Offshore: Deals and cases Q2 2012
16 July 2012 | By Joanne Harris
Several IPOs and significant acquisitions kept the offshore sector busy in the second quarter of 2012, although few transactions were extremely high in value
British Virgin Islands
Justice Holdings and Burger King
British Virgin Islands (BVI) company Justice Holdings agreed a business combination with Burger King Worldwide Holdings. Under the terms of the agreement 3G Capital, Burger King Worldwide’s principal stockholder, will receive approximately $1.4bn (£900m) in cash and continue as the majority shareholder of the company. The Justice shareholders and its founders will own approximately 29 per cent of the combined company and, upon closing, it is expected that the combined company will list and commence trading on the New York Stock Exchange.
For Justice Holdings: Maples and Calder partner Richard May and associates Matthew Gilbert and Ruairi Bourke; Greenberg Traurig team led by partners Donn Beloff and Alan Annex
For Burger King and 3G Holdings: Conyers Dill & Pearman partner Robert Briant and associate Anton Goldstein; Kirkland & Ellis team led by partner Stephen Fraidin
Chinese e-commerce company Alibaba.com announced its proposed privatisation in May 2012, achieving shareholder approval for the planned transaction. The company, valued at HK$18.3bn (£1.51bn) will go private through a scheme of arrangement under section 86 of the Cayman Islands Companies Law.
For Alibaba: Appleby partners Judy Lee and Jeremy Walton, counsel Jayson Wood, senior associate Joanne Collett and associate Tiffany Chan
Edwards Group IPO
UK-headquartered Cayman industrial equipment company Edwards Group listed on the Nasdaq exchange in New York in May. The 12.5 million shares were priced at $8 per share.
For the company: Maples and Calder partner Jack Marriott and associate Jess Stock; Weil Gotshal & Manges, team led by partners Alexander Lynch, David Bittner and Peter King
For the underwriters, Barclays, Goldman Sachs and Deutsche Bank: Davis Polk & Wardwell, led by partner Alan Denenberg
McLaren Insurance Company and Petoskey Assurance
Healthcare captive insurers McLaren Insurance Company (Micol) and Petoskey Assurance merged under a statutory merger agreement in April 2012. The surviving company is Micol, owned by Michigan-based healthcare system, McLaren Health Care Corporation, which had more than $4.2bn in annual revenue in 2011.
For Micol and Petoskey: Solomon Harris lawyer Kay Carter
Home Builders Federation
A scheme promoted by the Home Builders Federation to stimulate the English housing market was established to operate through a Guernsey-based insurance company. It was designed to reduce risk to lenders at higher loan-to-value ratios. The scheme will apply in respect of newly built homes in England, and provides insurance to lenders in respect of losses on mortgages, due to defaults. The scheme is supported by a £1bn guarantee from the UK Government.
For the Home Builders Federation: Ogier partners Frances Watson and William Simpson and senior associate James Cooke; Clyde & Co partner Ivor Edwards and associate Samantha Jones
Isle of Man
Issue of two tranches of perpetual securities which raised S$2.3bn (£1.17bn) and are listed on the Singapore stock exchange. The first offering of perpetual securities, which raised S$1.8bn, was the largest ever single-tranche Singapore dollar bond deal and this was followed by a second issue of S$500m directed at retail investors, which began trading on 18 April 2012.
For Genting: Cains director Mike Edwards; Allen & Gledhill partners Margaret Chin and Glenn David Foo and associate Samuel Lee
For DBS Bank and HSBC (global co-ordinators) and CIMB, DBS, Deutsche Bank, JP Morgan and Oversea-Chinese Banking Corporation: Clifford Chance partner Raymond Tong, counsel Bin Wern Sern and associate Ryan Lin
Hyundai Heavy Industries ship registration
Döhle (IOM) Ltd, Freeport Trust Company Ltd and the Isle of Man Ship Registry facilitated the delivery, flagging and registration at the Isle of Man Ship Registry of the first of nine 13,100 twenty-foot equivalent units (TEU) container vessels being built by Hyundai Heavy Industries in Korea, the largest shipbuilder and shipyard in the world. At over 360m long and 48.2m wide, these vessels are the largest to be registered in the Isle of Man and some of the largest vessels in operation in the world. To date, three of the vessels have been registered at the Isle of Man Ship Registry.
