Offshore deals and cases Q3 2012

The past quarter has been busy for the offshore sector as firms have looked to capitalise on globalisation, while workflow has remained high

/v/a/c/offshore.jpg

Since the summer, offshore law firms have been kept busy with plenty of instructions from clients and also plenty of strategic moves. A number of firms have opened new offices, seeking to capitalise on globalisation.

Corporate activity has been steady. A number of companies with offshore operations have issued notes in a bid for financing, while others are merging or selling off assets.

On the litigation front, the quarter has seen several large cases with significant judgments – particularly in Jersey and the Cayman Islands.

News

Office launches

US litigation boutique Kobre & Kim announced in July it was following up its earlier British Virgin Islands (BVI) launch with a Cayman Islands office. Kobre & Kim brought on board local lawyer James Stenning to set up the office, as well as relocating London partner James Corbett QC to Cayman.

/g/s/c/Williams__Michael__Mourant_Ozannes_.jpg
Michael Williams

In September Channel Islands firm Mourant Ozannes confirmed the long-planned launch of its BVI office. Jersey partner Michael Williams relocated to the BVI to lead the office, with Ogier managing associates Rachael McDonald and Shaun Folpp both joining Mourant Ozannes as partners in the BVI.

Caribbean firm Forbes Hare launched a London office in October by hiring Walkers partner Catherine Ross. Ross focuses on corporate and finance law, particularly hedge funds.

Both Maples and Calder and Bedell Cristin have opened offices in Singapore. Bedell announced its launch in July, relocating recent recruit Stephen Adams from the BVI to Singapore. The office will focus on providing BVI services to Asian clients.

Maples opened in Singapore in September, relocating funds partner Nick Harrold and corporate finance partner James Burch from Hong Kong.

Hires

/h/f/k/Leon_Santos.jpg
Leon Santos

Collas Crill boosted its presence in Singapore in August with the hire of Leon Santos from fund management group Prosperity Capital Management. Santos’s appointment came as partner Sean Cheong, who founded the Singapore office in 2011, moved back to Guernsey to be replaced in Singapore by Marcus Hinkley.

Appleby hired two former Walkers partners for its London and Guernsey offices. Ian Gobin, who worked at Walkers until November 2011, will be based in Guernsey, while Deborah Poole is leaving Walkers’ London office for Appleby London.

Walkers has picked up two lawyers from the London offices of Mayer Brown and Proskauer Rose. Mayer Brown senior associate Aaron McGarry has joined the firm as senior associate to develop a niche derivatives practice in Dublin. McGarry will sit within the wider asset finance group headed by Ken Rush.

Irish-qualified John O’Driscoll will initially join Walkers’ Cayman office as senior counsel before relocating back to London to focus on insolvency law, working closely with the Dublin team. Currently, Walkers has no insolvency lawyers in Ireland.

Jersey firm Sinels has appointed Marcus Stemmer-Baldwin to head its litigation practice. Stemmer-Baldwin joins Sinels from Cayman firm Ritch & Conolly, where he worked for six years.

Bedell Cristin has appointed Appleby lawyer Valerie Georges-Thomas to head its BVI office. Georges-Thomas joins Bedell as a senior associate.

Promotions and appointments

Walkers has elected Ingrid Pierce as its first female managing partner following a management restructure at the firm. Pierce replaces Diarmad Murray in the role, with Murray remaining on the firm’s executive committee while returning to fee-earning. He was elected in May 2011 when previous incumbent Grant Stein was chosen as Walkers’ chairman. Stein announced his retirement in December 2011. Pierce will continue to act as Walkers’ Cayman funds head in addition to her managing partner duties.

/r/y/p/Katrina_Edge.jpg
Katrina Edge

Ogier has announced the promotion of three new partners, with the appointments taking effect from 1 February 2013. Jersey-based Katrina Edge and Victoria Yates become partners in Ogier’s legal business, while Ogier Fiduciary Services’ Paul Lawrence is also promoted. Lawrence recently relocated to Luxembourg to lead the establishment of the firm’s fiduciary business there.

Corporate

Bermuda

Digicel Group

September 2012

Caribbean and South Pacific wireless telecommunications operator Digicel offered $1.5bn (£940,000) in 8.25 per cent senior notes, due 2020.

