American Tower 'Improperly Withdrew' From Project Pact, Says Terra

American Tower International (ATI) “improperly withdrew” from an $800 million Latin American wireless project agreement without justification, alleged Terra Towers in a breach of contract suit filed Dec. 12 in the Circuit Court of the 11th Judicial Circuit in Miami.

Terra alleged ATI agreed to buy from Terra, TBS Management and DT Holdings (DTH) 100% of Continental Towers LATAM Holdings' shares for $466 million in December 2018, said the complaint (docket 162880555). The action also involves the alleged breach of a telecom tower development agreement with Terra affiliate DTH for 958 cellphone towers in Latin America for $328 million.

DTH and ATI began negotiations in 2016 to establish a joint venture in the telecom tower business in Peru through a site development agreement (SDA) and master usufruct agreement, said the complaint. The agreements said an affiliate DTH company, Desarrollos Terrestres del Peru (DTP), would receive funding from ATI to build and deploy site units comprising cellphone towers and fiber infrastructure in Lima. DTP built the tower sites, and ATI parent American Tower Corp. (ATC) received rental income from cellphone carriers leasing space on the towers, it said.

From late 2017 through 2018, Terra and ATI negotiated ATI's proposed acquisition -- calling the proposal Project Codu -- of towers owned by Continental Towers and DTH. In October 2018, the parties agreed ATC would provide funding to Terra for the buyout of Peppertree's and Goldman Sachs’ minority shares in Continental Towers at an agreed price, and Terra would become sole owner of Continental Towers’ shares, which it would then sell to ATI for $466 million, the complaint said. DTH would enter an SDA with ATC for the development of 958 sites in several Central American countries for $328 million, bringing the total Project Codu tag to nearly $800 million.

The parties submitted definitive agreements to ATI’s board in final form toward an expected closing by year-end, said the complaint. Part of Project Codu included ATC’s requirement that 94 Guatemala towers owned by Telefonica -- which DTH had contracted to buy after winning a public bid process -- be included, with the stipulation the purchase would be completed by year-end, it said. ATC’s investment committee approved the deal, but an ATC executive delayed the closing to Q1.

Amid last-minute negotiations to meet the year-end deadline to buy the Telefonica towers, ATC executives said they couldn’t loan the funds to DTH for purchase of the Telefonica towers without board approval but could document advancement of the funds through an amendment to the SDA. To ensure DTH received the necessary funds to buy the Telefonica towers, “ATC falsely represented in its internal documents that the funds advanced to DTH were to fund an enlargement of the SDA in Peru when it really was essentially a loan” to buy the towers, the complaint said.

DTH “would not have proceeded with the purchase of the Telefonica towers had it not received assurances from ATC that Project Codu would close” within the first few months of 2019, the complaint said. ATI notified DTP in early 2019 that it would not proceed with Project Codu, said the plaintiffs, and withdrew from the project “without justification.” Plaintiffs are seeking an award of compensatory damages, plus interest, attorneys’ fees and costs, and other relief.

In a Friday response, an American Tower spokesperson emailed, “Our policy is not to comment on ongoing legal proceedings but we will fully defend our interests."