction is subject to the condition that GBT’s obligation to
provide information to Carlyle under Section 5.1 be complied with in all material
respects.
186. As alleged in detail above, Section 5.1 has not been satisfied.
187. AmEx GBT and the Sellers dispute whether GBT’s obligation to
provide information to Carlyle under Section 5.1 has been complied with in all
material respects.
188. As a result, an actual case or controversy exists between the parties that
is ripe for judicial determination.
189. Accordingly, Carlyle seeks a declaration that it has no obligation to
close the Transaction because GBT’s obligation to provide information to Carlyle
has not been complied with, the satisfaction of which is a condition to closing under
the SPA.
COUNT VII
Carlyle Has No Obligation to Close the Transaction
Because the Covenant to Use Commercially
Reasonable Efforts to Fulfill Conditions Precedent to Closing
Has Not Been Complied with in All Material Respects
75

 190. Carlyle repeats and realleges the allegations of paragraphs 1 through
152 as if fully set forth herein.
191. Under Section 8.2(b) of the SPA, Carlyle’s obligation to consummate
the Transaction is subject to the condition that “[a]ll of the covenants and obligations
that the Sellers, Juweel, GBT Holdco and GBT UK Holdco are required to comply
with or to perform at or prior to the Closing Date shall have been complied with and
performed in all material respects.”
192. As alleged in detail above, the Sellers failed to comply in all material
respects with their obligation under Section 5.4 to use commercially reasonable
efforts to satisfy the conditions precedent and consummate the Transaction.
193. The Sellers dispute that they have failed to satisfy this condition
precedent to closing.
194. As a result, an actual case or controversy exists between the parties that
is ripe for judicial determination.
195. Accordingly, Carlyle seeks a declaration that it has no obligation to
close the Transaction because the Sellers have not met the condition precedent to
closing under Section 8.2(b).
PRAYER FOR RELIEF
Carlyle seeks judgment and relief against AmEx GBT and the Sellers as
follows:
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 a.

Declaring that Carlyle has no obligation to close the Transaction

because, since the execution of the SPA, AmEx GBT has experienced and continues
to experience an MAE, the absence of which is a closing condition under the SPA;
b.

Declaring that Carlyle has no obligation to close the Transaction

because the refinancing and

will not be consummated as required by

Section 5.10, the satisfaction of which is a closing condition under the SPA;
c.

Declaring that Carlyle has no obligation to close the Transaction

because AmEx GBT has not operated in the ordinary course of business in all
material respects, which is a closing condition under the SPA;
d.

Declaring that Carlyle has no obligation to close the Transaction

because AmEx GBT has not provided the management certificate required by
Section 8.2(f) of the SPA;
e.

Declaring that Carlyle has no obligation to close the Transaction

because the Sellers will not satisfy the condition precedent to closing under Section
8.2(a) that representations and warranties are true and accurate at closing;
f.

Declaring that Carlyle has no obligation to close the Transaction

because the obligation to provide access and investigation was not complied with in
all material respects, which is a condition precedent to closing under the SPA;
g.

Declaring that Carlyle has no obligation to close the Transaction

because AmEx GBT and Sellers did not use commercially reasonable efforts to
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 fulfill conditions precedent to closing, the satisfaction of which in all material
respects is a closing condition under the SPA; and
h.

Granting Carlyle any other relief that the Court deems just and proper.

POTTER ANDERSON & CORROON LLP

OF COUNSEL:
Jonathan D. Polkes
Caroline Hickey Zalka
Amanda Shulak
WEIL, GOTSHAL
& MANGES LLP
767 Fifth Avenue
New York, NY 10153

/s/ Michael A. Pittenger
Michael A. Pittenger (# 3212)
Matthew F. Davis (# 4696)
Clarissa R. Chenoweth-Shook (# 5278)
Daniel M. Rusk IV(# 6323)
1313 North Market Street
Hercules Plaza, 6th Floor
Wilmington, DE 19801
(302) 984-6000
Attorneys for Plaintiff Carlyle Roundtrip, L.P.

Dated: May 8, 2020
PUBLIC VERSION
FILED: MAY 13, 2020
6722620

78

 CERTIFICATE OF SERVICE
I hereby certify that on this 13th day of May, 2020, a copy of the
foregoing document was served via File & ServeXpress upon the following
attorneys of record:
Daniel B. Rath, Esq.
Rebecca L. Butcher, Esquire
Jennifer L. Cree, Esquire
LANDIS RATH & COBB LLP
919 Market Street, Suite 1800
P.O. Box 2087
Wilmington, DE 19899
/s/ Clarissa R. Chenoweth-Shook
Clarissa R. Chenoweth-Shook (#5728)