The remaining vessels are scheduled to be delivered during this year and the first half of 2013. The nine container ships are owned by nine Isle of Man entities, all administered from the island. The transaction was structured and arranged by Crédit Agricole CIB and the vessels were financed using a facility provided by a number of banks, led by HSH Nordbank.
For the banks: Norton Rose
For Hyundai Heavy Industries: Ince & Co
For Crédit Agricole: Dougherty Quinn director Mark Dougherty
Polyus Gold IPO
Polyus Gold listed on the London Stock Exchange in June 2012, raising $635m. The company is now London’s largest listed gold producer, with a market capitalisation of over $9bn and the world’s third largest gold reserve base.
For Polyus Gold: Mourant Ozannes partner James Hill and senior associate Jon Woolrich; Debevoise & Plimpton team led by partners James Scoville, Guy Lewin-Smith, Richard Ward, Natalia Drebezgina and Alan Kartashkin
Tower 42 acquisition
Tower 42 Holdings purchased the Tower 42 Estate for £282.5m from the BlackRock UK Property Fund, the Royal Mail Pension Plan, the Hermes Property Unit Trust and the BT Pension Scheme, collectively the Tower Limited Partnership. The price was partly funded by a secured fixed rate loan financing of £145m for 20 years from Aviva Commercial Finance Limited. The flagship property in the 2.2-acre freehold site is Tower 42 itself.
For Tower 42 Holdings: Bedell Cristin partner Simon Hopwood and associate Emily Picot; Macfarlanes partner Ian Nisse
For the Tower Limited Partnership: Mourant Ozannes partner Ben Robins and associate Stephanie Cope; Nabarro, led by Amanda Howard; Hogan Lovells partner Michael Stancombe, senior associate Alison Ramsey and associate Judith Reynolds
Four Seasons Healthcare
Barclays and Goldman Sachs provided financing and issued bonds for the acquisition of UK care home operator Four Seasons Healthcare by Terra Firma Capital Partners for £825m. Four Seasons Heath Care is an independent provider of nursing homes, care homes and specialist units operating across the UK, Isle of Man and Jersey. The organisation employs more than 30,000 staff caring for some 20,000 residents.
For Four Seasons: Ogier partners Simon Mackenzie, Philip Le Cornu, Nick Ward, Raulin Amy and Caroline Chan and associate director Jo Pitcher; Macfarlanes partners Ian Martin and Bronwen Jones, and senior counsel Will David
For Terra Firma: Carey Olsen partners Tom Carey and Guy Coltman, senior associates Adrian Sarchet and Geoff Ward-Marshall; Slaughter and May, team led by partner Jeff Twentyman; Cravath Swaine & Moore partner Philip Boeckman and associate Alexander Muller
For Barclays and Goldman Sachs: Appleby partners Helen Crossley, Barney Lee, Mark Lewis and Sherice Arman and associates Sarah Cox, Christopher Spencer and Caroline Barton
Shell Africa sale
Royal Dutch Shell sold the majority of its shareholdings in its downstream African businesses as part of a programme of sales of its non-core operations. The transaction was worth $1bn.
For Shell: Appleby partner Gilbert Noel and associate Ashley Oogorah
The Fairfield Sentry case in the BVI was the stand-out case of the last quarter of the year offshore
British Virgin Islands
Fairfield Sentry Ltd (in liquidation)
Eastern Caribbean Court of Appeal
Judgment, 13 June 2012
In the latest stage of litigation emanating from the colossal Bernard Madoff Ponzi scheme, the Eastern Caribbean Court of Appeal has dismissed Madoff feeder fund Fairfield Sentry’s appeals and upheld two previous judgments of the British Virgin Islands (BVI) Commercial Court. The Court of Appeal found that restitution claims, brought on the basis of an alleged mistake as to the value of Bernard L Madoff Investment Securities, did not render the contracts between Fairfield and redeeming shareholders impossible to perform.
