Ithaca-Valiant legal fees near £1.5m as Herbies, Pinsents erect Chinese walls
18 March 2013 | By Joshua Freedman
3 June 2013
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CMS Cameron McKenna and Herbert Smith Freehills (HSF) are the chief recipients of nearly £1.5m in fees from a £203m energy takeover that saw two law firms put up Chinese walls to prevent potential conflicts.
Canadian-based North Sea oil and gas exploration group Ithaca Energy will pay an estimated £630,000 in legal fees in relation to its acquisition of fellow Aim-listed company Valiant Petroleum. Valiant’s legal spend was estimated at £860,000, with the amounts revealed in a public document required under the Takeover Code.
The deal gives Valiant shareholders 307p per share in cash and 1.33 Ithaca shares for each Valiant share they hold.
Ithaca was primarily advised by CMS, which took the bulk of the £630,000. The firm fielded lead corporate partners Gary Green and James Parkes alongside lead corporate associates Narinder Jugpal and Jenny Stephenson. Others in the CMS team were oil and gas partner Bob Palmer, employee incentives partner Nicholas Stretch, acquisition finance partner Patrick Donegan, competition partner Caroline Hobson and employment partner Sarah Ozanne.
Pinsent Masons advised Ithaca on banking arrangements, putting forward Edinburgh partner Iain Macaulay. He worked on the other side of a Chinese wall from Glasgow corporate partner Rosalie Chadwick, who led the firm’s due diligence role for Valiant. Ithaca’s UK headquarters are in Aberdeen.
The barrier was put up as an extra precaution to avoid what could have been perceived as a commercial conflict, but the fact that Pinsents was not Valiant’s main corporate adviser meant the risk of improper practice was low.
A slice of Ithaca’s fees also went to Lawrence Graham, which fielded corporate head Geoff Gouriet to advise Ithaca’s financial adviser, Cenkos Securities, and to Calgary firm Burstall Winger, where corporate specialist Stacey Burstall was Canadian counsel to Ithaca. Other fees from Ithaca were earned by Norwegian firm Kvale, which put forward oil and gas partner Yngve Bustnesli.
Approval of the deal was conditional on consent from the Norwegian Ministry of Petroleum and Energy and the country’s Ministry of Finance.
Valiant’s main corporate adviser was HSF, which also put up a Chinese wall due to a dual role for the target and Ithaca’s lenders.
On one side of the divide were lead partner and Valiant relationship contact Stephen Wilkinson, who advised the company alongside fellow corporate partner Mark Bardell and energy partner Simon Tysoe. The lead associate was Sophie Tobin.
On the other side were finance partner Jason Fox and senior associate Olivia Caddy, who advised the lending consortium consisting of Banc of America Securities, BNP Paribas and the Bank of Nova Scotia.
HSF was able to take the double role after negotiating the Chinese wall with Valiant and the banks. It took most of the £860,000 fees paid by Valiant, with some going to Bennett Jones, the Canadian counsel to the company. The Bennett Jones team was led by Calgary corporate partner Colin Perry. Also included in the amount were fees to Edward Davies of Erskine Chambers, who handled the scheme of arrangement’s court approval.
Background to this deal:
Pinsents’ role for Ithaca comes from the client’s longstanding relationship with Macaulay, who has advised the company for several years. Macaulay and Chadwick are both legacy McGrigors partners who joined Pinsents last year through the firms’ merger. The Scottish firm also advised Valiant on its 2008 listing on Aim, with capital markets partner Martin Finnegan leading (31 March 2008).
HSF’s Fox, who is set to join US firm Bracewell & Giuliani as its London senior partner, previously advised BNP Paribas and Bank of Scotland on a $335m borrowing base facility for Valiant.
Burstall Winger advised Ithaca on its IPO in 2006.