Insolvencies ruled the roost at the turn of the year, but now deals work is emerging from casualties. March saw the sale of Malmaison and Hotel du Vin, Dreams and Blockbuster’s UK stores.
A number of high-profile cases involving corporate casualties came closer to being resolved in March.
Hotel brands Malmaison and Hotel du Vin were sold to a US private equity group after their parent company MWB Group went into administration in November.
SNR Denton acted for the Denver-based acquirer of the brands, KSL Capital Partners, fielding London corporate real estate head Matthew Tinger as the lead partner. Ashurst private equity partner David Carter led for sellers RBSM Investments, the private equity arm of RBS, MWB Hotel Holdings, and administrators Phil Bowers and Neville Kahn at Deloitte (see Associate of the Month).
CMS Cameron McKenna corporate partner and hotels and leisure head Thomas Page advised Malmaison and its management, while Freshfields Bruckhaus Deringer banking partner Jeffrey Rubinoff and associate Lisa Seifman advised the lending group, consisting of RBS and Bank of Scotland.
Elsewhere, restructuring specialist Gordon Brothers Europe purchased Blockbuster’s UK shops from the DVD and video rental group’s UK administrators at Deloitte.
HowardKennedyFsi advised existing client Gordon Brothers, with corporate partner Paul Glassberg leading (see Partner of the Month). Others on the team were IP partner Robert Lands, head of restructuring Vernon Dennis, disputes partner Amanda McNeil, real estate partner Adam Walford, transaction finance partner Nigel Emerson and tax specialist Brian Slater.
CMS banking and finance partner Peter Wiltshire led for the administrators. CMS has been advising the Deloitte team of Lee Manning, Matthew Smith and Kahn on various aspects of Blockbuster UK’s administration, confirmed in January, with restructuring partner Rita Lowe at the helm.
Meanwhile, DLA Piper restructuring partner Simon Neilson-Clark led a team acting for administrators at Ernst & Young on the pre-pack sale of bed retailer Dreams to
private equity house Sun Capital Partners, which was advised by Kirkland & Ellispartners Kon Asimacopoulos and Elaine Nolan.
As part of the deal, 171 Dreams stores will transfer to a new company controlled by Sun Capital, in addition to its head office and two UK manufacturing facilities. More than 1,600 jobs will be also be transferred under the agreement.
Herbert Smith Freehills(HSF) partners Stephen Wilkinson, Mark Bardell and Simon Tysoe advised Valiant Petroleum on its takeover by fellow AIM-listed company Ithaca Energy, advised by CMS partners Gary Green and James Parkes.
Pinsent Masons advised Ithaca on banking arrangements, putting forward Edinburgh partner Iain Macaulay. Macaulay 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. HSF also erected a Chinese wall as finance partner Jason Fox (soon of Bracewell & Giuliani) and senior associate Olivia Caddy advised Ithaca’s lenders, Banc of America Securities, BNP Paribas and the Bank of Nova Scotia. Lawrence Graham corporate head Geoff Gouriet advised Ithaca’s financial adviser Cenkos Securities, while Calgary firm Burstall Winger was Canadian counsel to Ithaca, fielding corporate specialist Stacey Burstall. Norwegian firm Kvale put forward oil and gas partner Yngve Bustnesli to advise Ithaca locally.
Deal of the Month: launch of Greencoat UK Wind. By Mike Newell, corporate partner, Norton Rose
The launch of Greencoat UK Wind, an onshore energy infrastructure fund managed by Greencoat Capital, is the first of its kind: it combined the launch of a new listed investment company, structured as an investment trust, with the acquisition of a seed portfolio of six onshore and offshore UK wind farms.
The fund met its £260m fundraising through a placing (managers were Barclays, RBC Capital Markets and Winterflood Securities), subscription offer and two cornerstone investments.
There were a number of complexities. Some of these were posed by the application of particular legal requirements. For example, it was a challenge to balance the policy requirements of the Department for Business, Innovation and Skills in relation to its cornerstone investment with the requirements under the listing rules and the disclosure and transparency rules on appropriate treatment of shareholders.
The prospectus had to include disclosures about each of the larger underlying wind farm companies as if it were an issuer itself. This caused problems for the sellers in terms of disclosure of confidential information, and for the directors of the fund in terms of their taking responsibility for the information being provided for the prospectus.
Other complexities arose from the fact that the investment into one of the underlying wind farm companies was a co-investment by the fund and UK Green Investment Bank (GIB), with the seller RWE retaining an interest. It was a challenge to balance the policy requirements of GIB with the commercial constraints of the fund and RWE.
