Clifford Chance has advised UBS Warburg on a huge exchangeable bonds issue for Russia’s second-largest oil company Yukos.
The firm’s London, Moscow and New York offices were all involved in the $310m (£218.1m) issue of UBS bonds
exchangeable into shares of Yukos.
The deal was led by London capital markets partner Tim Morris, whose relationship with UBS on exchangeable and convertible bonds won the firm the deal.
London-based US partner Chris Walton advised on US securities aspects, while New York partner David
Moldenhauer advised on US tax issues. Moscow partner Arthur Illiev advised on Russian law and partner Irina Dmitrieva on the Russian tax aspects.
The deal was the first that most of the partners had done using Clifford Chance’s online dealroom, which is called CliffordChanceConnect. It allowed them to post offer documents and transaction documents for the whole team and the client to have access to worldwide advice.
“This was one of the first times that many of us who were involved had used the dealroom, and we thought it was pretty successful”
Walton said: “Clifford-ChanceConnect is a state-of-the-art online dealroom facility that enables you to post offer documents, transaction documents, commentary and the like to a transaction team that you designate all over the world. They are then given email alerts when new documents are posted to the dealroom.
“This was one of the first times that many of us who were involved had used the dealroom, and we thought it was pretty successful.”
Yukos did not have a law firm advising it externally. The deal was structured to allow the majority shareholders in Yukos to dispose of part of their controlling shareholding.
Adrian Cartwright, who assisted Morris on the London side of the deal, said: “This deal shows a real shift in sentiment towards Russia after the real problems and defaults there in 1998. What we were hearing in the market was that no one will be doing deals in Russia any more, but what we’re showing here is that deals can get done in Russia.”
Most of the deal was done outside London. There was a lot of structuring involved when the deal kicked off in May, so the bulk of the work was completed by mid-July. Moscow had a significant role to play in the due diligence on the Russian entity into which the bonds were being exchanged as well as on the Russian share issue.
The US aspects of the deal were small by comparison.
Cartwright said: “We’re seeing quite a lot of interest in Russian companies on the debt and equity link side, and that’s positive.”
Walton added: “A lot of the Russian companies like Yukos are trying to take significant steps forward in their corporate governance activities at the moment.”