Category: Deal 5

On December 9, 2016, CEELM reported that A&D Pharma Group acquired 78 pharmacies from Sibpharmamed in Romania. We invited Mihaela Scarlatescu, Head of Legal and Compliance at A&D Pharma, to explain how the transaction was realized.

CEELM: According to PeliFilip, who advised A&D on the deal, the transaction was “very complex.” Could you elaborate on what made it so?

M.S: In the pharma retail business, the economic and commercial environment is in continuous movement, being challenging by its nature. Development and business both increase by acquisition of a new chain of pharmacies, and its integration into the already existing business is not a one-day task. It requires full commitment from all available resources and professionalism from all those engaged into the transaction: operational, finance, legal and regulatory, HR.

The acquisition of the Polisano pharmacy chain was particularly complex because of Polisano Holding’s position on the market, which included: high financial risk, insolvency announced by Polisano’s distribution business line; and several pledges against Polisano’ business. All these aspects together with other ones that were not so difficult to mitigate were a real and tumultuous challenge which our team and our collaborators had to encounter and had to solve with no risks for Sensiblu.

CEELM: Why did you opt for PeliFilip as the firm to assist you in this deal?

M.S: We search on the market and we chose to work with one of the best on the market; one for which professionalism and trustworthy are values of doing business. Considering the transaction volume, risks and required resources, we knew we needed an external counseling team of lawyers who were strongly business oriented, proactive, and open to accept the challenge.

CEELM: Why did you prefer to lead the negotiations team yourself rather than relying on your external counsel?

The external counsel does have more experience in similar transactions, but the know-how of Sensiblu business and its particularities, needs, and expectations were known by the in-house legal team. The synergy created was the best recipe starting with the sensitive phases of the negotiations and continued with each step we moved further, until the end of one of the top deals on the Romanian pharma market in 2016.

CEELM: What role in the negotiations did PeliFilip play in terms of “closely assisting” you on the negotiations?

M.S: From the moment when the strategy of enlarging the Sensiblu business was announced, we knew that a business risk assessment was definitely required. At this stage we benefited from PeliFilip’s expertise in business risk assessment from legal and commercial point of view. In addition, during the entire project, Sensiblu faced various bottlenecks which required strong legal expertise for continuing into a healthy and with-low-level-of-risk transaction.

CEELM: As a result of the acquisition the number of units owned by Sensiblu increased by 20%. What challenges does this growth pose to you and your legal team going forward?

M.S: I cannot say if 20% is the precise percentage of growth, but unquestionably this acquisition was not considered completed once the contract was signed. For the legal team a new project started, with new challenges and timelines. This new project is called “integration.” The volume of work is substantial, as the transaction was not about one, two, or event ten pharmacies, but about 78 pharmacies spread all over Romania. We must register the new pharmacies with different Romanian authorities (including the Trade Register, the Health Ministry, and national and local health authorities), we need to renew the licenses, and we have to manage the transfer of personnel and make sure they’re properly integrated. Basically, the work volume is explosive at this level, even if the transaction is considered an achieved success from the business perspective. Once the “legal integration” is completed, we expect to re-enter a normal working flow.

Another aspect which should considered is when we speak about integration; it is significantly about people — for whom we have to build a communication channel that is transparent and trustworthy. Of course, these “soft” aspects are not managed only by the legal department, but also by other resources from Sensiblu: HR, Finance, IT, etc.

We are optimistic and now we are ready to face new challenges!

On February 3rd, 2017, CEELM reported that the Estonian Supreme Court ruled in favor of If P&C Insurance’s claims regarding professional liability involving a construction project for Skanska AS. We reached out to Heinar Olak, the Head of Legal at If P&C, to clarify the grounds of the dispute and its finale.

CEELM: In your view, what were the most complex aspects of this dispute?

H.O: The core of the dispute was which architectural firm should be liable for mistakes in the project documentation where the project was prepared by one architectural firm (in this case Pello IB OU) but officially signed and presented by another architectural firm (in this case Sweco OU) as its own work. Our aim was to prove that liability lies on the firm that signed and officially presented the documentation that eventually led to the damage.