For Digicel Group: Conyers Dill & Pearman director Marcello Ausenda and associate Robert Alexander; Davis Polk & Wardwell partners Michael Kaplan, Joseph Hadley and Rachel Kleinberg, counsel Jean Weng and Catherine Martin, and associates Jason Roomer, Katharine O’Banion, and Arie Rubenstein

For the underwriters: Cahill Gordon & Reindel

British Virgin Islands

Waterloo Investment Holdings

June 2012

BVI company Waterloo Investment Holdings listed on the Bermuda Stock Exchange at the end of June 2012. The company issued 100,007,864 ordinary shares at a price of $1 per share. Waterloo is an investment holding company and its principal subsidiary is British Caribbean Bank. It also holds shares in developments in the Turks and Caicos Islands, Belize and Costa Rica.

For Waterloo Investment Holdings: Harneys partners Leonard Birmingham and Murray Roberts advised on the BVI law aspects of the listing.

Finstar/Rive Gauche

August 2012

Finstar Group, the majority shareholder in Russian perfume and cosmetics retailer Rive Gauche, sold its 51 per cent stake to Elshtere. Finstar remains a substantial shareholder in Rive Gauche. The company is the second-largest perfume and cosmetics business in Russia, with more than 180 stores.

For Finstar: Harneys partners Simon Hudd (BVI advice), Nancy Erotocritou and Styliani Constantinou (Cypriot advice); Akin Gump Strauss Hauer & Feld Moscow partner Suren Gortsunyan, counsel Alexander Trukhtanov and associate Konstantin Mineev

Amira Nature Foods

October 2012

BVI company Amira Nature Foods was listed on the New York Stock Exchange, resulting in a market capitalisation of around $300m on its launch. It is the highest-value BVI company IPO of 2012.

For Amira: Walkers partner John Goslin; Loeb & Loeb team led by partner Joseph Daniels

For the underwriters: UBS Investment Bank and Deutsche Bank Securities: Skadden Arps Slate Meagher & Flom partner Michael Zeidel

Cayman Islands

HudBay Minerals and Silver Wheaton Corp

September 2012

HudBay Minerals entered into a precious metals steam transaction with Silver Wheaton Corp.

HudBay received an upfront deposit payment of $500m and will receive a further $250m in deposit payments in two equal instalments once $500m and $1bn respectively in capital expenditures have been incurred at its Constancia project in Peru.

The deposit payments are in respect of 100 per cent of payable gold and silver from HudBay’s 777 mine until 31 December 2016 or the satisfaction of a completion test at Constancia, whichever is later, and thereafter 50 per cent of payable gold and 100 per cent of payable silver, as well as 100 per cent of payable silver from Constancia.

HudBay will also receive cash payments equal to the lesser of the market price and $400 per ounce for gold and $5.90 per ounce for silver, subject to a 1 per cent annual escalation after three years.

For HudBay Minerals: Conyers Dill & Pearman Cayman counsel Olivaire Watler and BVI associate Cora Miller; Goodmans partners Jonathan Lampe, Kari MacKay and Mark Surchin and associates Leah Ramkaran and Dan Dedic; Thorsteinssons partners Michael Colborne and Michael McLaren; Thompson Dorfman Sweatman lawyers Jeff Kowall and Elmer Gomes; MacPherson Leslie & Tyerman associates Penny Yeager and Ryan Hallman; Rodrigo Elias & Medrano Abogados partner Luis Enrique Palacios and associates Jorge Trelles and Luis Arce

For Silver Wheaton: Walkers partners Marianne Rajic and Ramesh Maharaj and associate Justin Hart; Cassels Brock & Blackwell partners Erik Goldsilver, Charles Newman, David Budd and France Tenaille

Guernsey

Coller International Partners VI

July 2012

Coller Investment Management established Coller International Partners VI, a Guernsey-authorised closed-ended investment scheme. The scheme is comprised of Guernsey, Cayman and other vehicles, and was set up primarily to pursue privately negotiated investments in the secondary market worldwide. The scheme closed with commitments of $5.5bn.

