Sidley Austin Brown & Wood has closed its first UK structured finance deal with CIBC World Markets. The company was joint arranger with longstanding Sidley client Merrill Lynch on a €180m (£119.3m) collateralised debt obligation (CDO) for AIG-MezzVest.
Sidley won a competitive tender for the work, which came from contacts that UK partner Sarah Smith made during a period spent working for the firm in New York.
In 2002, CIBC instructed White & Case on a tap issue for a CDO by Duke Street Debt Capital Management. Freshfields Bruckhaus Deringer worked on the original structure but was too busy to follow it up.
CIBC and Merrill Lynch also instructed Freshfields on the original warehouse facility to start originating assets for AIG-MezzVest, but turned to Smith and fellow Sidley partner Andrew Bliss for the CDO. The firm's Michael Doran also advised trustee Deutsche Bank.
The complex structure was driven by the fact that, unlike many CDOs where an asset manager is appointed to build up a portfolio of assets they have purchased, AIG-MezzVest has been originating loans itself with the intention of funding them through this structure.
The structure involved a secured loan from the note-issuing vehicle to another AIG-MezzVest company, which in turn lends the proceeds to its lending vehicles. Bliss said: "You have two Cayman Island entities, a Luxembourg entity and above that equity holders. That divergence of ownership is quite unusual."
The equity interest is provided by the AIG-MezzVest fund itself.
The portfolio of investments will largely consist of mezzanine bonds and loans with companies in Europe and the US. It is intended that the mezzanine fund established by AIG-MezzVest will ultimately issue additional debt.
Angus Duncan and Paul Flanagan led an Allen & Overy team advising AIG-MezzVest, with assistance from Luxembourg partner Marc Fielder. The firm also advised on the establishment of AIG-MezzVest in 2000.
Maples and Calder advised on issues relating to the Cayman Islands.