International firm of the year Clifford Chance

Transcription

1 ASIA TEAMS OF THE YEAR International firm of the year Clifford Chance L-R: Connie Heng, Angela Chan and Tony Oakes of Clifford Chance Strong relationships with Asian issuers fuelled Clifford Chance s work this year. The firm assisted Vincom on its convertible and counselled Kookmin Bank on its groundbreaking covered bond. Banks such as China Development Bank on the China Minmetals deal and those on the Buma LBO also turned to Clifford Chance. The firm was also involved in two of the year s most important restructurings Asia Aluminum and FerroChina. Also nominated: Allen & Overy; Linklaters; Freshfields Bruckhaus Deringer; Latham & Watkins; Sidley Austin and Skadden Arps Slate Meagher & Flom Most innovative US firm: Sidley Austin L-R: Benjamin Carale, Renee Xiong, Ivy Tseng, Matthew Sheridan, Timothy Li and Carmen Guo of Sidley Austin, with Jack Wilson of RR Donnelley Sidley Austin had a very active 2009, acting for the companies on a swathe of Asian deals. In capital markets, it assisted Indika on its senior note offering, the PRC government on its renminbi bond in Hong Kong, and Sands China. The firm also counselled the targets of private equity, namely Transpacific and Gome. Also nominated: Davis Polk & Wardwell; O Melveny & Myers; Latham & Watkins; Milbank Tweed Hadley & McCloy; Shearman & Sterling and Skadden Arps Slate Meagher & Flom Offshore team of the year: Walkers L-R: Tom Young of IFLR, Denise Wong, Carol Hall and Kristen Kwok of Walkers Corporate work dominated Walkers practice in 2009, with the firm advising on a number of important M&A and private equity deals in the region. In Hong Kong, it assisted Carlyle on its take-private of Natural Beauty Bio- Technology. The firm also assisted Bain Capital on its investment in Gome by way of a subscription to convertible bonds and an underwritten open offer. In Cambodia, meanwhile, the firm assisted the banks on Royal Group s takeover of CamGSM. Elsewhere, the firm assisted Deutsche Bank on Asiana Airlines securitisation of ticket receivables. 20 IFLR/April

2 ASIA TEAMS OF THE YEAR Debt and equity-linked: Linklaters Linklaters remains a trusted adviser for underwriters and bookrunners, with the firm assisting the banks on Bank of East Asia s $500 million core capital raising and the PRC s Rmb 6 billion offshore bond. The firm also assisted the banks on Tata Steel s $875 million exchange offer in November, the largest such deal in Asia. However, the firm showed it has other strings to its bow by assisting Sino-Forest on its consent and exchange offer with US law advice. L-R: Jeremy Webb of Linklaters, Rachel Evans of IFLR Also nominated: Clifford Chance; Davis Polk & Wardwell; Shearman & Sterling and Sidley Austin Securitisation: Allen & Overy L-R: Walter Son of Allen & Overy, Rachel Evans of IFLR Equity: Freshfields L-R: Tom Young of IFLR, Iris Leung and Calvin Lai of Freshfields Allen & Overy s structured finance team is widely respected as one of the best in the region. The past 12 months were no exception with A&O picking up several important mandates in Korea. The firm advised the arrangers on Kookmin s groundbreaking covered bond in May and assisted Nomura on the IBKguaranteed securitisation of Hanjin s shipping contracts in October. In non-transactional matters, the firm also showed its clout, advising on the Nafmii master agreement and counselling the Asia Development Bank on the introduction of closeout netting for derivatives transactions in the PRC. Also nominated: Clifford Chance; O Melveny & Myers and Orrick Herrington & Sutcliffe In May, Freshfields capitalised on its longstanding relationship with Hutchison to advise the company on the spin-off of its Hong Kong telecommunications business. Although well respected for its work with issuers, the firm also played a crucial role on the Sands IPO counselling the sponsors, bookrunners and underwriters. The firm also assisted the underwriters on China Minsheng Bank s $3.9 billion IPO and China Longyuan s $2.6 billion offering. Also nominated: Clifford Chance; Linklaters; Norton Rose and Sidley Austin IFLR/April

3 ASIA TEAMS OF THE YEAR M&A: Clifford Chance L-R: Tom Young of IFLR with Connie Heng of Clifford Chance Clifford Chance picked up several interesting mandates in south-east Asia in In August the firm counselled the banks on Buma s takeover by Delta while, in November, the firm assisted Royal Group on its purchase of the Cambodian operations of Millicom. This was Cambodia s biggest M&A deal to date at $346 million and marked the first buyout of an international firm by its local partner. Elsewhere, the firm assisted China Development Bank on China Minmetals takeover of Oz Minerals. Also nominated: Freshfields Bruckhaus Deringer; Linklaters; O Melveny & Myers and Paul Weiss Rifkind Wharton & Garrison Private equity: Linklaters Linkaters private equity team grows from strength to strength. This year the firm assisted Affinity Equity Partners on its club deal with KKR to buy Oriental Brewery from InBev. Not only was this transaction Asia s largest LBO since 2006, before the credit crunch, it also involved some innovative structuring of the intercreditor agreement to deal with different financing facilities. The firm also assisted Carlyle on its successful take-private of Natural Beauty, as well as TPG on the sale of its stake in BankThai. L-R: Carl Hopkins of Major Lindsey & Africa and Betty Yap of Linklaters Also nominated: Sidley Austin; Simpson Thacher & Bartlett; Skadden Arps Slate Meagher & Flom and Sullivan & Cromwell Restructuring: Clifford Chance FerroChina s distress and insolvency in China kept Clifford Chance busy this year, with the firm representing some of the company s offshore creditors. The deal was closely scrutinised for its insight into China s new bankruptcy law and how foreign creditors would be treated. gasia Aluminum, meanwhile, exposed the dangers for offshore investors in Chinese companies with onshore assets. The company s offshore vehicles were put into liquidation while its onshore assets were sold to a company affiliated with the management. Clifford Chance advised a group of private equity investors. L-R: Tom Young of IFLR with Clifford Chance s Tony Oakes Also nominated: Allen & Overy; Lovells and Sidley Austin 22 IFLR/April

4 ASIA TEAMS OF THE YEAR Project finance: Latham & Watkins Latham & Watkins counselled the lenders on the Paiton 3 project, an Indonesian power plant to be built on the site of an existing, separate project. The deal required the careful drafting of financing documents to ensure that both sets of lenders were protected in the event of either project getting into distress. The firm also assisted Senoko Power on the refinancing of its senior and mezzanine debt facilities. The original deal was shortlisted for IFLR s Project Finance Deal of the Year last year. L-R: Andrew Lam of Latham & Watkins with Rachel Evans of IFLR Also nominated: Clayton Utz; Herbert Smith; Shearman & Sterling and Skadden Arps Slate Meagher & Flom China practice: Clifford Chance Clifford Chance s China practice had a busy The firm was hired by Chinalco on its aborted investment in Rio Tinto, as well as assisting China Development Bank on China Minmetals more successful takeover of Oz Minerals. The firm was also chosen by creditors of Asia Aluminum and Ferrochina looking to extract value from the onshore assets of the distressed PRC-based companies. Also nominated: Davis Polk & Wardwell; Linklaters and Sidley Austin L-R: Tom Young of IFLR, Connie Heng of Clifford Chance Pro-bono firm: Allen & Overy L-R: David Kidd of Allen & Overy with Rachel Evans of IFLR Allen & Overy has supported charities and good causes across the Asia-Pacific region, from Hong Kong and China, to Singapore, Japan and Thailand. The firm advised Roots & Shoots and the World Wildlife Fund on corporate governance issues in China, and counselled Enlighten (which aims to improve the life of those with Epilepsy) on establishing its branch in Hong Kong. Meanwhile, in Thailand, the firm assisted the A-Pac Financial Coalition with a report for the International Centre for Missing and Exploited Children on a legal framework for use against the abuse of children over the internet. Elsewhere, the firm supported Prison Fellowship International with Christmas presents for the children of prisoners in Singapore and India. IFLR/April

