CEE Legal Matters

Category: Austria

  • Dorda Advises Gilde Buy Out Partners on Acquisition of Gundlach Automotive Corporation

    Dorda Advises Gilde Buy Out Partners on Acquisition of Gundlach Automotive Corporation

    Dorda and the Munich office of Sidley Austin have advised private equity investor Gilde Buy Out Partners on the acquisition of the majority stake in Gundlach Automotive Corporation from Dutch investment company Pon Holdings.

    The transaction value was not disclosed and is subject to approval by the antitrust authorities.

    Gundlach Automotive Corporation is an aftermarket distributor of tires, rims, completely-fitted wheels, and other services to car dealerships and wholesalers in Germany, as well as wheel assembly services to blue-chip car OEMs in Europe.

    The Dorda Team was led by Partner Christian Ritschka, assisted by Associate Florian Karall. The team also included Partner Veit Ohlberger, Attorneys at Law Andreas Seling, Nino Tlapak, Magdalena Brandstetter, and Lisa Kulmer, and Associates Heinrich Doczy, Tullia Veronesi, Gunther Posch, and Dominik Widl. 

    The Sidley Austin team included Partners Christian Zuleger, Nicole Janssen, Markus Feil, and Roderic Pagel and Associates Armin Mustafic, Patrick Heinrichs, Thomas Komanek, Matthias Annweiler, Julius Koblitzek, Maximilian Mayer, Xenia Pisarewski, and Jorg Fischer.

    Editor’s Note: After the article was published CEE Legal Matters was informed that Gilde was also advised by the Orange Clover law firm in the Netherlands, which acted as global lead counsel. Clifford Chance acted as global lead counsel and CMS as Austrian counsel for Pon Holdings.

    The Orange Clover team was led by Partner Pien van Veersen and included Partner Machiel Galjaart and Senior Associates Yntze Heida and Irene Glasbergen. 

    The CMS Vienna team consisted of Attorney-at-law Oliver Werner and Senior Associate Marco Selenic. 

  • Schoenherr and Oberhammer Advise on Wieland Ventures’ Acquisition of Stake in UrbanGold

    Schoenherr and Oberhammer Advise on Wieland Ventures’ Acquisition of Stake in UrbanGold

    Schoenherr has advised Wieland Ventures GmbH on the acquisition of a 22.1 percent stake in UrbanGold GmbH from Mettop GmbH. Mettop was advised by Oberhammer. 

    Financial terms of the transaction were not disclosed.

    UrbanGold was founded in 2014 as a start-up and spin off from Mettop. The start-up developed technology allowing for electrical and electronic waste to be recycled into valuable metals. 

    Mettop, which was founded in 2005, is an independent Austrian engineering company specialized in the design, optimization, and engineering of technologies for metallurgical processes.

    The Wieland Group is a worldwide provider of semi-finished products and components made of copper and copper alloy. Currently, Wieland has 15 production sites on three continents.

    According to Schoenherr, Wieland will play an important role in further developing and expanding the company. “With this investment,” the firm reports, “Wieland will continue its strategy of further improving the sustainability of copper, in order to also enhance the attractiveness of their customers’ products in their respective markets.”

    Schoenherr’s team was led by Partner Florian Kusznier, supported by Partner Hanno Wollmann, Attorneys at Law Sigrun Adrian-Waltner, Julia Wasserburger, and Dominik Hofmarcher, and Associate Mariella Friedrich.

    The Oberhammer team was led by Partner Kamen Sirakov.  

  • Binder Groesswang Advises Verbund on Placement of World’s First Syndicated Loan Rated According to Sustainability Criteria

    Binder Groesswang Advises Verbund on Placement of World’s First Syndicated Loan Rated According to Sustainability Criteria

    Binder Groesswang has advised Austrian electricity provider Verbund AG in connection with the world’s first Environmental Social Governance-linked syndicated loan, the interest rate of which is not determined by reference to the financial rating but by reference to a sustainability rating established by the ESG rating agency Sustainalytics. Signing and closing of the EUR 500 million loan took place on December 10, 2018.

