BT plumps for Linklaters for the UK's biggest rights issue

Linklaters & Alliance has reaffirmed its relationship with top client British Telecommunications (BT) and advised on its mammoth rights issue to raise £5.9bn.

Linklaters advised BT on the deal - the UK's biggest ever rights issue - even though the client has strayed in the last year, calling in Allen & Overy (A&O) to advise it on plans to float its directories division Yell.

The Linklaters team was led by partner Jeremy Parr along with fellow corporate partners David Barnes and Roger Barron.

A&O, though, still scooped work on the deal, advising Cazenove and Merrill Lynch as joint financial advisers and brokers to the issue and Cazenove as sponsor. The A&O team was led by head of corporate Richard Cranfield alongside corporate partner Jonathan Gould.

The issue was not underwritten and was made at a 47 per cent discount on the market share price at 9 May.

Parr says: "There's been quite a lot of initiatives going on at BT to reorganise their business. We've been working on a lot of those initiatives and we continue to work on a number of them."

He declines to comment on which other aspects of the restructuring the firm is involved with.

The rights issue was unusual from a legal point of view, not only because of its size, but because it was the first issue to permit acceptances through the Crest system, which is a computerised share settlement agency that allows the holding of shares in paperless forms.

Gould says: "There's never been a rights issue through Crest before, and it raised a lot of legal issues. Those were issues that Linklaters was primarily working on, and as the advisers to Cazenove and Merrill Lynch, we were working with them on settling the Crest wording."

Linklaters advised BT on issues across Europe, working alongside its alliance firms. It covered France, Spain, Germany, the Netherlands, Italy, Belgium, Luxembourg, Hong Kong and Singapore.

Linklaters also worked alongside longstanding BT adviser Shearman & Sterling on US law, while A&O worked with Cleary Gottlieb Steen & Hamilton.

BT had a large internal legal team working on the deal, led by new head of legal Anne Fletcher, who is replacing Alan Whitfield when he leaves to join KLegal next month (The Lawyer, 26 February).