5 ASIA TEAMS OF THE YEAR In-house, debt: Credit Suisse Credit Suisse worked on several innovative debt deals in The bank was the sole bookrunner on Vincom s convertible bond, and also played a role on Bumi Resources and CapitaLand s convertibles. Credit Suisse also helped structure Sino-Forest s exchange offer, acting as dealer-manager and solicitation agent. Also nominated: Barclays Capital; Citi; Deutsche Bank; HSBC; Morgan Stanley and Nomura L-R: Stephen Monick of Credit Suisse, IFLR managing editor Simon Crompton In-house, equity: Goldman Sachs Goldman Sachs worked on a swathe of shortlisted equity deals of the year. The bank was the sponsor of Hutchison Telecommunications introduction in Hong Kong, a joint bookrunner on Sands China s IPO, and a joint global coordinator of Maxis s offering. Also in Malaysia, Goldman led Malayan Banking s RM6 billion ($1.6 billion) rights issue. Also nominated: Bank of America Merrill Lynch; BNP Paribas; Credit Suisse; JP Morgan and UBS L-R: Jasmine Karimi of HKCCA, Steven Winegar of Goldman Sachs Regional: Mallesons Stephen Jaques Mallesons is one of Australia s strongest firms, but it also benefits from strong offices in Greater China. This year the firm picked up some quality domestic mandates, counselling the liquidators on Opes Prime s restructuring and National Australia Bank and Westpac on Victoria s desalination plant. National Australia Bank also turned to the firm for advice on the SMHL Securitisation Fund. Meanwhile the Hong Kong team assisted the banks on Lumena s IPO. L-R: David Olsson of Mallesons Stephen Jaques with Rachel Evans, IFLR Also nominated: Kim & Chang; King & Wood and Mayer Brown JSM 24 IFLR/April

6 ASIA AWARDS National winners The winners of the national teams of the year with their awards Local law firms often make the difference between a deal s success or failure. They truly understand the nuances of the law in their jurisdiction, and the practicalities of applying it. This year was no exception, with local law firms across the region playing a crucial role on many of the most innovative deals of For example, Vietnamese winners YKVN acted on the Debt Deal of the Year, helping Credit Suisse structure an international convertible for Vincom. Melli Darsa & Co, the Indonesian winner, and Stamford Law (Singapore), counselled Northstar Pacific on its 40% Local law firms often make the difference between a deal s success or failure stake in Delta the second leg of IFLR s M&A Deal of the Year, which began with Buma raising financing for its acquisition by Delta. Korean Firm of the Year, Kim & Chang, also played its role on a winning transaction, representing HSBC and Citibank on Kookmin s covered bond. This was the first covered bond in Asia and was named Structured Finance Deal of the Year. Indian firm Luthra & Luthra, meanwhile, was recognised for its national work, notably on shortlisted deals Sterlite and Cairn India. But of all the national winners, King & The winning firms Australia Blake Dawson China King & Wood Hong Kong JSM India Luthra & Luthra Indonesia Melli Darsa & Co Japan Nagashima Ohno & Tsunematsu Malaysia Kadir Andri & Partners Wood acted on the most nominated deals four in total. The firm assisted Hutchison Telecommunications on its introduction on the Hong Kong exchange, China Development Bank on China MinMetals investment in Oz Minerals, Natural Beauty on its take-private by Carlyle, and a group of creditors on the Asia Aluminum restructuring. Blake Dawson pulled off a surprise win, wresting the Australia Law Firm of the Year from Mallesons (who s held it since 2003) thanks to its work on the China MinMetals takeover and for Merrill Lynch throughout the restructuring of Opes Prime. New Zealand Bell Gully Philippines SyCip Salazar Hernandez & Gatmaitan Singapore Stamford Law South Korea Kim & Chang Taiwan Lee and Li Thailand Chandler & Thong-ek Vietnam YKVN IFLR/April

7 ASIA DEALS OF THE YEAR Debt and equity-linked Vincom convertible L-R: Dang Duong Anh of Vilaf, Connie Heng of Clifford Chance, Matthew Bersani of Shearman & Sterling and Truong Nhat Quang of YKVN Vincom s $100 million convertible in November was a groundbreaking deal for Vietnam. The deal was the first convertible to be sold overseas, and only the second international bond. (The first was issued by the sovereign in 2005.) This created a number of challenges to ready the regime for an international convertible bond. Vincom successfully sought verbal approval from the State Bank of Vietnam prior to pricing, providing comfort to it and the bookrunner. Two 10b-5 opinions were also prepared to educate investors about the company and the convertible s structure and to manage the liability of the issuer and bookrunner. Vincom also worked with the regulators on the regime for conversion. Vietnam restricts foreign ownership so a cash conversion was built into the structure in case the bond cannot convert into shares. Bank of East Asia core capital In November, Bank of East Asia (BEA) became the first Hong Kong bank to do a hybrid tier-one capital raising, with the $500 million deal approved as Category One core capital by HKMA. While many Asian banks have emerged well capitalised from the credit crunch, this was not the public perception of BEA, which suffered a bank run in September November s offering allowed the bank to boost its regulatory capital, while the instrument was treated as debt by the tax authorities. One deeply subordinated note was issued by the bank on which payments of interest would be tax-deductible, alongside a preference share issued by a special purpose vehicle owned by BEA. These were contractually stapled together. If a particular event occurred, the two would be unstapled and the note would be assigned (the rights having already been purchased) to the SPV with the preference share dividend paying. Indika senior notes Indika s $230 million offering of senior notes in November was one of the more complicated debt deals to come out of Indonesia in It came to market when a lack of certainty about deal documentation was at its highest, thanks to Law 24 on translating documents into Indonesian. Indika successfully solicited consent from existing senior secured noteholders to go ahead with this debt offering and to modify their indenture so that some of the collateral from the earlier deal could be used again. Covenants were also structured to give Indika a greater degree of control over its 46%-owned subsidiary (Kideco) than would usually be the case. PRC renminbi bond In October, Hong Kong was chosen as the venue for the PRC s first offshore sovereign renminbi bond. Under Hong Kong regulations, the PRC government cannot issue debt without a full prospectus. As this is unsuitable for a sovereign bond, China used a dealer exemption that had not been used for almost 20 years. The offering documents were issued by the bookrunners under their licences, thereby bypassing the need for regulatory approval of a prospectus. To meet the high demand for this product, the regulators agreed to relax the rules governing the sale of debt products to the retail market. For the first time, bonds could be bought through phone and internet banking. HKMA is now consulting on expanding these changes to other debt offerings. Sino-Forest exchange offer As redemption dates approached for many bonds in late 2008 and early 2009, companies rushed to head off a default and exchange their obligations. But for some companies, particularly those with bonds held by US investors, this was not simple. Bonds that had traded into the US secondary market could not simply be exchanged; new bonds could only be offered to Qualified Institutional Buyers (QIBs), not all bondholders. To address this, Sino-Forest turned away from the typical model of exchange offers, where consent and exchange are sought and documented simultaneously, and created a dual-track process where consent was required from all bondholders but new bonds were only offered to those that were eligible. Sterlite convertible This $500 million convertible bond from Sterlite Industries in October was the first from an Indian issuer to be SEC-registered; previously, deals into the US had been done under Rule 144A. Sterlite had to manage US tax issues, as well as investors used to anti-dilution provisions. Todeal with Indian regulations on the price of conversion, whichset a minimum floor price below whichequity can t be issued, the convertible included a feature to compensate investors if the price dropped. Sterlite also had to deal with regulations governing the amount of money that can be raised outside of India and how such proceeds are used, as well as Securities and Exchange Board of India registration of shares so that no further approval would be required after the bond converted. 26 IFLR/April

8 Securitisation Kookmin covered bond ASIA DEALS OF THE YEAR L-R: Soo-Man Park, Kim & Chang, Walter Son of Allen & Overy, Young-Hee Jo of Shin & Kim and Tony Oakes of Clifford Chance Covered bonds came to Asia in 2009 with Kookmin Bank s $1 billion offering in May. Although other issuers have not yet followed Kookmin s example, market commentators expect more covered bonds out of Korea and, possibly, Japan. Another first, Kookmin s bond included credit card receivables within the cover pool of assets backing the deal. Credit cards were added to the structure to boost the rating and ensure that the bond s assets could be sold if the bond defaulted (the mortgage market in Korea is not very active). The deal was six-times oversubscribed and the Korean government is now considering introducing new legislation to facilitate further covered bonds. This transaction was unusually structured as a standalone deal as the present Asset- Backed Securities (ABS) Law does not make it easy to issue under a programme. Asiana Airlines ticket receivables As global demand for structured products ground to a halt last year, issuance in Korea continued, albeit at a slower rate. New deals continued to innovate as Asiana Airlines $86 million securitisation showed in June. This transaction securitised the airline s ticket receivables through a complicated structure under which the receivables were transferred to a trust that then issued two investor certificates and one seller certificate. Each investor certificate was sold to an onshore SPV, which then issued a bond to an offshore SPV and entered into a loan-esque contract with investors, instead of issuing more common asset-backed notes. This attracted a different class of investors that was happy to trade through transfers rather than a tangible piece of paper. IBK structured note This deal out of Korea issued notes based on contracts between Hanjin Shipping and Posco. The $200 million three-tranche transaction closed in October and involved a novel guarantee. Industrial Bank of Korea guaranteed the notes; the notes are unsecured and the security over the issuer s assets is in favour of IBK. Unusually, the SPV issuer was an onshore entity (offshore vehicles are usually used to issue bonds to international investors) and issued foreign-currency bonds directly to offshore investors. SMHL Securitisation Fund This A$784 million ($706 million) securitisation in November included a novel tranche of senior notes. The deal, backed by residential mortgages, allowed holders of the A1R class notes to redeem or convert them on any monthly payment day for two years after issuance. After two years, the A1R notes will automatically convert into A1 notes, which compensate for the lack of early redemption rights by paying a higher coupon. The two types of notes with different risk and reward profiles help to bring in a more diverse investor base. This was the first Australian RMBS to offer a convertible and redeemable class of notes, with more now expected to follow. The notes were sold to domestic and international investors and listed in Ireland. This was the first Australian RMBS to offer a convertible and redeemable class of notes, of which more will follow IFLR/April