    “We are pleased to have supported Verbund AG in the realization of financial innovations on several occasions,” commented Binder Groesswang Partner Emanuel Welten. “Following the issue of the world’s first digital green bond in the spring of 2018, we were now able to advise the innovative company on the placement of the world’s first syndicated loan evaluated according to sustainability criteria.” 

    Sustainalytics, which Binder Groesswang describes as “a global leader in ESG valuations and ratings,” assigned Verbund an ESG risk rating. According to Binder Groesswang, “the results of this rating are used to determine the interest rate for the syndicated loan entered into by Verbund AG with 12 banks. If Verbund AG’s sustainability rating decreases during the term of the loan, the cost of the loan will rise. However, if there is an improvement in Verbund AG’s sustainability rating, the costs will decrease. The term of the loan is five years, [and] the interest rate is determined once a year based on the results of the external sustainability rating.”

    The Binder Groesswang team consisted of Partner Emanuel Welten and Associate Adrian Zuschmann.

    As reported by CEE Legal Matters in March, 2018, earlier this year Binder Groesswang assisted Verbund AG with the issuance of a green bonded loan arranged by German bank Helaba Landesbank Hessen-Thuringen.

  • Don’t Hedge Your Bets for Brexit – Financial Implications for Corporates

    With uncertainties surrounding a “no deal” Brexit meanwhile culminating in fears of a “super hard” Brexit, financial institutions in the UK, the EU27 and beyond are eager in search of solutions that preserve continuity of contracts and that contain the numerous legal and regulatory risks for institutions on both sides of the Channel.

    In some areas, European and national law-makers are enacting legislation addressing specific risks: On an EU level, a draft equivalence decision for CCPs (central counterparties for cleared derivatives) and CSDs (central securities depositories) is scheduled to be adopted by the College of Commissioners on 19 December. The equivalence decision is contingent on failure to reach a deal on Brexit. Also, some lawmakers in the EU27, including in Germany, France, the Netherlands, Sweden, Finland, Ireland and Italy, have proposed or already enacted (or are rumored to be about to enact) legislation aimed at insulating local financial institutions from the cliff-edge-effects of a no-deal scenario. 

    However, beyond regulated financial institutions, we observe that financial risks potentially caused by Brexit may not necessarily enjoy top priority in corporate risk management and internal control functions of CEE/SEE businesses. Looking at the number of lending and treasury relations between local businesses (but also sovereigns and sub-sovereign entities), London banks and investment firms as well as the fact that many of those transactions are regulated (banking or securities) services in many CEE/SEE jurisdictions, this lack of attention is somewhat surprising. 

    Certainly, financial services regulation is not the focus of the customer of financial institutions, i.e. the borrowing or hedging corporate. But can unregulated corporates really turn a blind eye to these aspects of Brexit and afford the luxury of focusing on other, more apparent, impacts of Brexit on their business, for example around customs duties for their supply / offtake relations, implications on their staffing, etc.? 

    The answer is a lawyerly one: It depends – on several factors. 

    If a corporate borrower’s working capital (general corporate purpose) revolving credit facility is from a local (or EU27) lender, it will likely remain available after 29 March 2019. Also, if that corporate’s hedging is with a local bank, there is not much they can do about whether that local bank can continue to centrally clear those hedging (derivative) transactions with a London central counterpart after 29 March 2019. 

    On the other hand, the higher the portion of revolving commitments and/or hedging arrangements from UK banks in the EU27 borrower’s debt capital structure, the more acute the Brexit issue potentially is. This is because in a no-deal scenario, those lenders (and hedge counterparties) will lose their passporting rights under EU law and may therefore no longer be able to lawfully fund their revolving commitments (or may face regulatory limitations to continue the hedging beyond certain “life-cycle-events”). 

