Deal of the week – easyjet Norton Rose conflict gifts EasyJet to Herbert Smith

Norton Rose conflict gifts EasyJet to Herbert Smith

Norton Rose and Herbert Smith have both pulled off crucial deals for low-cost airline EasyJet.
A Norton Rose team advised EasyJet on a follow-on equity offering expected to raise more than £90m. Partners Mark Lloyd Williams and Rich Baumann, both of whom advised EasyJet on its flotation last year, led the deal.
Herbert Smith acted for EasyJet Airline Company, a wholly-owned subsidiary of EasyJet, on its new 20-year airport services agreement with London's Luton Airport.
This is not Herbert Smith's first deal for the Norton Rose client. The firm is understood to have scooped some of the work because usual adviser Norton Rose had conflict issues. Herbert Smith also advises Luton Airport's owner TBI, most recently helping it fight off a hostile bid from French company Vinci.
The Herbert Smith team was led by partners Gavin Davies and Peter Burrell.
Norton Rose had to use a special structure on the EasyJet offering, to ensure that all placements with institutions could be placed on a firm basis, despite the concurrent running of the open offer.
EasyJet chairman Stelios Haji-Ioannou is offering a sufficient number of his shares to cover all institutional placements should there be 100 per cent take-up in the open offer. If there is less than 100 per cent take-up, he will take up the remaining shares in the open offer. He will sell at least 13 million of his shares. The open offer will be completed by late November.
UK-qualified partner Lloyd Williams said: “It's a structure that has pushed the boundaries of these deals, but it's not a structure that can be replicated in every company.”
The equity offering was also subject to a strict timetable governed by the announcement of its first year results and market conditions.
US-qualified partner Baumann said: “We had to do it extremely quickly and so we were working around the clock. I think we pulled it off very well under the circumstances – EasyJet finished its financial year on 30 September and I think when they got the first sense of what the results were going to be they began to consider an equity offering.”
Joint lead managers and bookbuilders Credit Suisse First Boston and UBS Warburg were advised by the London office of New York's Skadden Arps Slate Meagher & Flom. UK-qualified partner James Healy and US-qualified partner Adrian Deitz ran the deal. Skadden Arps also advised the banks on the flotation last year.
The airport agreement takes effect retrospectively from 1 October 2001 and deals with landing charges for EasyJet traffic, including reduced charges for growth in traffic in order to incentivise EasyJet to increase passenger numbers at Luton. It also sets out operational service levels aimed at enhancing the effectiveness of service at Luton.