For Coller Investment Management: Ogier Guernsey partners William Simpson and Roger Le Tissier, senior associate Bryon Rees and associate Rachael Sanders, Cayman partner Nick Rogers and associate Michael Lubin and Jersey partner Michael Lombardi; O’Melveny & Myers partner John Daghlian and counsel Daniel Quinn

Jersey

Jersey Art Fund

October 2012

A new fund investing in 200 works of art with a target fund size of €50m was authorised by the Jersey Financial Services Commission on 1 October. The fund will acquire art from auction houses, individual art collectors, galleries, museums and other sources. It is closed-ended, with a term of seven years.

For the investment adviser: Collas Crill partner Adrian Odell; Dechert partners Achim Pütz and Martin Hüwel

Man Group/FRM Holdings

August 2012

Global hedge fund research and investment company FRM wassold to alternative investment management giant Man Group through a Jersey scheme of arrangement. The resulting combined multi-manager business will have total assets under management of $19bn.

For FRM Holdings: Carey Olsen partners Guy Coltman and John Kelleher, senior associate David Allen and associates David Taylor and Louise Woolrich; Allen & Overy partner Edward Barnett

For Man Group: Mourant Ozannes partner Robert Hickling, senior associate Paul Martin, managing associate Matthew Shaxson and associate Jane Rosen; Clifford Chance partners David Pudge, Joel Ziff, Gerard Saviola, Jonathan Elman, Simon Crown, Imogen Clark and Kevin Thompson and senior associates Katy Foster and Dan Royle

Battersea Power Station

September 2012

A Malaysian consortium comprising property group SP Setia, multinational conglomerate Sime Darby and Malaysia’s Employees Provident Fund acquired Battersea Power Station for £400m. The proposed development, which will be a 15-year project, could cost up to £8bn.

The landmark power station went into administration in 2011, with Ernst & Young appointed to handle the sale process.

For the consortium: Mourant Ozannes partners Joel Hernandez and James Hill and associates Kerill O’Shaughnessy and Matt Satchell; Norton Rose team led by David Sinclair and Dan Wagerfield; Shearn Delamore & Co; Wong & Partners

For Ernst & Young, the administrators: Linklaters team led by Mark Burgess-Smith

Isle of Man

AngloGold Ashanti Holdings

July 2012

Isle of Man company AngloGold Ashanti Holdings issued $750m of 5.125 per cent notes due in 2022, guaranteed by AngloGold Ashanti Limited. The notes are listed on the New York Stock Exchange.

For AngloGold Ashanti Holdings: Cains team led by director Richard Vanderplank; Slaughter and May partner Matthew Tobin; Cravath Swaine & Moore associates Virginie Marier and Nicholas Dorsey; Edward Nathan Sonnenbergs directors Ze’ev Blieden and Diana Messerschmidt and senior associate Phila Zulu

For the underwriters: Davis Polk & Wardwell partners Paul Kumleben and John Paton and associates Reuven Young, Serge Martyn and Sarah Joy

For the trustee: Emmet Marvin & Martin

Playtech

August 2012

Ahead of a move to the main market of the London Stock Exchange following its 2006 AIM listing, Playtech redomiciled from the BVI to the Isle of Man, where it already had its headquarters. Playtech is the world’s largest publicly-traded online gaming software and services supplier, with a market capitalisation of over £1bn.

For Playtech: Appleby Isle of Man partner Nick Verardi and senior associate Kyle Sutherland and BVI partner Michael Burns; Berwin Leighton Paisner partner Alex Latner and associates Gareth Jones, Brian Mulkerrins and Natalie Carter

Mauritius

Genpact

August 2012

Bain Capital is acquiring 30 per cent of computer services company Genpact from General Atlantic and Oak Hill Capital Partners for approximately $1bn. The deal is funded through credit financing from JP Morgan to Bain’s wholly-owned Mauritian subsidiaries.

For JP Morgan: Appleby partner Malcolm Moller and senior associate Anjana Ramburuth; Davis Polk & Wardwell

For Bain Capital: Ropes & Gray team led by partners Will Shields and Newk Stillwell

For General Atlantic and Oak Hill: Paul Weiss partners Matthew Abbott, Neil Goldman, David Lakhdhir, Richard Bronstein and David Sicular and counsel Ross Fieldston

Litigation

Bermuda

Director of Land Valuation v Banks

Bermuda Supreme Court

Judgment: 27 July 2012

This case concerned the interpretation of Bermuda’s land tax laws. Samuel Banks, who owns a Bermuda property, challenged the assessment of the land tax payable in respect of the property.