9 ASIA DEALS OF THE YEAR Equity Sands China IPO Listing casino operators is always tricky thanks to the highly regulated environment in which they operate, but Sands China s $2.5 billion offering in Hong Kong at the end of November was more complicated than most. Sands China was spun off from its US parent, Las Vegas Sands, prompting a number of carve-out issues about separating the businesses and timing disclosure to potential investors in Hong Kong and shareholders in the company s NYSE-listed parent. Sands China s IPO was also part of a wider fundraising effort, including $1.75 billion in project financing and pre-ipo obligations, some of which converted into equity at the point of listing. This again required regularly updated disclosure on the company s capitalisation. L-R: Calvin Lai of Freshfields, Matthew Sheridan of Sidley Austin, Denise Wong of Walkers and Gerhard Radtke of Davis Polk BW Plantation IPO As the first initial public offering to come out of Indonesia in 2009 in October BW Plantation s offering was closely watched. Market observers were not just looking for investor demand; the deal was completed under new rules from Bapepam on underwriters. Once an offering opens, local underwriters cannot invoke broad market-out provisions to back out of a deal before closing. Instead, they can only exit a deal if the share index of the Indonesia Stock Exchange drops below 10% on three consecutive days, in the event of certain force majeure, or if allowed by Bapepam. The local banks which underwrite all stocks in an IPO required back-to-back agreements with international underwriters to distribute the risk on this deal. Local and international underwriters had to get comfortable with the additional risk associated with their limited ability to exit. Hutchison Telecommunications introduction In May, Hutchison spun off its Hong Kong telecommunications business by way of an introduction on the Hong Kong Stock Exchange. The deal raised $613 million from qualified existing shareholders of Hutchison Telecommunications International. In Hong Kong, the deal had to comply with the exchange s listing rules on the issuance of new shares, and on spin offs. Hutchison had to show that its Hong Kong and international communications businesses had been separated into standalone companies. The deal s complexity was increased by the fact that some of Hutchison International s shareholders were in the US. The company had to file a prospectus with the SEC to convince the regulator that it did not need to register for a sale of securities. This posed issues with regards to coordinating the information provided to shareholders in the US and Hong Kong. Lumena IPO Lumena was one of the first companies brave enough to test market demand with a large IPO in the turbulent first half of The company raised $149 million in June with its Hong Kong offering. To offer in Hong Kong, Lumena had to introduce strict corporate governance procedures; the management was restructured to get the exchange comfortable with the listing. The company also had to ensure that it had appropriate approvals to continue its operations, such as land permits, and obtain these if it didn t already have them. Concurrently, a secured pre-ipo loan to Lumena was restructured with a partial repayment from the IPO proceeds, the participation of warrant holders in the IPO and a new, almost unsecured, loan following the IPO. Maxis Berhad IPO This landmark deal for Malaysia s capital markets involved the listing of Maxis Berhad on Bursa Malaysia. The $3.3 billion IPO in November was the largest ever in south-east Asia and introduced a new feature to Malaysian offerings the cornerstone investor. Previously, cornerstone investors had not been permitted by the regulators on the basis that this would be favouring a select group. The company was able to persuade the regulators that this feature was crucial to the deal s success, setting a precedent for future transactions. Prior to listing, Maxis s relationship with its Malaysian subsidiaries was restructured, as were dividends from those companies to Maxis. Schramm IPO As the Hong Kong Stock Exchange looks at different ways to attract non-chinese companies, Schramm became the first German company to list in December. To list, Schramm worked with the exchange on conflicts between Hong Kong s listing rules and the German Companies Law on issues such as shareholder protection and issuing new shares. On the latter, Schramm worked around the German requirement to register shares on any new offering (to comply with Hong Kong practice on speed of issuance) by devising a structure whereby new shares could be issued to underwriters who would be registered. The shares could then be sold into the market when desired. 28 IFLR/April

10 M&A Delta/Buma ASIA DEALS OF THE YEAR LR: Angela Chan of Clifford Chance, Melli Darsa of Melli Darsa & Co, Wei Xiao of Milbank Tweed, Neil Campbell of OMM and Min-tze Lean of Stamford Law In an unusual twist to conventional M&A, the target of this deal raised the financing for its takeover. Bukit Makmur Mandiri Utama (Buma) raised approximately $1 billion to finance its buyout by Delta Dunia Makmur (Delta) through a refinancing, a new facility, a bond and an equity offering. Buma s management wanted the deal to be a success so used Buma s better credit. These fundraisings were documented separately but were done almost simultaneously. Completion risk was a particular concern for all parties as the fundraising was based on the premise of the M&A deal closing. At the same time, Northstar Pacific bought a 40% stake in Delta. The transactions were structured accordingly and were conditional on one another. China Minmetals/Oz Minerals China Minmetals A$1.39 billion ($1.24 billion)takeover of Oz Minerals in June 2009 was a necessary rescue for the troubled Australian mining company. The deal, however, was nearly thwarted after the original structure was rejected by the Foreign Investment Review Board. Some of Oz Minerals assets were located in a sensitive area where there was a military installation. This was off limits to a foreign company, particularly a Chinese state-owned enterprise. The deal was therefore restructured at the last minute from an equity acquisition of Oz Minerals holding company to a piecemeal acquisition of the company s subsidiaries. This was done by way of a scheme of arrangement, leaving the sensitive assets within Oz Minerals holding company. The companies pursued a low-key approach with the regulators to obtain approval second-time round. China Strategic/Nan Shan Insurance AIG s troubles were closely watched over the course of 2009, by investors, creditors and the US government. But the sale of its Taiwanese life insurance business, Nan Shan, for $2.15 billion in October certainly improved its position. Nan Shan was sold to a consortium comprising Primus a private equity-esque financial institution and China Strategic, a small Hong Kong-listed company. This required discussion with the Hong Kong exchange to allay fears that the transaction amounted to a reverse takeover effectively listing Nan Shan in Hong Kong. The exchange also had to be made comfortable with China Strategic raising $1 billion through a convertible bond to fund the acquisition. This involved boosting the company s management team. All of it took place under the close watch of the US government. ebay/gmarket This transaction saw consolidation in the online market space with ebay buying Korean Gmarket for $1.2 billion in June Although Gmarket has American Depositary Shares listed in the US and is not listed in Korea, the deal raised some interesting conflicts between US and Korean law. ebay s tender offer was not subject to Korean takeover rules but some holders of Gmarket s shares were in Korea so there needed to be a separate tender offer in Korea. Disclosure had to be translated into Korean to ensure that all shareholders were provided with the same information. The companies also had to convince Korea s fair trade regulator that the transaction would not be anti-competitive. Despite a combined market share of over 90%, the merger was approved prior to signing after the regulators were convinced that the market in which the companies operate is so flexible that market entry was not limited. Royal Group/Millicom In a sign that Cambodian companies are becoming more sophisticated, Royal Group bought out its international joint venture partner, Millicom, to acquire CamGSM in November 2009.The $346 million deal was Cambodia s largest M&A to date and required careful structuring to make lenders comfortable with its risk. For example, the banks lent onshore, taking security over onshore assets. However, Royal Group purchased Millicom s Cambodian operations at the holding company level, so share pledges were also required to reassure the banks. Sumitomo Mitsui/Nikko Cordial Securities This $8.7 billion deal saw one of Japan s largest financial institutions purchase Nikko Cordial Securities from Citigroup. After talks with US regulators, Citi decided to dispose of the retail portion of Nikko Cordial, alongside Nikko Asset Management and Nikko Citi Trust. The three deals were structured separately but closed at the same time. Nikko Cordial s disposal was conducted as a demerger, with Sumitomo acquiring all the retail assets which were put into a new vehicle for the purpose. Citi however kept the institutional and wholesale parts of Nikko Cordial so the business had to be split, taking into consideration regulatory restrictions, before Sumitomo could acquire the retail portion. IFLR/April