The first instance judge had determined two preliminary issues. He ruled that the NAV statements issued by the administrators of the fund did not amount to “certificates” so as to preclude the liquidators subsequently from challenging the NAV. He also held that the redeeming shareholders had given “good consideration” for the redemption sums by surrendering their shares and that, for this reason, the restitutory claims should not proceed. The Court of Appeal dismissed appeals from the redeemers and the liquidators against both these findings. The case is now likely to go to the Privy Council.
For the Harney Westwood & Riegels appellants/respondents: Harneys partners Philip Kite and Kissock Laing and associate Colleen Farrington, instructing Brick Court Chambers’ Mark Hapgood QC
For the Ogier appellants/respondents: Ogier managing associate Robert Foote and senior associate Claire Goldstein, instructing 3 Stone Buildings’ David Lord QC
For the Maples and Calder appellants/respondents: Maples and Calder partner Arabella Di Iorio, instructing Maitland Chambers’ Dominic Chambers QC
For the O’Neal Webster appellants/respondents: O’Neal Webster partner Paul Webster QC and associate Nadine Whyte, instructing Fountain Court Chambers’ David Railton QC
For Fairfield Sentry: Forbes Hare partner William Hare and associate Robert Nader, instructing Fountain Court’s Michael Brindle QC and Maitland Chambers’ Andrew Westwood
AHAB v Al Sanea
Grand Court of the Cayman Islands
Judgment: 12 June 2012
This was the largest award of damages ever made by the Grand Court of the Cayman Islands. The $2.5bn (£1.61bn) award was granted by the Chief of Justice of the Cayman Islands in a ruling handed down on 12 June 2012, and is connected with other litigation overseas.
The Cayman litigation is concerned with the claim that Maan Al Sanea misappropriated billions of dollars from the Algosaibi family while managing their financial services business and transferred the proceeds into various Cayman companies. Al Sanea sought to dispute the jurisdiction of the Cayman court, claiming that certain issues had to be litigated in Saudi Arabia. Al Sanea’s attempts to dispute jurisdiction have been rejected by both the Cayman Islands Court of Appeal and, more recently, by the Judicial Committee of the Privy Council.
The Chief Justice granted an application for an interim payment of $2.5bn.
For the plaintiffs, Ahmad Hamad Algosaibi & Brothers (AHAB): Mourant Ozannes partner Peter Hayden and senior associate George Keightley, instructing Ewan McQuater QC and David Quest of 3 Verulam Buildings; Eric Lewis and Kate Toomey of Lewis Baach
For the defendant, Maan Al Sanea: Appleby partner Jeremy Walton instructing Blackstone Chambers’ Thomas Beazley QC and Brian Kennelly
Royal Court of Jersey
Judgments: 25 April/14 May 2012
Beneficiaries of a Jersey law discretionary trust had been removed from the trust by the trustee, Verite Trust Company, and protector, George Machan. The Royal Court set aside this removal on the basis that the decision was “perverse and unreasonable”. The decision was made by the trustee and protector in the context of divorce proceedings in the Family Division of the High Court of England and Wales. It involved consideration of factors for a trustee and protector to take into account (including letters of wishes) when exercising a power of removal of beneficiaries. It also raises the possible obligation of a trustee to act as “bon pêre de famille” in the context of a family trust involving children which is a new development in the Jersey law of trusts.
The trustee, protector and widow also applied to the Royal Court for an order that the judgment be withheld from publication, anonymised or redacted. The applications failed.
For A and B (beneficiaries of the trust): Mourant Ozannes advocates Mark Temple, Damian Evans and Fritha Ford
For Verite Trust Company Limited and George Machan: Carey Olsen advocates Robert MacRae, Victoria Connolly and Louise Woolrich
In the Matter of the Shirnovic Trust
Royal Court of Jersey
Judgment: 25 April 2012
There is a long-standing principle in English law that, in certain circumstances, equity will aid the defective execution of a power. The Royal Court had to consider whether this principle applied in Jersey and, if so, whether it applied in a modern, unconventional scenario. Following arguments put forward on behalf of the representatives, the Royal Court held that it did.
For Bas Trust Corporation: Bedell advocate Lisa Springate
For MF and others: Carey Olsen advocate Robert MacRae