Lovells creates Chinese walls for Tube Lines sale

Lovells has installed Chinese walls to advise Star Capital Partners on its plann-ed acquisition of the Tube Lines stake belonging to em-battled services group Jarvis.

A team of London lawyers, headed by partner Philip Brown, is advising Star Capital and SMIF, Star’s secondary market fund, in exclusive negotiations with Jarvis. Reports say the Tube Lines sale could fetch as much as £130m.

Lovells sought clearance and installed the ethical barriers as it also advised Tube Lines, the group responsible for maintaining London Underground’s Jubilee, Northern and Piccadilly Lines, on the Tube Lines public-private partnership and subsequent refinancing.

As reported by The Lawyer (13 September), the firm also won a place on the Tube Lines panel earlier this year to advise on real estate, company, corporate governance and contract work relating to London Underground.

It is understood that Lovells obtained clearance from Tube Lines as well as express clearance from Amey, Bechtel and Jarvis – the private consortium members that acquired Tube Lines in 2002 – to advise on the deal. The group acting has been relocated and is using separate IT systems.

A Lovells spokesperson said: “There’s total physical and electronic separation of the team.”

The deal, if successfully concluded, would mark one of the most
high-profile PFI secondary market sales to date.

The secondary market, while lucrative and growing, is still relatively limited. Among the few key PFI secondary market players are Henderson, Innisfree, Isquared (the joint undertaking between Barclays Capital and Société Générale) and SMIF.

The market has come under fire from the Government recently over private sector windfalls flowing from sales of equity stakes in PFI projects. However, PFI lawyers have rejected the concerns, arguing that windfalls are no more than the rewards for getting projects through the risky stages and on to a marketable footing.

Variable term concessions of the kind employed in Portugal have also been touted as a means by which private sector windfalls can be limited.

Slaughter and May, which is advising Jarvis on its restructuring, is also acting on the proposed Tube Lines sale.