CEELM: What were Skanska’s specific claims in the matter?

H.O: Skanska AS claimed compensation of the cost for rebuilding a methane tank necessitated by the mistakes in the project documentation in amount of EUR 895,549 and compensation of contractual penalties it paid due to the delay of construction in the amount of EUR 790,059.

CEELM: And what arguments did the court find most persuasive?

H.O: In this case the customer of Skanska AS had specific qualification requirements toward the architectural firms that Pello IB OU was not compliant with. That was, in our understanding, the reason why another architectural firm was hired to sign the project. On one hand we emphasized that by doing so Skanska had created a wrongful picture to its customer about compliance with the qualification requirements that was not not nice but also dangerous in these circumstances. On the other hand we stressed the fact that the person signing the project documentation gives the “go” to the project, and therefore must be liable for the consequences.

CEELM: Why did you opt to use Nove as your counsel?

H.O: Although we as an insurance company manage number of litigations in-house, in specific cases are look for support from law offices with relevant experience and knowledge. We believe that legal service is very much a people business where the outcome depends first of all on the persons involved. Therefore when we are looking for support, we target specific attorneys rather than law offices in general. Andrus Kattel, as a Partner at the Nove law office, is a well-known litigation lawyer in Estonia who has also remarkable experience in insurance-related litigation. We have used his services in several cases in the past.

As the Head of Legal At If P&C Insurance AS I’m responsible for ensuring that the company gets relevant and high quality legal service either from its in-house legal team or from external advisers. In this case my role was to coordinate the process and ensure the necessary assistance from my in-house colleagues to the external adviser.

CEELM: What effect do you foresee this Supreme Court judgement will have on construction and insurance contracts in the market?

H.O: We hope this will support honesty and transparency in construction field and thereby protect the customers of construction companies.

On December 20, 2016, CEELM reported that Inter Cars, an importer and distributer of automotive spare parts in CEE, obtained a loan facility from a consortium of banks. Jacek Piotrowiak, the General Counsel at Inter Cars, kindly agreed to share his experience managing the legal aspects of the deal.

CEELM: What projects at Inter Cars S.A. was the PLN 1.1 billion loan facility necessary for?

J.P: The PLN 1.1 billion loan facilities advanced to Inter Cars S.A. and our certain subsidiaries in Poland, Czech Republic, Slovakia, Romania, Lithuania, and Croatia received from a club of banks consisting of Bank BGZ BNP Paribas S.A., Bank Handlowy w Warszawie S.A., Bank Polska Kasa Opieki S.A., CaixaBank, S.A. (Spolka Akcyjna) Oddzial w Polsce, DNB Bank Polska S.A., ING Bank Slaski S.A., and mBank S.A. as mandated lead arrangers and Bank Polska Kasa Opieki S.A. as agent with mBank S.A. as the security agent, was used to refinance existing debt under the syndicated financing advanced to Inter Cars in 2009 and to finance our working capital needs. The new loan facilities also allow Inter Cars and its subsidiaries to utilize funds by way of overdrafts, guarantees, and letters of credit, under the so-called ancillary facility financing. This new financing will help expand our business in Poland and in Europe generally on more flexible terms than we had in the past.

CEELM: What, if any, were the challenges arising from the fact that the consortium of banks issuing the loan facility included banks from a multitude of jurisdictions?

J.P: We wanted to extend the line-up of financial institutions beyond the four of them that financed our business since 2009 and added Bank BGZ BNP Paribas S.A., CaixaBank, S.A. (Spolka Akcyjna) Oddział w Polsce, and DNB Bank Polska S.A. to the mix of our financiers. This move also helped enhance our ability to finance Inter Cars group by BNP Paribas, CaixaBank and DNB Bank outside Poland, where these institutions have strong presence. We were able to manage the relationship with seven financial groups well since from the outset of term sheet discussions we were quite open in terms of our business goals and found that these institutions were very upbeat about continued growth of our business and the direction we’re heading to.