    For the loan product, the industry’s pre-eminent body, the Loan Market Association, proposes to address this – as well as other regulatory limitations that may exist – by the so-called “designated entity” concept. In short, if relevant language is included in the finance documentation, this will allow (but will usually not oblige) the UK lender to nominate a local / EU27 affiliate to participate in the relevant loan(s). If the relevant language was not slotted in the finance documents, a transfer of the lending relation to a local / EU27 lender (affiliated or not) appears to be the route to go. 

    In the derivatives space, a legal transfer of the hedge counterparties’ position is the route to go – if necessary, given the nature of the hedging arrangement and applicable law. 

    In either instance, implementing the relevant changes to the lending syndicate and/or hedge counterparties may pose several issues, including operational and (withholding) tax, that need careful addressing – and it will take time to do so. 

    Therefore, to the extent corporate treasury has relevant relations with UK financial institutions and where those consultations are not yet sufficiently advanced, with only three months remaining it is probably about high-time to address those issues with the corporate’s banking relations.

    By Martin Ebner, Partner  Schoenherr

  • Austria: Efficient Arbitration – Part 5: The Prague Rules: An Inquisitorial Alternative

    The most recent article in our Efficient Arbitration Series looked at how document production, when handled properly, could save time and costs in arbitration proceedings. In this article, we continue to add tools to our efficiency box by considering a new set of procedural rules that will soon become available: The Prague Rules on the Efficient Conduct of Proceedings in International Arbitration (“Prague Rules”).

    Launched this week, the Prague Rules are an alternative to the existing IBA Rules on the Taking of Evidence in International Arbitration (“IBA Rules”). If used appropriately, they could improve the efficiency of arbitration proceedings. We highlight the rationale and key features of the rules.

    The efficiency rationale

    To address the demand for greater efficiency, the primary purpose of the Prague Rules is to reduce the time and cost of arbitration through a civil law inquisitorial approach.

    While the existing IBA Rules also aim to improve efficiency, they have been criticised for being too counsel-driven and too heavily rooted in common law tradition.

    The Prague Rules have thus emerged as a civil law counterpart to the IBA Rules. While the latter focuses on the agreement between the parties, the former features an inquisitorial method, where arbitrators assume a more proactive role in the conduct of proceedings. 

    Key features – a proactive tribunal

    The Prague Rules Working Group identified three contributing factors to the length and cost of arbitration proceedings: 1) expansive document production; 2) number of fact and expert witnesses; and 3) length of cross-examination.

    Unsurprisingly, most of the key features of the Prague Rules equip tribunals to actively manage these factors:  

    • Case management conference (“CMC”) – Art. 2.1 obliges the tribunal to hold a CMC after it receives the case file. At the CMC (or any time thereafter), the tribunal “shall clarify” the parties’ respective positions. This contrasts with the IBA Rules (Art. 2(3)), which only encourage the tribunal to identify early issues, and only upon consultation with the parties. The active involvement of the tribunal from the outset may help narrow the issues in dispute, reducing unnecessary evidence and pleadings.
    • Limited document production – Under Art. 4.3, parties can only request the production of “specific documents”. This is narrower than the IBA Rules (which allow requests for a “category” of documents under Art. 3(3)), and may help avoid expansive documentary evidence and fishing expeditions. 
    • Number of witnesses – The tribunal can decide which witnesses will testify at the hearing (Arts. 5.2–5.3). Importantly, the tribunal may give authoritative value to a written witness statement without requiring the witness to testify at the hearing (Art. 5.6). This could cut down the length of hearings and reduce unnecessary witnesses or duplication of witnesses.
    • Jura Novit Cura – Art. 7.2 allows the tribunal to investigate points of law of its own motion, without being restricted to what has been pleaded by the parties. However, the tribunal must first consult the parties. Art. 7.2 is arguably the most controversial feature, and has no parallel provision in the IBA Rules.
    • Settlement facilitation – Under Art. 9.1 the tribunal is required, at all stages of the proceedings, to assist the parties in reaching an amicable settlement. In doing so, the tribunal may also act as a mediator (Art. 9.3).