The director of land valuation brought the appeal against the decision of a 2011 Land Valuation Tribunal, seeking to clarify the way Bermuda’s laws are interpreted. The case is believed to be the first appeal under the Land Valuation Act 1967.

The Supreme Court dismissed the appeal and said there would be a ruling on costs.

For the respondent Samuel Banks: Conyers Dill & Pearman director Jeffrey Elkinson and associate Ben Adamson, instructing Richard Drabble QC of Landmark Chambers

For the appellant, the director of land valuation: Martin Johnson, Attorney-General’s Chambers, instructing Jonathan Small QC of Falcon Chambers

Cayman Islands

In the matter of the liquidation of the X Fund

Grand Court

Judgment: 21 August 2012

This judgment was handed down in anonymised form until the liquidation of the fund is complete.

The Grand Court held that it does not have a discretionary power, as part of its inherent jurisdiction, to set aside a remuneration agreement entered into with a liquidation committee, at the request of a liquidator, and substitute new terms.

The court also provided guidance to official liquidators that they should apply for prospective approval of a remuneration agreement as soon as is reasonably practical to do so, even where that agreement is on a percentage of distributions or realisation basis.

For the liquidation committee: Ogier partner Richard de Lacey QC and managing associate Rachael Reynolds

For the official liquidators: Walkers associate Barnaby Gowrie

Lansdowne Ltd & Silex Trust Company Ltd v Matador Investments Ltd (in liquidation) & Ors

Grand Court

Judgment: 23 August 2012

In considering whether an oral side agreement between the two founders of a hedge fund took precedence over the provisions of the articles of association relating to gating and suspension of redemptions, Judge Quin held that the agreement was between the founders personally and could not be said to be between the fund and the investors.

Quin also found that the articles of association of a company comprise an agreement that creates collective rights and obligations, as between the company and all of its shareholders, and between its shareholders inter se. In addition, third parties are entitled to rely on the accuracy of the articles when purchasing shares.

Even if the agreement was between the fund and the investors, it was inconsistent with the articles and could not change the prescribed redemption and suspension process. In order to protect the shareholders whose shares are not to be redeemed, the terms and manner of the redemption must be set out in the company’s articles.

The case is on appeal to the Cayman Islands Court of Appeal, with a hearing anticipated in April 2013.

For Matador Investments: Appleby partner Jeremy Walton and counsel Jayson Wood

For Lansdowne and Silex Trust Company: Walkers partner Sandie Corbett and senior counsel Matthew Goucke, instructing Francis Tregear QC of XXIV Old Buildings

For the liquidators: Conyers Dill & Pearman

Renova Resources Private Equity Ltd v Gilbertson & Ors

Grand Court

Judgment: 15 August 2012

The Grand Court upheld the case brought by Renova and its Russian principal Viktor Vekselberg who, as shareholder in Fabergé, brought a claim and was the defendant in a counterclaim concerning the alleged misappropriation of the brand name. The case involved complex forensic and legal questions of directors’ duties, duties in the context of limited partnerships, equitable claims and valuation and indemnification issues. It was the first time that the Cayman courts have permitted a derivative action to proceed to trial.

The court found in the plaintiff’s favour on its claim for breach of director’s duties, and held that the errant directors’ family trust company held the fruits of that breach on constructive trust.

For Renova: Maples and Calder partner Aristos Galatopoulos, senior associate James Eldridge and associate Marc Kish, instructing Richard Millett QC of Essex Court Chambers

For Gilbertson: Appleby partner Andrew Bolton and associate David Butler, instructing Michael Bloch QC of Wilberforce Chambers

Trident Microsystems (Far East) Ltd

Grand Court

Judgment: 8 August 2012

Trident Microsystems (Far East), a Cayman company, and its parent company were placed into Chapter 11 proceedings in Delaware. In order to support the proceedings and ensure creditors could not take steps to disrupt the process in Cayman, in January the company applied to the Grand Court for the appointment of joint provisional liquidators and a stay of proceedings against the company.