11 ASIA DEALS OF THE YEAR Private equity KKR and Affinity/Oriental Brewery L-R: Yong Jae Chang of Lee & Ko, David Grimm of Paul Hastings, Betty Yap of Linklaters, Sky Yang of Bae Kim & Lee, Anthony Choi of Simpson Thacher, Urs Fankhauser of Sullivan & Cromwell and Seong-Koo Cheong of Kim & Chang. KKR and Affinity s acquisition of Oriental Brewery from InBev in July was not just a landmark deal for Asia, but also globally. The $1.8 billion takeover was the largest in Asia since 2006 and the third largest in the world in 2009, suggesting that leveraged acquisitions could be about to make a comeback. Upstream guarantees are not possible under Korean law so debt at the acquisition company level was not secured by assets, but by the target s shares. Four separate facilities were provided to the company two offshore and two onshore at HoldCo and OpCo level which were treated pari passu. InBev also negotiated the right to re-acquire Oriental Brewery within five years under certain circumstances and pre-agreed financial terms. Warburg Pincus/Transpacific Industries At stake on Warburg Pincus s A$800 million ($616 million) investment in Transpacific Industries was the need for a structure that would facilitate the recapitalisation of the waste management company without necessitating shareholder approval or dispensations from the Australian Securities Exchange. Regulatory limits on stock dilution mean that new shares have to be offered pro rata. Warburg Pincus therefore made a A$65 million investment in Transpacific by way of a placement and underwrote a A$735 million entitlement offer (similar to a rights issue). If shares were not taken up by other investors, the private equity company would increase its stake. However, to manage the amount of shares that would be sold to investors or would remain with Warburg, the private equity player used a structural mechanism to cap the number of shares issued. All parties communicated regularly with the regulators to ensure that the investment was permitted and didn t cross the threshold for a general offer. Carlyle/Natural Beauty One of the high profile deal failures of early 2009 was CVC s attempt to privatise Natural Beauty Bio-Technology. When Carlyle set its sights on the company later in the year, it was keen to learn from CVC s mistakes. CVC tried to take Natural Beauty private through a scheme of arrangement, which requires shareholder approval. The deal was voted down by minority shareholders. Carlyle instead elected to conduct a general offer after its BidCo acquired % of the target having done a deal in advance with the controlling shareholder. As a result, minority shareholders could not vote down the deal. This HK$800 million ($102 million) deal was the private equity house s first public-to-private transaction in Hong Kong. Bain/Gome With its chairman under house arrest and stock suspended for eight months, any transaction involving Gome was always likely to capture the public imagination. So Bain Capital s Pipe (private investment in public equity) deal in August was viewed by many as rescue financing that could resurrect the company s fortunes. Bain s investment comprised two interconnected transactions, namely a subscription to an Rmb 1.6 billion ($233 million) convertible bond and underwriting a $199 million open offer by Gome. The deal was structured to avoid seeking shareholder consent; the number of shares to be issued when the bond converts was kept under 20% of the share capital. When Carlyle set its sights on Natural Beauty later in the year, it was keen to learn from CVC s mistakes 30 IFLR/April

12 Restructuring FerroChina ASIA DEALS OF THE YEAR L-R: Tom Young, editor of IFLR and Matt Fairclough, Clifford Chance FerroChina s problems provided the first major test for China s new bankruptcy law when it entered formal procedures at the end of The company, which had debtors onshore and offshore set a precedent for how foreign creditors would be treated in future insolvencies. In the end, foreign creditors were treated the same as Chinese creditors. But those that invested through offshore structures received nothing. Secured onshore creditors could expect to receive 60% of their debt, while unsecured onshore creditors could expect 20%. Five of FerroChina s subsidiaries were sold to China Minmetals to recoup the money. The deal highlighted problems with China s insolvency law, namely the appointment of a local administrator, difficulties arranging a rescue sale without management cooperation, and the necessity of local government support. Asia Aluminum If investors needed a reminder of the dangers of channelling money into China through offshore structures, Asia Aluminum provided it. Its highly publicised difficulties in the first half of 2009, were resolved in such a way that many investors walked away with next to nothing. The complexity of the deal stemmed from the company s many different levels of debt. While material operations and some debt were accrued onshore, debt was also acquired through offshore trading entities, through two layers of bonds, and through a series of Pik (payment-in-kind) notes. When the company offered to buy back the senior and Pik notes in February for between 13 and 27 cents on the dollar, investors rejected the deal. The management, as threatened, put the company into provisional liquidation and, despite efforts to find a white knight, Asia Aluminum s assets were sold to a company associated with the management and sanctioned by the PRC government. Opes Prime In October, Hong Kong was chosen as the venue for the PRC s first offshore sovereign renminbi bond. The Rmb 6 billion ($878 million) deal was the first bond issue by China since 2004 and was three-times oversubscribed. Under Hong Kong regulations, the PRC government cannot issue debt without a full The regulators agreed to relax the rules governing the sale of debt products to the retail market prospectus. As this is unsuitable for a sovereign bond, China used a dealer exemption that had not been used for almost 20 years. The offering documents were issued by the bookrunners under their licences, thereby bypassing the need for regulatory approval of a prospectus. To meet the high demand for this product, the regulators agreed to relax the rules governing the sale of debt products to the retail market. For the first time, bonds could be bought through phone and internet banking. HKMA is now consulting on expanding these changes to other debt offerings. Davomas What could have been a standard exchange offer for some outstanding bonds was complicated when Davomas was tipped into the Indonesian insolvency process. As a result, the exchange and consent solicitation had to be conducted under a plan of composition, the first time this has been achieved in Indonesia. Under the deal, $238 million in high yield bonds were exchanged following a joint solicitation and tender offer. Over 98% of bondholders accepted the offer, which was 50% lower than the notes face value, and received variable-rate guaranteed senior notes due The plan of composition had to be approved by creditors and a Jakarta court. Without approval the offer could not go ahead and the company could have been forced into insolvency. Evergrande Following the financial crisis s arrival in Asia, Evergrande became distressed, defaulting on its core financing. Under the terms, this meant the company could be forced to repay up to $1 billion of that debt early. The company decided to do an IPO to raise capital. With the capital markets closed for much of 2009, the company made the most of a window to list in November. To do so, Evergrande had to obtain waivers for the defaults from its creditors. This was complicated by the number of creditors with different levels of security over Evergrande. For example, strategic investors also had equal security on some parts of the deal as senior secured investors. And convertible bondholders had first rank security over some of the group s subsidiaries. Consent from 100% of creditors was however obtained and the company completed a $725 million IPO. IFLR/April

13 ASIA DEALS OF THE YEAR Project finance Paiton 3 L-R: Alan Schiffman, Skadden, Andrew Lam of Latham & Watkins and Stephen Bottomley, Mayer Brown JSM The $1.4 billion Paiton 3 project in Indonesia used a challenging financing structure to fund a new project constructed within an existing project complex. The new IPP (independent power plant) will share some of the existing project s facilities but has been financed by separate lenders. The financing for the new project has been structured using the vehicle that financed the existing plant. As such, the cash flows and security arrangements had to be structured to give lenders access to their project, rather than both. Complex agreements were required to stipulate what will happen if either project gets into distress, as well as the use of shared facilities. The terms of the contracts had to be agreed between the borrower and the new lenders, as well as between the borrower and the original lenders. Victorian desalination plant Victoria s desalination plant in Australia was nearly scuppered by the financial crisis. This A$4.8 billion deal struggled to find financing so the Victorian government, which invited bids for the project, offered to guarantee the syndication of the debt. This was the first time that an Australian state had provided such a guarantee. At the same time, Victoria also agreed to guarantee the refinancing after five to seven years. However, despite its help with financing, the government did not make the project easy. Bidders for the tender were required to submit bids four times as the project s nature shifted. In the meantime, work on the project began on the basis that the losing bidder would be compensated by the winner. This required careful documentation to ensure that all parties were happy with the risk. The project also required the building of power infrastructure to supply the plant. This was done under a separate (government guaranteed) project financing; the project company and lenders had to get comfortable with the ownership risk as the government was set to sell the infrastructure within three years. New Bong Escape Undertaking the first hydroelectric IPP in either Pakistan or Azad Jammu & Kashmir (Kashmir) is no easy task. The project, which began in Kashmir in 1996, has been rocked by bombings, assassinations and an earthquake, but financing for the $175 million plant finally closed in Unsurprisingly, political and legal (this part of Kashmir is administered by Pakistan but is also semi-autonomous) risks were a major concern for lenders and the sponsor. (The Despite its help with financing, the Australian government did not make the project easy original sponsor was replaced by Hubco and Proparco and IFC joined the lender group late in the day.) The financing was structured as a direct US dollar-denominated loan from Asian Development Bank, IFC, and Proparco, an ijara facility from Islamic Development Bank and a shariah-compliant commercial facility from Habib Bank and National Bank of Pakistan. While reps and warranties were the same, each facility agreement was different, with all tied together by a complex intercreditor agreement. Cairn India This mixture of corporate and project financing allowed Cairn India to channel $1.6 billion from an international dollar facility and domestic rupee facility to its oil project in Rajasthan. Cairn holds its interests in Rajasthan through a number of subsidiaries. As a result, a complex structure was required to direct cash from the project back to the lenders, and to give them security over the project s assets. This was complicated by Cairn s plan to merge its subsidiaries. This is one of the first reserve-based financings of an oil project in India. The deal also required careful drafting of the production sharing contract and joint operating agreement. 32 IFLR/April