    An alternative, not a substitute

    The Prague Rules are not a substitute for the IBA Rules, but a complementary alternative. While the rules have been met with varying levels of enthusiasm, what remains true is that they provide more options.

    Parties can choose, from the outset, the type of legal culture they want the tribunal to adopt. They can select the Prague Rules or the IBA Rules, or a combination of both, depending on their strategy and the case at hand. The Prague Rules are thus a reminder that there are alternative tools available for the efficient conduct of arbitral proceedings.

    And more options can only mean one thing: more chances to get it right. Efficiently. 

    By Marina Stanisavljevic, Associate Schoenherr

  • Rudolf Pekar to Become Equity Partner at Fellner Wratzfeld & Partner

    Rudolf Pekar to Become Equity Partner at Fellner Wratzfeld & Partner

    Rudolf Pekar will become the youngest member of the Fellner Wratzfeld & Partner partnership in January, 2019.

    FWP describes Pekar, who joined the firm in 2009 as a paralegal after graduating from the University of Vienna’s law school and will now join the firm’s equity partnership as having “an fwp storybook career.” from paralegal to equity partner. Pekar also spent from 2010-2013 at Freshfields Bruckhaus Deringer in Vienna.

    Pekar specializes in procurement law, real estate law, and regional planning law.

     “I am extremely pleased that we can expand the dynamic procurement law sector by including Rudolf Pekar, a long-term colleague and highly esteemed on a personal level ­in the group of partners,” FWP Managing Partner Markus Fellner said. “His career illustrates the development opportunities FWP provides for committed lawyers.

  • Deal 5: Erste Group’s Managing Director Kathrin Gfall-Gapp on First Blockchain Loan Issuance

    Deal 5: Erste Group’s Managing Director Kathrin Gfall-Gapp on First Blockchain Loan Issuance

    On October 31, 2018, CEE Legal Matters reported that the Erste Group had issued the first loan via blockchain platform in Europe. We reached out to Erste Group’s Managing Director and Head of Group Transaction Documentation Kathrin Gfall-Gapp to enquire on the first paperless issuance experience.

    CEELM: What does a blockchain issuance look like? How does it work, exactly?

    K.G: We established a platform based on blockchain technology. The entire issuance and documentation process of the Schuldscheindarlehen (SSD) issuance was based on this technology, without the need to implement any parallel paper process. With our solution, the issuer provides the SSD offer on the platform, where investors can easily subscribe to it. The SSD agreement is concluded on the platform, which uses a web-based interface and applies a four-eyes principle.

    CEELM: Wolf Theiss commented that “the key element was to ensure legal certainty and carefully map the blockchain-based processes.” That must be especially difficult in such a new area. How did you approach those elements of the process, doing them for the first time, without much in the way of previous examples to rely on?

    K.G: We looked at two major legal areas, namely civil law and regulation, and asked ourselves some very basic questions: How can one conclude a SSD? What regulation is applicable? 

    The next step involved examining how the current issuance process functions and what the involved documentation currently looks like. Then we needed to assess what and how these requirements could be translated in the new purely digital world. By carefully answering those questions and developing robust legal opinions for them, we were able to create the basis on which solutions could also be found for all secondary questions.

    CEELM: Why did you decide to make the issuance via blockchain? 

    K.G: In our assessment, blockchain technology provided for the certainty and security we deemed necessary. We assessed various digital options before coming to this conclusion.

    CEELM: How did you select external counsel for this particular issuance, and why did you select Wolf Theiss? 

    K.G: We were looking for a solution-oriented, open-minded legal sparring partner who is very familiar with capital markets law and requirements. We have a long-standing relationship to Claus Schneider at Wolf Theiss due to his being our issuer counsel on all of our issuance programs. Based on this relationship, we knew that Claus would be willing and able to explore this interesting new path along with us. At the same time, we knew that we could be certain that what we delivered together would be a 100% robust legal framework.

