A federal judge yesterday tabled a proposal to pay $50 million to $150 million in "breakup fees" to Rorer Group Inc. if it loses out to another suitor in the bidding battle for the A.H. Robins Co.
The fees -- two to six times Rorer's net income for the last 12 months -- were urged by Ralph R. Mabey of Salt Lake City, the independent examiner in the Chapter 11 bankruptcy case. Mabey was assigned to the case by U.S. District Judge Robert R. Merhige Jr., who presides in Robins' 29-month-old voluntary reorganization.
The range urged by Mabey compares with the flat $100 million figure proposed by Rorer, a Ft. Washington, Pa., pharmaceutical firm, and with the $25 million to $75 million that Merhige approved a few months ago. All of the figures exclude millions of dollars in expected billings for legal, consultant and other expenses.
At the time, Rorer was the only bidder for Robins, having proposed a $2.65 billion acquisition that included paying up to $1.765 billion into a trust for Dalkon Shield victims. That bid was embodied in Robins' still-pending reorganization plan.
On Dec. 11, however, Merhige, in a move that cleared up uncertainties for prospective bidders, set $2.475 billion as the sum that would constitute full compensation of Dalkon Shield victims if paid over a reasonable time. Six days later, Sanofi, a French firm, made an offer for a 60 percent controlling interest in Robins.
On Christmas Eve, American Home Products Corp. reentered the bidding after withdrawing an initial offer last February. Rorer responded Monday with a sweetened offer for Robins, subject to a flat $100 million breakup fee, plus expenses, if after being accepted it should be displaced by a higher bidder.
Mabey, apparently after conversations with Rorer, last week filed a motion to enhance the breakup fees to compensate Rorer for what he called "the costs, risks and delays involved in entering the merger agreement and weathering the storm inherent in the Chapter 11 confirmation process."
Yesterday, Mabey, arguing in a telephone conference call for the enhanced fees for Rorer, said they would help deter withdrawal of "what appears to be the only viable proposal," and that "a bird in the hand is worth two in the bush."
But he won no support for his proposal from lawyers for Robins; the committee representing Robins' outside shareholders; the Dalkon Shield Claimants' Committee, which represents victims of the defective intrauterine contraceptive device, or the Internal Revenue Service, which has a claim against Robins.
Merhige, in taking Mabey's motion under advisement, said he had heard from a fourth possible bidder, which he did not identify. But, he said, a Jan. 6 deadline for Robins to choose its acquirer is firm, and no company that tries to elbow out the chosen bidder will have a chance unless it puts "substantially" more than $2.475 billion in trust for Dalkon Shield victims.