The UK Listing Authority required that the only permissible condition immediately prior to admission was admission itself. So the sale and purchase agreements relating to the seed investments had to become otherwise unconditional before admission, causing logistical problems. Legal, financial, technical and commercial due diligence had to be done on the underlying wind farm companies.
The launch’s success shows the market appetite for infrastructure investment, the attractiveness of sustainable income yields to investors and the importance of cornerstone investor buy-in.
The legal line-up:
For Greencoat: Norton Rose (lead corporate partner Mike Newell; corporate partner Stephen Rigby on the acquisition of a seed portfolio of operational UK wind farms from SSE and RWE Innogy; project finance partner Andrew Hedges; lead corporate associates Nicholas Harmes on the IPO; and Fay Stavrou on the acquisition).
For RWE Innogy: CMS Cameron McKenna (lead corporate partner Charles Currier; senior associate Stuart Hohnen; associate Glyn Richards; energy partner Munir Hassan; energy associate Louise Dalton; tax partner Aaron Fairhurst; real estate partner Mark Heighton)
For RBC, Barclays and Winterflood: Ashurst (lead equity capital markets partner Nicholas Holmes; US partner Ray Fisher; lead senior associate Padmini Singla)
March deals with UK involvement
Slaughter and May returns to the top spot for UK deals, a slot it held in January. Deal volume at the top level is up significantly on the past two months: three firms clocked up six deals, according to Thomson Reuters data. Slaughters replaced Linklaters at the top on deal value thanks to five mandates including advising Schroders on its $644m (£425m) acquisition of Cazenove Capital and Costain Group on its $389m purchase of May Gurnet Integrated Services.
Herbert Smith Freehills’ strong showing came from just three deals: it acted for Cazenove on the Schroders deal, Valiant on its acquisition of Ithaca Energy, valued at $389m by Thomson Reuters, and BSkyB on its $301m acquisition of Telefónica UK businesses.
Hogan Lovells also makes a high-level appearance after not featuring in the top 20 in February. It advised Middle East-backed Constellation Hotel on its acquisition of InterContinental Hotels’ London Park Lane Hotel alongside five other deals.
Partner of the Month: Paul Glassberg
Position: Partner, corporate
Paul Glassberg led for Gordon Brothers Europe on its acquisition of Blockbuster’s UK stores alongside a team including property partner Adam Walford, IP partner Robert Lands, employment partner Jane Amphlett, restructuring partner Vernon Dennis and Gordon Brothers International principal, managing director and in-house lawyer Rafael Klotz.
What was unique about the deal?
We had to simultaneously negotiate the acquisition of the business and assets including the 264-store estate with the administrators of the UK business and their UK lawyers, and also negotiate a licence to use the Blockbuster name and relevant associated IP with Blockbuster’s US-listed parent, Dish. The transactional negotiations were concluded in under 72 hours, during which time a negotiating team from the US parent came over from Colorado, so it was a pretty full-on few days.
What was the first deal you worked on?
Well, one early memory is, as a fresh-faced trainee at Berwin Leighton (now Berwin Leighton Paisner), going to a remote snowy village in Sweden to take a witness statement from a Swedish sea master who explained how the rust enhanced the quality of the grain stored on his ship, thereby defeating a breach of contract claim from the party who had chartered the ship for its cargo.
What is your most memorable moment on a deal?
As a fairly junior lawyer I attended a large and tense meeting with lots of clients and advisers and, when there was some confusion over the refreshments being served, to reduce the air of tension I chose to recite what I thought was an apposite scene from Danny Kaye’s The Court Jester (“The pellet with the poison’s in the vessel with the pestle; the chalice from the palace has the brew that is true.”) The only person to find it amusing was me.
Associate of the Month: Olga Galazoula
Position: Senior associate, restructuring and special situations
Olga Galazoula, a recent Ashurst recruit from Freshfields Bruckhaus Deringer, advised RBSM Investments and MWB Hotel Holdings as sellers of the Malmaison and Hotel Du Vin group to KSL Capital Partners, advised by SNR Denton. Private equity partner David Carter led the Ashurst team with support from corporate partner Giles Boothman on restructuring aspects, associates Philippa Michie on tax and Caroline Grant from the restructuring and special situations group.
What was unique about the structuring or nature of the deal?
The individual circumstances of the sellers made it an interesting and unusual deal – one of them was in an insolvency process and acting through an officeholder, while the other was a private equity-type institutional investor.
Which other deals have you taken the lead on?
Recent deals include acting for an energy infrastructure group in the Middle East on the restructuring of its $800m debt facilities.
What was the first deal you worked on as trainee or lawyer?
Acting for the lenders on the refinancing of a Greek property portfolio. Sadly, it did not involve any site visits to sunnier places.