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15 EUROPE TEAMS OF THE YEAR International firm of the year: Linklaters Linklaters was rewarded for its outstanding performance across the board in Europe. The firm had wins in the structured finance, equity and private equity team categories, and was also present on the year s best debt and equity-linked, structured finance, equity, private equity and restructuring deals. It was Linklaters work for Lloyds that really stood out this year. The firm worked for the bank on its groundbreaking enhanced capital notes and also helped with its rights issue. Linklaters also fielded multiple teams to help Source issue exchange-traded commodities while avoiding swap counterparty default risk and credit risk. Richard Youle (L) and Stephen Griffin (R) of Linklaters receive the award from Simon Crompton of IFLR (centre) Also nominated: Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Shearman & Sterling Most innovative US firm in Europe: Shearman & Sterling L-R: Roger Kiem, Bertrand Sénéchal, Julian Tucker and Richard Price of Shearman & Sterling receive the award from James Abbott of Deutsche Bank Another great year for Shearman & Sterling saw the firm win nominations in five of IFLR s six deal categories, proving its proficiency across the board. From acting for the security agency bank on Schoeller Arca Systems restructuring to advising French and US advice to the lead managers and bookrunner on Club Med s ORANE bond issue, Shearman proved to be the banks go-to US firm. It also won roles advising the Qatar Investment Authority on its acquisition of derivative options in VW, and was also present on two of tonight s shortlisted private equity deals. Also nominated: Cleary Gottlieb Steen & Hamilton, Latham & Watkins and Sullivan & Cromwell 34 IFLR/April

16 Debt and equity-linked: Allen & Overy Annet Tamminga of JP Morgan presents the award to Yannis Manuelides, Henri Wagner and Daniel Fletcher of Allen & Overy Structured finance: Linklaters EUROPE TEAMS OF THE YEAR Of the five deals shortlisted for IFLR s debt and equity-linked deal of the year, Allen & Overy was involved in three, proving the lasting strength of its debt capital markets team. This year, the firm worked on the exchange offer for newly created BPCE, and advised the dealer managers on the innovative Lloyds ECN deal. It also won roles advising European issuers, including Wind Telecommunications on its complicated refinancing. Also nominated: Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and Lovells Linklaters impressive securitisation work continued this year, with the firm present on two of IFLR s shortlisted deals. On the Yorkshire Water whole business securitisation, the firm developed a new structure for the issuer that incorporated e- voting and co-existence, and on the Source ETC programme the firm provided multifaceted advice to the banks involved, which succeeded in accessing the tricky commodities markets while mitigating swap counterparty risk. Stephen Griffin of Linklaters receives the award from Cynthia Cheung of Bank of America Merrill Lynch Equity: Linklaters Also nominated: Allen & Overy and Clifford Chance Linklaters won lead roles on the region s most innovative, and often largest, deals in The firm acted for the underwriters in HSBC s 17.7 complex rights issue and the issuer, Lloyds, in its highly structured equity offering. It was also instrumental in the success of other landmark deals last year, working on the Rio Tinto rights issue and the Tom Tom offering. Also nominated: Allen & Overy, Cleary Gottlieb Steen & Hamilton and Freshfields Bruckhaus Deringer L-R: Peter Castellon of Citigroup presents the award to Stephen Griffin of Linklaters IFLR/April

17 EUROPE TEAMS OF THE YEAR M&A: Freshfields As ever, Freshfields was striking for its breadth of work. Advising Essent on the sale of its rather politicised business to RWE was not easy, and local pressures combined with a difficult market to create the need for a truly innovative solution. Elsewhere the firm also advised Porsche on the sale of its derivatives to the QIA and spent a long time helping Sinochem negotiate between their Chinese regulators and the UK Takeover Panel. Also nominated: Hengeler Mueller, Linklaters, Shearman & Sterling and Sullivan & Cromwell Shawn der Kinderen of Freshfields Bruckhaus Deringer receives the award from Laura Holleman of Goldman Sachs Private equity: Linklaters Ian Bagshaw (L) and Richard Youle (R) of Linklaters receive the awards from Stephen Whitbread of Morgan Stanley (centre) Restructuring: Freshfields If three nominations for deal of the year is good, four is just damned impressive. Linklaters not only led Oaktree to the first really successful loan-to-own deal in Europe, it also advised the managers on the hideously complicated restructuring and buyout of Invitel by MidEuropa, advised the lenders on the buyout of Anheuser Busch s business in eastern Europe and worked for Arcus on its management buyout of Babcock & Brown. Also nominated: Clifford Chance, Freshfields Bruckhaus Deringer, Lovells and Shearman & Sterling Freshfields spent 2009 landing leading roles on the most innovative deals. The firm advised the underwriting bank on the Yell restructuring. It acted for the lending banks on Thomson s e2.8 billion debt restructuring, as well as Rolf in its Russian refinancing. It also represented Honsel and McCarthy & Stone in their restructurings. Also nominated: Allen & Overy, Clifford Chance, Latham & Watkins, Linklaters and Lovells L-R: Richard Tett, Catherine Balmond and Ken Baird of Freshfields Bruckhaus Deringer receive the award from Ruari Ewing of the ICMA 36 IFLR/April

18 EUROPE TEAMS OF THE YEAR Project finance: Clifford Chance L-R: Matthew Layton of Clifford Chance receives the award from Amol Prabhu of Barclays Capital With roles on two of the deals shortlisted for the IFLR project finance deal of the year, Clifford Chance showed its skill in road projects financing. The firm advised the EIB on the A2 Motorway extension in Poland, ensuring that the bank s terms were met and its guarantees appropriately structured. It also worked for the bank consortium on the A5 Motorway project in Germany, which incorporated a new LGTT structure. Also nominated: Allen & Overy, Baker & Mckenzie, Freshfields Bruckhaus Deringer and Simmons & Simmons In-house, debt: Bank of America Merrill Lynch Andreas Theiss of Wolf Theiss presents the award to Cynthia Cheung and Catherine Daly of Bank of America Merrill Lynch A combination of high profile and smaller bespoke deals landed Bank of America Merrill Lynch s debt team on the shortlist for our first specialised in-house awards. First, the Lloyds exchange offer involved careful timing to tie-in with the concurrent rights issue and of the differing US and European exchange offer timing rules. The offer was fully underwritten on day one with the inclusion of a topup commitment that made drafting the agreement particularly challenging. A small, bespoke structured finance transaction also caught the judges attention, with the divestment and syndication of LP interests in Kreos Capital Venture Debt Fund presenting the team with several legal hurdles. The lack of standardised financing documents and structures for the asset class meant that agreements were hotly negotiated. The transaction included acquisition funding which involved complex and bespoke security arrangements with each participating investor. Also nominated: Citigroup and Goldman Sachs In-house, equity: Deutsche Bank L-R: James Abbott of Deutsche Bank receives the award from Okko Behrends of Allen & Overy Roles on the largest Polish equity offer since 2004 by PKO, Globaltrans follow-on listing and HeidelbergCement s (HC) rights issue proved the Deutsche Bank equity team s expertise in capital raising, and its ability to help companies access markets when liquidity was tight. On PKO, the team negotiated the government s involvement and complex pre-funding and settlement considerations to set a standard for future Polish deals, and for Globaltrans it worked with the issuer to produce disclosure and due diligence opinions above the necessary requirements to keep in line with UKLA and best practice standards. On the HC rights issue, the capital increase was closely tied to a refinancing to deal with HC s over-indebtedness, and also had to consider a share overhang from Merckle, the major shareholder. Also nominated: Bank of America Merrill Lynch, Barclays Capital and Goldman Sachs IFLR/April