    CEELM: What are the lessons you learned from the issuance? Would you anything differently next time?

    K.G: Our most important take-away: It works! Based on a solid legal framework, we — together with our developers — delivered a client-focused solution that was exactly what we had desired at the very beginning of our brainstorming. It pays off to venture into new territory if you have the right team, a promising idea, and a vision of how to accomplish it.

  • Wolf Theiss Elects New Management Team

    Wolf Theiss Elects New Management Team

    Wolf Theiss Partners Andrea Gritsch, Sebastian Oberzaucher, and Claus Schneider have been elected Managing Partners at the firm, joining current Managing Partner Richard Wolf, who was reelected to the position.

    The election took place on December 7, 2018. According to Wolf Theiss, the new management team will jointly navigate the firm’s Central, Eastern and South-Eastern European offices for the next four years.

    Andrea Gritsch, who joined Wolf Theiss in 2008, is an expert in the financial services sector and typically handles large-scale cross-border mandates in the fields of M&A, finance, supervisory law, and restructuring. Gritsch, a FinTech expert, is the first woman on the management team, according to a Wolf Theiss press release. 

    Claus Schneider specializes in debt, hybrid, and structured capital market issues and regulatory advisory for financial institutions. Prior to joining the firm in 2000, Schneider worked at the World Bank in Washington, D.C.

    Sebastian Oberzaucher co-heads the firm’s procurement team and is responsible for the public sector in the new management. He specializes in planning and implementing complex construction, supply and service tenders with a particular focus on infrastructure, transport, healthcare, and IT.

    On behalf of the entire partnership, Richard Wolf thanked his former management colleagues. “Erik Steger and Nikolaus Paul greatly contributed to and led our partnership since 2010, both in terms of corporate culture and in advancing our footprint in Central, Eastern and South-Eastern Europe. The past few years were extremely important in setting and maintaining the successful course of the firm in a rapidly changing market.”

    Steger and Paul will now focus on their specialist areas of real estate law and funds and financing.

  • Wolf Theiss and Doralt Seist Csoklich Advise on Sale of The Brick Complex

    Wolf Theiss and Doralt Seist Csoklich Advise on Sale of The Brick Complex

    Wolf Theiss has advised Soravia on the sale of its “The Brick” building complex to Wiener Stadtische Versicherung. DSC Doralt Seist Csoklich advised the buyers on the deal, which was signed and closed on November 21, 2018.

    The Brick, which is being developed aAs part of the Vienna’s new Biotope City, is expected to be completed by 2020. The building complex, with 23,700 square meters of floor space, includes a hotel, catering, and two office blocks.

    According to Wolf Theiss, the transaction was completed as a Forward Purchase Deal. Wolf Theiss Partner Birgit Kraml, who led the firm’s team on the deal, explained that: “The properties were sold as part of a share deal; further, a design and manage contractor agreement and further agreements were drawn up for future lettings at the site and to secure the separate operation of the two office buildings on the one hand and the hotel building on the other.”

    Kraml was assisted by Wolf Theiss Partner Erik Steger and Associates Stefan Horn and Marlene Bouzek.

    The Doralt Seist Csoklich team was led by Partner Wilfried Seist and included Senior Associate Theresia Grahammer.

  • Austria’s Public Prosecutor Drops Charges Against CHSH Client Matthias Hartmann

    Austria’s Public Prosecutor Drops Charges Against CHSH Client Matthias Hartmann

    Austria’s Central Public Prosecutor’s Office for White-Collar Crime and Corruption has dropped charges against Matthias Hartmann, the former Director of Austria’s Burgtheater, who was represented by Cerha Hempel Spiegelfeld Hlawati.

    The charges related to the discovery in 2014 of financial inconsistencies and the alleged disguising of significant amounts of debt, which led to the dismissal of both Hartmann and the Burgtheater’s then commercial director.

    The CHSH team consisted of Partner Stefan Huber and Senior Attorney Peter Lewisch.