The provisional liquidation progressed in parallel with the Chapter 11 proceedings to ensure that business units of the company could be marketed and auctioned efficiently and restructuring options explored.

Ultimately, a restructuring was not possible and instead substantially all of the assets of the company were realised with a view to implementing a plan of liquidation in the Chapter 11 proceedings.

Accordingly, it was no longer appropriate to continue the provisional liquidation and on 8 August the Grand Court placed the company into official liquidation.

For Trident: Maples and Calder partner Colin McKie and associates Caroline Moran and Victoria Lissack

For Sigma Designs: Walkers partner Rupert Bell

For United Microelectronics Corp: Solomon Harris partner Kai McGriele

For NXP Semiconductors Netherlands: Appleby partner Rupert Coe

Guernsey

In Re B

Guernsey Court of Appeal

Judgment: 11 July 2012

This case concerned the trustee’s duty of confidence and the circumstances where a trustee might be authorised to disclose information regarding a trust in its own best interests.

The judgment, which dismissed the trust’s appeal, showed that a trustee will not be expected to remain silent when appropriate and limited disclosure will serve to protect its interests.

The judgment also confirmed that the English principles relating to bankers’ duties of confidence apply equally to trustees in this case.

For the respondent trustee: Carey Olsen partner Russell Clark

For the appellant: Babbé partner Andrew Laws

For HM Procureur: Crown Advocate Frederic Raffray

Jersey

In re G Trust

Royal Courts of Jersey

Final hearing: 2 July 2012

A beneficiary of the trust held by a South African family brought proceedings seeking to upset a proposed decision to distribute the fund of the trust and claiming damages in excess of $10m for breach of trust against the incumbent trustee. In turn the trustee brought third-party claims against another beneficiary. The case involved allegations of breach of duty of confidence, of backdating of tax-sensitive documents and of violation of South African exchange control legislation.

The case entailed issues of Jersey, Swiss and South African civil and criminal law and involved the forensic examination of electronic disclosure and its metadata as part of the backdating allegations.

For a beneficiary: Collas Crill advocates Damian James and Dan Boxall; Mishcon de Reya partner Anthony Julius and associates Tamasin Perkins and Victoria Pigott; Monfrini Crettol & Associés partner Yves Klein; Serle Court Chambers’ Dakis Hagan; Brick Court Chambers’ Thomas Plewman SC

For the trustee: Bedell Cristin advocate Mark Taylor; Farrer & Co partner Toby Graham and associate Joanna Poole; New Square Chambers Nicholas Le Poidevin QC; Fountain Court Chambers’ Brian Doctor QC; Serle Court Chambers’ Paul Adams

For another beneficiary: Baker Partners advocate David Wilson; Taylor Wessing partner Steven Kempster

For other beneficiaries: Appleby advocates Michael O’Connell, David Benest and Michael Cushing

For another beneficiary: Harcus Sinclair lawyer Alison Meek

For other beneficiaries: Franckellaw advocate Simon Franckel

La Générale des Carrières et des Mines v FG Hemisphere Associates

Privy Council

Judgment: 17 July 2012

The Privy Council handed down its judgment setting aside orders made by the Jersey Royal Court in November 2010 in favour of the US distressed debt fund, FG Hemisphere Associates.

The appeal concerned determining whether FG could enforcearbitration awards made in its favour against the Democratic Republic of Congo (DRC) against the Jersey assets of Gécamines.

The Privy Council unanimously agreed that Gécamines is a separate legal entity and not an organ of the state of the DRC.

For Gécamines: Mourant Ozannes partner Justin Harvey-Hills and associates Oliver Egerton-Vernon, Damian Evans, Charlotte Brambilla and Eloise Layzell; Liedekerke Wolters Waelbroeck Kirkpatrick partners Nicolas Angelet and Aimery de Schoutheete; Jonathan Hirst QC of Brick Court Chambers; Giles Richardson of Serle Court Chambers

For FG Hemisphere Associates: Ogier consultant Kerry Lawrence, instructing Lord Pannick QC and Andrew Hunter QC of Blackstone Chambers