19 EUROPE NATIONAL WINNERS National law firms of the year Austria, Baltics, Belgium and the Czech Repulic L-R: Paul Sestak of Wolf Theiss, Reimo Hammerberg of Sorainen, Irene Welser and Edith Hlawati of CHSH, François De Bauw of Linklaters Denmark, Finland, France and Germany The IFLR Austrian law firm of the year, CHSH, took a lead role on Wienerberger s capital increase, the first in Austria to have hard underwriting and a discounted subscription price. In the Baltics, Sorainen won for its role on the Barclays investment agreement with the Lithuanian government, and for its work advising the new majority shareholder in Parex Bank on its debt restructuring. In Belgium, Linklaters was rewarded for its role advising Fortis on the restructuring of its operations, and helping Carmeuse amend loan terms to ease its financial covenants. And IFLR s winner in the Czech Republic, Wolf Theiss, was recognised for its work on Erste Bank s participation capital securities, unravelling the country s unclear guidelines on hybrid issuances. L-R: Dimitrios Himonas of Roschier, Pierre Raoul-Duval of Gide Loyrette Nouel, Pernille Bigaard of Plesner, Bernd Wirbel of Hengeler Mueller In Denmark, IFLR s law firm of the year was Plesner, which took a key role for Mid Europa on its acquisition of a holding in Invitel, one of IFLR s shortlisted M&A deals. In Finland Roschier took the trophy for its work on the first successful public tender offer by a private equity fund in Finland, and for several innovative project financings. In France, winning firm Gide Loyrette Nouel was rewarded for its work helping to structure French bank rescue fund SFEF, and for its role on Eurazeo's convertible bonds in Danone. And the German law firm of the year, Hengeler Mueller, wins for its role on three of IFLR s shortlisted deals, including the Heidelberg Cement capital raising. Greece, Hungary, Ireland and Israel L-R: Kathleen Garrett of Arthur Cox, István Réczicza of White & Case, Panayotis Bernitsas of M&P Bernitsas IFLR s winner in Greece, M&P Bernitsas, worked on the first deal in the Greek market to use derivatives as the only underlying asset, and on a complex rights issue for the country s national bank. In Hungary, White & Case was rewarded for its work advising Invitel on MidEuropa s investment, and the firm s subsequent loan refinancing, and also helped the European Investment Bank on a complex locomotive financing. Ireland s winning firm Arthur Cox took the trophy for representing a syndicate of five banks on the restructuring of the Rolf Group, and Covidien on its migration to Ireland. And in Israel the winner was Herzog Fox & Neeman, which represented Prisma Investment House in an exchange of funds in Psagot Group for a stake in Psagot Investment House, and again on the sale of a mutual fund to Excellence Investments. 38 IFLR/April

20 EUROPE NATIONAL WINNERS Italy, Luxembourg, Netherlands and Norway L-R: Henri Wagner of Allen & Overy, Marco Zaccagnini of Gianni Origoni Grippo & Partners, Gaike Dalenoord of NautaDutilh, Steiner ter Jung of Selmer Poland, Portugal, Russia and Spain IFLR s Italian law firm of the year was Gianni Origoni, which advised IBL Banca on its acquisition of Citigroup s branches in Italy, and Sator Private Equity on its acquisition of Banco Profilo through an undersigned capital increase. In Luxembourg Allen & Overy is rewarded for its work advising a group of creditors on the restructuring of Kaupthing, the first time this was achieved through a demerger for a Luxembourg credit institution. In the Netherlands, NautaDutilh worked on three of IFLR s shortlisted deals, including Wind Telecoms innovative high yield issue, and the precedent setting IMO carwash restructuring. And our winner in Norway, Selmer, took the trophy for advising on the recapitalisation of Master Marine, and on a number of innovative M&A deals. L-R: Nuno Galvão Teles of Morais Leitão Galvão Teles Soares da Silva & Associados, Javier Ybañez of Garrigues, Daniel Braverman of Cleary Gottlieb, Ireneusz Matusielanski of Dewey & LeBoeuf IFLR s Polish winner, Dewey & LeBoeuf worked on Europe s largest IPO in 2009 for PGE Polska Grupa, and helped AIG merge its retail banking in Poland with Santander. In Portugal, Morais Letaio worked for the arrangers on the shortlisted Iberwind project financing, and also for EDP on an innovative securitisation transaction. In Russia, winner Cleary Gottlieb helped Gazprom on its acquisition of SeverEnergia, and for Magnit on the largest Russian rights issue of the year. And IFLR s winner in Spain, Garrigues, advised on Madrid Activos s static cash CLO public securitisation, with a complex asset pool and multicurrency waterfalls. Sweden, Switzerland and Turkey L-R: Simon Crompton of IFLR, Fethi Pekin of Pekin & Pekin, Benedikt Maurenbrecher of Homburger, Stefan Brocker of Mannheimer Swartling Mannheimer Swartling, IFLR s winner in Sweden, advised Ratos on its acquisition in a minority stake of Inwido Finland, and E Trade on the divesture of its Nordic business to Saxo Bank. In Switzerland, winning firm Homburger worked for Paris Re on Swiss law aspects of its acquisition by Partner Re - IFLR s M&A deal of the year. And in Turkey the winning firm was recognised for its work advising the finance parties involved in the MMK project financing, and the lenders on the privatisation of Meram Elektrik. That firm was Pekin & Pekin. IFLR/April

21 EUROPE DEALS OF THE YEAR Debt and equity-linked Lloyds ECNs L-R: Daniel Fletcher of Allen & Overy, Stephen Griffin of Linklaters, Donald Guiney of Freshfields Bruckhaus Deringer Lloyds enhanced capital notes (ECNs) launched both a new class of securities and a global regulatory debate on contingent capital instruments. The ECNs intuitively address the need for a bank to have a countercyclical capital buffer by converting to equity once capital reserves dip below a pre-determined threshold. The structuring of the securities overcame EU state aid provisions, and incorporated them into a waterfall structure that allowed existing holders to choose whether to take the ECNs, ordinary shares or a combination of the two. Allen & Overy acted for the dealer managers, and for the ECN trustee. Freshfields Bruckhaus Deringer represented the joint globalcoordinators, joint sponsors and dealer managers on the rights issue part of the capital raising, and Linklaters advised Lloyds TSB and Lloyds Banking Group, with Maclay Murray Spens assisting Lloyds on Scottish law. BPCE exchange offer At the time of the exchange offer Banque Fédérale des Banques Populaires and Caisse Nationale des Caisses d Epargne were in the middle of a merger to become France s second biggest banking group. This meant that the exchange offer by the merged BPCE for Natixis Tier 1 securities involved complicated disclosure descriptions and cross-guarantees, as the offer and subscription period were both closed before the issuer existed as anything other than a shell company. A law was enacted in French parliament to give BPCE the right status to launch the issue, and the offer was also structured to exclude existing US and Italian holders. EDF retail offering This 3.2 billion ($4.3billion) retail bond issue was the first corporate issue in France for more than 20 years, and the first time that notes were offered directly to retail investors. This led to a new Euro medium-term note (EMTN) programme being established, with a full retail prospectus and disclosure. The offer also set a regulatory precedent when the French Autorité des Marchés Financiers agreed to drop the requirement for a lettre de fin de travaux, the completion confirmation document that is signed by auditors and backs up the prospectus. The obligation was later fully repealed and new regulations were issued for listing on Euronext Paris and marketing to retail bond holders were passed. Club Med ORANE issue Part of a dual equity and equity-linked offering, the Club Med issue had preferential subscription rights and was underwritten by a commitment from shareholder and nonshareholder investors instead of the banks. This led to difficult disclosure considerations providing enough information to convince shareholders to back the deal without breaching the rues for listed companies in France. The underwriting structure was split so that shareholders guaranteed a proportional amount of the deal by committing to exercise their subscription rights, and non-shareholders agreed to subscribe to any remaining ORANE. Wind Telecoms high yield The Wind deal was structured as part of the refinancing of the group, and reopened European high-yield markets as the first bond sale used to refinance after the credit crunch. Existing creditors all agreed to the structure, which was designed to be beneficial to new bondholders to bring new money in. The covenant package was also structured to anticipate a potential lack of bank funding, building in the ability to refinance the senior debt facility with bonds, and allowing for additional refinancing as and when necessary. It was the first corporate issue in France for more than 20 years, and the first time that notes were offered directly to retail investors 40 IFLR/April

22 Structured finance Source ETC programme EUROPE DEALS OF THE YEAR This transaction was specially designed to access the expanding commodities market, a viable investment in which is usually difficult to structure. The Source joint venture between Goldman Sachs, Morgan Stanley and Bank of American Merrill Lynch issues Exchange Traded Commodities (ETCs) that replicate the performance of certain commodities indices. A liquid instrument was developed that eliminated the risk of default by swap counterparties and sold exposure to the commodities with no credit risk. Linklaters provided legal, regulatory and tax advice to Source, with Maples and Calder providing Irish law assistance. L-R: Simon Crompton of IFLR, Joan Ma of Linklaters, Nollaig Murphy of Maples and Calder Yorkshire Water This was a unique deal in the water sector as it incorporated a co-existence structure to encourage existing investors to consent to and come into the new debt. It overcame clashes with the negative pledge clause to offer equal security to old and new investors, with the status of non-participants changed in the intercreditor agreement to allow subordination if they acted against the interests of the group. The deal also developed an e-voting model to compensate for the absence of the monolines as controlling creditor. This allows voting through investor websites to avoid individuals having to vote through the clearing systems. BNP covered bonds With an unusual asset class, BNP Paribas covered bond programme was originally planned as an asset-backed transaction, but converted due to market appetite. A simple structure therefore had to be devised around the complex asset pool. A combination of the traditional true sale structure and a secured loan structure was developed. This allowed a true sale of the loan portfolios, with the funding of BNP deriving from the portfolio s sale proceeds, and a future reloading of portfolios if appropriate, which would give rise to a security interest and funding derived from a secured loan. Eurus II catastrophe bonds This 75 million bond issuance covers sponsor Hannover Re against losses from windstorms in parts of Europe through to early The catastrophe bond transaction succeeded despite the instrument s reputation having been damaged following Lehman Brothers collapse. To overcome doubts, a repo-based collateral arrangement was structured, with BNP Paribas as repurchase counterparty. BNP s bond portfolio is used to generate returns, and a tri-party purchase agreement including Euroclear was established. The deal was the first time such a repurchase agreement had been used to collateralise a structured transaction. A combination of the traditional true sale structure and a secured loan structure was developed UBS covered bond programme UBS s covered bond programme was the first to be established in Switzerland. It is listed in Ireland and passported across several EU jurisdictions. It opens the market beyond the domestic pfandbriefe legislation with issuances out of UBS s London branch backed by a pool of Swiss residential mortgages. This structure had to overcome complex Swiss tax and regulatory rules while remaining attractive to international investors. IFLR/April

