Allen & Overy and Freshfields join raft of firms on Deutsche Annington refinancing

The agreement will see Deutsche Annington, a portfolio company of London-based private equity group Terra Firma, refinance its debt in the wake of poor market conditions.

It will allow the Bochum-based company more time to repay commercial mortgage-backed securities (CMBS) distributor German Residential Asset Note Distributor (GRAND), with the current maturities due to expire in July 2013. The new deal will see them extended to 2018.

Allen & Overy advised Deutsche Annington, with Frankfurt-based real estate finance partner Olaf Meisen and global restructuring and insolvency managing partner Mark Sterling leading. The duo were assisted by a partner team including real estate financing specialist Mark Manson-Bahr in Frankfurt and restructuring partner Ian Field in London.

Freshfields acted for consultant Ad Hoc Group, which consists of BayernLB, ING Investment Management, JP Morgan, Landesbank Baden-Württemberg, PIMCO and Standard Life Investments. The six entities together make up 32% of Deutsche Annington’s noteholders.

London restructuring partner Richard Tett, City banking partner Jeffrey Rubinoff and Hamburg-based restructuring partner Lars Westpfahl led the Freshfields team of around 20 lawyers.

White & Case acted for the trustee adviser, Deutsche Trustee Company, with commercial litigation specialist Alistair Graham, structured finance partner David Barwise and banking lawyer Stephen Phillips all providing advice. Graham and Phillips are London partners, while Barwise is based in both the City and Singapore.

Sidley Austin global finance co-head Graham Penn in London and Arthur Cox Dublin-based capital markets partner Glenn Butt both advised GRAND in its role as issuer.

Paul Hastings City finance partner Charles Roberts advised the REF note servicer, Capita Asset Services, GRAND’s primary loan servicer.

In exchange for the noteholders agreeing to the debt repayment date being pushed back by five years, Deutsche Annington and Terra Firma will contribute €504m (£392m) in equity support in the form of €265m (£206m) cash to reduce the amount of debt and a further €239 (£186m) in notes.

The agreement will also commit Deutsche Annington to refinancing in five separate installments, €1bn (£780m) in 2013; €700m (£545m) in 2014; and €650m (£506m) in both 2015 and 2016, with the balance refinanced in 2017.

Tett commented: “It has taken a year for the structure to be deleveraged to market level and to create a stable platform for a five-year repayment plan to avoid the balloon risk.”

The agreement is still subject to final approval, but it is expected that the deal terms will be published in September, with a number of court hearings in store before the final terms and conditions are finalised.

The entire deal is expected to close in November this year, with many of the external lawyers working on the deal since around June 2011.

The debt restructuring aims to enable Deutsche Annington to repay its debt and prepare it for a potential public listing within two years.

A different raft of firms were retained earlier this year to advise on Terra Firma’s acquisition of the Garden Centre Group from Lloyds Banking Group. Ashurst, Dundas & Wilson, Macfarlanes, McGrigors, Memery Crystal and SJ Berwin all acted on the deal (2 April 2012).

Legacy Lovells (now Hogan Lovells) real estate partner Michael Bütter left the firm’s Hamburg base in 2008 to join Deutsche Annington, with the legacy firm traditionally one of Terra Firma’s lead external legal advisers. It advised the private equity group on a €5.4bn CMBS in 2006 (7 August 2006).