CC and A&O land Swissair selloff as Linklaters rues lost fees
18 February 2002
27 July 2009
12 November 2001
26 February 2001
13 January 2003
27 November 2000
Clifford Chance, Allen & Overy (A&O) and Swiss firms Bar & Karrer and Prager Dreifuss have come out on top on Swissair's sale of its standalone ground-handling business, Swissport, to Candover Investments for $344m (£240.7m).
However, Linklaters and Swiss firm Homburger, which both advised Swissair, may end up out of pocket after the company was forced to ask the Swiss courts for bankruptcy protection while negotiations were continuing.
Venture capital company Candover eventually paid $162m (£113.4m) for Swissport and a consortium of banks raised the rest.
Clifford Chance, led by partner David Pearson, acted for Candover, with Barr & Karrer, led by partner Andreas Malacrida, providing Swiss advice. A&O, led by Euan Gorrie, acted for the banks, including the Royal Bank of Scotland, which led the debt, ING, WestLB, Bayerische Hypo-und Vereinsbank and Bank of Scotland. A&O clinched a further interest by also acting for Intermediate UK investor Capital Group on raising SFr130m (£53.9m) mezzanine finance for the deal, led by partner Jacqueline Evans.
The sale of Swissport was part of a debt restructuring exercise by Swissair, which began in August last year. Candover won exclusivity for the deal early on and underwrote equity amounting to SFr274m (£113.7m), giving it a 77.5 per cent stake in the company.
Heads of terms were signed that August, but then events took a change for the worse when Swissair was declared bankrupt.
"After 11 September, there was a downturn in sentiment towards the industry," said Pearson. "Switzerland hadn't ever seen anything of this size."
Linklaters and Homburger advised Swissair on drafting the letter of intent and continued to act for several weeks afterwards. But at the end of September, Swissair decided that obtaining Swiss legal advice on the deal would be sufficient, and asked Linklaters to cease acting.
Linklaters is owed several hundred thousand pounds to date, but continues to act for Swissair on other operations, including the sale of its catering operations and duty-free shops.
Linklaters partner Robert Elliott said: "The question was of timing. Generally, a professional firm won't walk off a job simply because it's owed money."
After a court administrator was appointed in October 2001, the parties were unclear on how to proceed. "There was a big hiatus while everyone went off and thought about things," said Gorrie at A&O. Eventually the wheels began to move once more. "Candover and the banks spent a lot of time reassessing projections," said Gorrie.
Candover offered the Swissport management, headed by Joseph In Albon, a stake in the outward parent company SWT Lux SA; it eventually took a 12.5 per cent interest. Prager Dreifuss, led by partner Andreas Moll, acted for the Swissport management. This was the Swiss firm's first instruction by this client, gained through a KPMG recommendation, the financial adviser to Swissair on the deal.
Clifford Chance has advised Candover in the past on a £30m investment in Clondalkin to support the acquisition of European Package Holdings Group in April 2001, as well as on the investment and acquisition by Bourne Leisure of Rank Holiday Division's caravan park business in January 2001 for £1.6bn.
A&O was the obvious choice for the consortium on the Swissair deal, through its main contact the Royal Bank of Scotland. It acted for the bank on a £3.5bn revolving credit facility for mmO2 in September 2001 and on a £1bn facility for Scottish Power UK in the same year. It also acted for a consortium - which included Bayerische Hypo-und Vereinsbank and ING - in October 2001 on the u1.2bn (£735.6m) financing for the DBFO high-speed rail link which runs between Amsterdam, Rotterdam and the Belgian border.