23 EUROPE DEALS OF THE YEAR Equity Lloyds rights issue L-R: Stephen Griffin of Linklaters, Donald Guiney of Freshfields, Yannis Manuelides of Allen & Overy, Elizabeth Fournier of IFLR While Lloyds contingent convertible bond made headlines, the rights issue portion of its offering was equally innovative. This was the first rights issue to include step-up underwriting, which led to the pricing of the offering after launch. It was also the first-ever underwritten liability management exercise, and first combined rights issue and liability management. Holders of existing Lloyds securities were offered four different exchange options when they took part in the US exchange offer. The way these four options interacted was controlled through an innovative structure, using two 52-stage waterfalls. Linklaters and Maclay Murray & Spens advised Lloyds. Allen & Overy represented the dealer managers and trustee, while Freshfields Bruckhaus Deringer advised the underwriters. Atrium Atrium was undoubtedly Austria s most innovative deal in It was the first global exchange of all Austrian Depositary Certificates (ADCs) of an issuer listed on the Vienna Stock Exchange (VSE) into shares, and the first dual listing of shares on VSE and Euronext. It is also the first time that registered shares have been listed on a regulated market of the VSE. Before Atrium s 868 million ($1.29 billion) listing, only ADCs representing a company s shares were listed on the Vienna Stock Exchange (VSE). Globaltrans Globaltrans $175 million follow-on offering included the issue of global depositary receipts listed on the London Stock Exchange. It was the first ever Russian follow-on offering combined with the simultaneous acquisition of majority control of a Russian company using newly issued shares as merger consideration, to avoid diluting the majority shareholder. The offering was combined with the $250 million acquisition of a 50% stake in OOO BaltTransService, the Russian railway transportation service operator, from Transportation Investment Holding. It was the first rights issue in a decade where ADS rights and ordinary shares had been offered on a registered basis in the US Heidelberg Cement The Heidelberg Cement equity offering was the first time that an offer structure close to the UK open offering has been used in Germany. The major shareholders assigned their subscription rights to one of the global coordinators and all new shares and the secondary shares were offered and allocated to institutional investors upfront. Allocations were made subject to clawback. This allowed free float shareholders that had not assigned their subscription rights to subscribe for new shares in the rights offering. HSBC rights issue At a time when banks everywhere were clammering to raise capital, HSBC s 17.7 billion rights issue was the first ever to include a full competitive tender process for positions on the underwriting syndicate. These took place on the weekend before the launch. The offering was also the first rights issue in a decade where American depositary share (ADS) rights and ordinary shares had been offered on a registered basis in the US. This allowed retail investors in the US to participate. The bank has primary listings in London and Hong Kong, and secondary listings in Bermuda and Paris, as well as ADS listed in New York. 42 IFLR/April

24 M&A Partner Re/Paris Re EUROPE DEALS OF THE YEAR The acquisition of Swiss reinsurer Paris Re by its Bermudan competitor Partner Re was complicated by plurality of jurisdictions. Paris Re is a Swiss-incorporated public company listed in France, while Partner Re is Bermuda-incorporate and listed in New York. It is rare for a stock-for-stock takeover in France to involve a company incorporated elsewhere, and little-used rules applied. The French regulator, Autorité des Marchés Financiers, was concerned about the precedent it would set for future deals and took the matter to its governing council on more than one occasion. L-R Phillip Mills of Davis Polk & Wardwell, Hansjürg Appenzeller of Homburger, Nikolaos Andronikos of Sullivan & Cromwell, Daniel Braverman of Cleary Gottlieb, Rudolf Tschäni of Lenz & Staehelin Blackrock/Barclays Global Investors Blackrock s purchase of BGI might not have been as legally innovative as some of its competition, but there s definitely an argument that it was the most complex deal for decades. Initially a sale of Barclays ishares division, its auction was won by CVC for $4.4 billion. But a go-shop provision led to the offer being broadened, and when Blackrock bid for the whole of Barclays Global Investors, CVC had to drop out despite its match right. The scale of the deal in the asset management sector ($13.5 billion for a business with $2.8 trillion in assets) will make it a marker for some time to come. Emerald/Sinochem This was the first City Code bid for a London main market target by a Chinese state-owned enterprise (SOE) and was largely a matter of culture. The Code aims to prevent an acquirer walking away once terms have been agreed. Any deal from a Chinese SOE is subject to numerous and opaque levels of approval by the government. A long period of education on both sides eventually led to an unconditional bid approval was first won from the Chinese authorities. This is the first time that had been achieved: previous transactions had created a bespoke condition for Chinese approvals, such as SOE Sinpec s 2009 offer for Addax Petroleum, which was governed by Canadian takeover rules. Jennington/KazakhGold The reason this deal is nominated can be summed up in a single sentence: it was the first cross-border takeover using Russian shares as consideration. Given previous uncertainty about taking security and offering Russian shares, that s a big step. And the size of the Russian market for potential acquirers also makes it a powerful precedent. Jennington International, an indirect but wholly owned subsidiary of Polyus Gold bought 50.1% of KazakhGold the largest gold mining company in Kazakhstan for $300 million. The company s GDRs were listed on the London Stock Exchange. Qatar/VW Unwinding Porsche s massive derivatives position on Volkswagen shares was not easy. The cashsettled options were arranged by a small outfit called Maple Bank that was effectively covering $7 billion to $8 billion of exposure. The documentation underlying them was not clear. Porsche needed help but no one wanted to take on the market, counterparty or legal risk. The Qatar Investment Authority ended up acquiring the options, giving it a 17% stake in VW and 10% in Porsche. But it took a lot of financial engineering for the deal to work, with Credit Suisse taking on the cash-settled options, giving QIA physically settled options and covering off the counterparty risk by syndicating it several other banks. And because Porsche and VW had financing arms that would create a regulatory burden if anyone owned more than 10% of them, Credit Suisse had to warehouse the derivatives with a separate set of banks (all holding 9.9%) and could only allow QIA to acquire 9.9% of the shares initially so the Authority wouldn t be treated as a financial institution either. The deal was unprecedented in both structure and scope. But the increased regulatory capital requirements of banks mean that many will begin looking at synthetic structures for anchor investors in the coming year. RWE/Essent This was a private M&A deal that was structured as a public M&A transaction. The shares in Essent were held by 136 provincial and municipal shareholders across the Netherlands, who each had to vote on whether to sell their shares. But as it would have been impractical for them individually involved, Essent agreed terms with RWE and then had to find 80% agreement from the provinces. More important, though, was the ability for RWE and Essent to alter the terms of the deal without a vote. That flexibility proved essential as the reaction to the deal fluctuated, with several key shareholders changing their mind halfway through (including one that held a 30% stake). The deal was unprecedented both in terms of that flexible offer, sale and purchase agreement, and the size and national importance of Essent. The latter was proven by ongoing litigation. IFLR/April

25 EUROPE DEALS OF THE YEAR Private equity Oaktree/Countrywide L-R: Roy Papatheodorou of Linklaters, Donald Guiney of Freshfields, Gavin Brown of Slaughter and May This was the first time that a private-equity house successfully pulled off a loan-to-own strategy. Not only that, but when Oaktree began to buy up Countrywide s debt in order to try and take control, existing sponsor Apollo began doing the same thing to maintain its seat at the table this was also unique. Oaktree brought in fellow fund Alchemy to help with the financing and Apollo brought in Polygon. Together they cut Countrywide s debt to 170 million and provided 75 million in new capital, and shared control of the company. This was also the first time a scheme of arrangement had been used in the UK with a simultaneous Cayman scheme and simultaneous Chapter 15 organisation in the US. Linklaters advised Oaktree, Slaughter and May worked for Castle and Wachtell Lipton Rosen & Katz for Apollo. Freshfields Bruckhaus Deringer and Walkers also advised. Apollo/Infineon Germany s two-tier board system, with both a management and supervisory level, can create problems for M&A. Apollo made control of the supervisory board of Infineon, and having its own chair of that board, a prerequisite for the funding of the transaction. The conditional structure was relatively simple, but it is the first time this has been successfully done in Germany and will be used as a precedent. There is also an ongoing debate as to whether a back-stop fee, like that charged by Apollo for its capital increase, is legal under German law on financial assistance. The lawyers came up with a sliding scale whereby Apollo gradually reduced its fee depending on how many shares it ended up buying in Infineon. Arcus/Babcock & Brown Arcus will definitely set a precedent. Nearly all infrastructure funds are usually badged owned by larger banks but Arcus began a trend for management to buy out its parent. It was an audacious deal against the background of failure by Challenger and a retreating Macquarie, and the complexity was driven by assets all over the world. Brawn/Honda A long-time client of Taylor Wessing, Ross Brawn had to outflank several counter bids for Honda before the Formula 1 team accepted that Brawn was the right option. The planning, negotiation and execution all took place under time pressure, eventually closing two weeks before the 2009 F1 season began in March. The firm then continued the advice through the rest of the year, culminating in Daimler and Abu Dhabi investment house Aabar acquiring a 75.1% stake in the Brawn GP team. CVC/Anheuser Busch Anheuser Busch s auction of its eastern European brewing business was a $2.23 billion transaction across nine jurisdictions. But really this is a story of trying to squeeze out shareholders in Serbia and Croatia. In those two jurisdictions the local law ignores any overarching agreement on price, either as to when it is set or when a mandatory offer has to be made to minority shareholders. In order to avoid speculators driving up the price once an announcement was made, the deal was structured specifically so it triggered a takeover offer on the date the international agreement was signed and the price was the average of the past three months. The takeover rules in both countries had never been used before in a deal of this sort. MidEuropa/Invitel This was a workout before anyone called it a workout. Invitel was in trouble, with too much debt and an overcomplicated financing structure. MidEuropa Partners knew the company well, having previously owned half of it, and volunteered to help. It bought TDC s 64% stake and $1 a share for the rest, despite the stock trading at more than five times that principally because there was such a volume of debt to sort out. MidEuropa acquired 87% of outstanding PIK notes in a tender offer (as well as securing amendments to them), its subsidiary Magyar Telecom bought into two other series of notes, one shareholder loan was bought out while another was repaid, and a forward start facility was agreed on the lending facility. A tripartite M&A deal like this, done through a debt offer and all negotiated before the target got into trouble, was unique. Permira/NDS One aspect that was particularly difficult with Permira s takeover was the test for the shareholder vote, which was 75% and a majority in number. Given that several hedge funds were involved, and the large block of ADR holders only counted as one vote, the deal could easily have been scuppered by some minor players. So the structure needed to look through the ADRs to their underlying holders, which was enabled by the English courts. Equally the takeover arrangements, whereby News Corporation ended up with a 49% stake in NDS alongside Permira s 51%, with NDS controlling part of the acquisition financing despite being majority owned by News Corporation, was not simple. All NDS series A shares were cancelled, together with 67% of the series B shares (the latter in exchange for a mix of cash and vendor note), before NDS could issue 51% in new shares to Permira. 44 IFLR/April

26 EUROPE DEALS OF THE YEAR Restructuring McCarthy & Stone The McCarthy & Stone restructuring was highly complex and one of the first restructurings of the post-lehman downturn. Firms had to develop new solutions to unlock the complex financial structures created over the previous three to five years. As one of the first leveraged buyout restructurings and one of the most complex in this downturn, the market has looked to McCarthy & Stone as a precedent. It has already been mirrored and used as the template for other deals, such as the IMO Carwash restructuring. Freshfields Bruckhaus Deringer advised McCarthy & Stone, Linklaters advised the senior lenders and Allen & Overy represented the mezzanine steering committee. L-R: Simon Crompton of IFLR, Stephen Griffin of Linklaters, Richard Tett of Freshfields Bruckhaus Deringer, Okko Behrends of Allen & Overy Glitnir Iceland s laws did not cover restructuring bank assets until So when Glitnir, one of the country s largest banks needed restructuring, the firms advising it had to force through new legislation in Iceland. The restructuring was also the first to provide comprehensive creditor guidance in the form of an online information memorandum that addresses international disclosure standards. There were other firsts too. It was the first to provide information on the claims process, claims filings for its majority equity interest in the new bank (named Islandsbanki) set up by the Icelandic government, and the first to develop a comprehensive system for claims administration and disposition. Honsel The Honsel restructuring shows how, with the majority senior lenders on board, a pre-pack out-ofcourt restructuring involving a debt-for-equity swap can be successfully achieved in Germany even with dissenting senior and junior creditors. Through an innovative application of the transfer and release provisions in the intercreditor agreement, combined with a German share pledge enforcement, Honsel and a majority of the senior creditors were able to successfully implement a restructuring that not only eliminated or left behind the out-of-the-money junior creditors, but also crammed down the non-consenting senior lenders. IMO Car Wash In a landmark contested restructuring, the mezzanine lenders disputed IMO Car Wash s schemes of arrangement as being unfairly prejudicial, arguing that the valuations obtained by the group and the senior lenders were flawed. After hearing valuation evidence from all parties, the High Court found it appropriate to sanction the schemes. This was the first contested scheme of arrangement in the economic downturn. The decision gives guidance as to the basis on which valuations of distressed assets in restructurings should be carried out and in particular, for schemes of arrangement. Rolf Group This structure effectively resolved a conceptual Russian law issue relating to security ranking and created pari passu Russian law security in favour of all bank lenders. Refinancing and settling the bank loans involved simultaneous restructuring of Eurobonds and a strategic investor s acquisition of a major stake in Rolf Group. Schoeller Arca Systems The Schoeller Arca Systems restructuring will have a significant impact on a number of high-profile restructurings, specifically those where value breaks in the mezzanine. It is the first Dutch court ruling in respect of a Dutch pre-pack where an enforcement sale of a Dutch holding company was pre-agreed between the senior lenders, a buyer and the company, while its subordinated bridge lenders opposed the sale. Thomson This involved the restructuring of e2.8 billion of Thomson s debt under its revolving credit facility and US private placement notes through a prepack sauvegarde. Lawyers also had to convert part of the debt into equity (via a rights issue backstopped by the creditors), notes redeemable in shares and other hybrid notes, with the remaining debt being restructured into a new multicurrency secured term loan facility and secured US private placement notes. It was the first pre-pack sauvegarde of a public company in France and first restructuring involving the Isda Small Bang CDS auction process Yell Yell s 4.46 billion refinancing was a first-of-its kind debt restructuring and linked equity issue, which prevented the company from going into administration. The Finco debt buyback proposal worked because of the support of a large proportion of a debt syndicate that was prepared to back a cashgenerative borrower. Obtaining 95% support was difficult, but proved to be more palatable than the insolvency-style alternatives. It was the first use of a Finco debt buyback to get lender consent to change terms of debt facilities under 100%. IFLR/April

27 EUROPE DEALS OF THE YEAR Project finance A5 motorway PPP L-R: Johnny Myers of Clifford Chance, Nicholas Bliss of Freshfields, Elizabeth Fournier of IFLR The A5 motorway project in Germany was the first to combine EIB senior debt with a loan guarantee for trans-european transport (LGTT), and the first A model where a financial investor became co-sponsor of the project. The LGTT is offered to sponsors, project companies and investors involved in project with traffic risk and uses contingent mezzanine financing to absorb the risk. This encourages lending on traffic projects as it removes risk from the senior lending banks, but means a complex intercreditor agreement had to be developed for the extra layers of debt. Clifford Chance advised the bank consortium, while Freshfields counselled the sponsors. The EIB was assisted by Simmons & Simmons, and Strabag was represented by DLA Piper. Norton Rose was legal adviser to the German Federal Ministry of Transport, Building and Urban Affairs. New Dawn The financing for the construction, launch and operation of a commercial communications satellite serving Africa involved complicated jurisdictional considerations, with English, French, New York, Bermudan and Mauritian legal opinions required. The contract was structured so that risks were allocated to the most appropriate manager, and so that if an uninsurable loss occurred a substitute satellite could be switched in to maintain service. The revenue from maintaining the contract with key customers would then be used to pay the lenders outstanding debt. A2 motorway A particularly innovative financing structure had to be developed for this transaction, to accommodate the involvement of the commercial banks, the European Investment Bank and the State Treasury of Poland. The EIB s rigid terms meant that borrower-friendly concessions could not be made, and a structure with different terms for lenders on what constituted a trigger and what would happen if they were triggered. The state support meant that the deal was elevated to sovereign risk level, which led to yet another set of lending and disclosure terms. A State Treasury guarantee was obtained, which covered the concessionaire s payment obligation and ensured a more flexible approach from the EIB. Iberwind The refinancing of Iberwind s portfolio involves true project bonds, but with lenders having recourse only to the project asset, instead of the usual credit enhancement features. The bonds can be cleared through domestic channels for tax purposes, but are linked to international clearing houses so as to be accessible to international investors. A clearing procedure was also developed that netted off payments between the banks and the issuer, so that only net payments were made at closing. A clearing procedure was also developed that netted off payments between the banks and the issuer 46 IFLR/April