CEELM: Why did you ask Norton Rose Fulbright for help on this loan?

J.P: We felt that Norton Rose Fulbright Warsaw offers the required experience in large scale syndicated financings in Poland and elsewhere in Europe. Also, its banking practice is well-respected among the banks. We also felt that Norton Rose Fulbright would be able to demonstrate many innovative ideas in structuring the new financing and help us achieve our goals, with a hands-on approach and determination to close the transaction on time.

CEELM: How did you divide the tasks between your internal legal team and external counsel?

J.P: My legal team and I co-ordinated the legal work of the transaction, while the financial matters were driven by our chief financial officer, Piotr Zamora. Norton Rose Fulbright was responsible for drafting and negotiating the term sheet and finance documents (the facilities agreement, the inter-creditor agreement, the security documents, and the fee letters) and negotiating the ancillary facility agreements prepared by the financial institutions. They also coordinated the work of our legal counsels outside Poland.

CEELM: In what way, if any, is your approach to splitting the responsibilities between your external counsel and your in-house team different in such financing deals from legal work outsourced on other matters?

J.P: I believe this refinancing transaction was a very complex and cross-border project, which took more than six months to close and required direct engagement on a daily basis from Norton Rose Fulbright. Due to the fact that they were able to allocate adequate resources and take care of many different streams of the work, we were successful at the end.

On November 29, 2016, CEELM reported that the Mareshki Medicines retail chain had been successful in the two-year litigation at the Supreme Administrative Court of Bulgaria, which resulted in the repeal of anti-competitive provisions on prescribing and dispensing medicine in Bulgaria’s Ordinance No 4. We asked Irena Georgieva, In-house Attorney at Mareshki, to explain what happened.

CEELM: According to Dimitrov, Petrov & Co., there were “unlawful and anti-competitive provisions” within Bulgaria’s Ordinance No. 4. What were those and how did they impact your business? 

I.G: The provisions affecting our business are related to:

A lot of administrative requirements for processing patient prescriptions which were not related to dispensing medicines and consulting patients but served purely accounting purposes. Thus service to patients was slowed down unreasonably;

Setting minimal time limits for processing patient prescriptions/medical documents and putting a maximum limit to the number of prescriptions that a pharmacy may administer, depending on: (i) the number of pharmacists working in the pharmacy and (ii) their working hours. Thus, if a pharmacy has reached the maximum number of prescriptions for the day, patients were to be sent away and redirected to another pharmacy;

All these limitations were introduced only for prescriptions for medicines subject to reimbursement by the National Health Insurance Fund, which created unjustified discrimination between those patients entitled to reimbursable medicines and everyone else (with prescription for medicines for which no reimbursement was provided). Because there were no administrative requirements for the latter, the service of these patients was much faster.

CEELM: We understand from Dimitrov, Petrov & Co., the firm “applied for both a competition advocacy before the Commission for the Protection of Competition and in parallel proceedings before the Supreme Administrative Court for challenging unlawful and anti-competitive provisions of Ordinance No. 4 concerning the dispensing of medicines.” How did these two claims in parallel play out and which of the two bodies eventually award you the result of repealing provisions aimed at limiting the competition within Ordinance No.4?

I.G: The application for competition advocacy was filed first. Since the Commission for Protection of Competition (CPC) does not have the powers to repeal the provisions, an administrative complaint was also filed. The decision of CPC stating that the clauses had significant anti-competitive implications was issued before the completion of the court procedure. The CPC’s decision was important because the Supreme Administrative Court, when repealing the said provisions as unlawful, referred to the CPC’s decision as one of its justifications.

CEELM: What were the main reasons you chose Dimitrov, Petrov and Co. as your representative firm in this case? 

I.G. Dimitrov, Petrov and Co. has been our ongoing legal counsel on all aspects of the pharmacy business for more than six years now. The team has profound knowledge of the regulatory requirements concerning the operation of pharmacies, especially the issues related to the reimbursement of medicines by the National Health Insurance Fund. For all those years, the team has shown commitment, in-depth expertise, and constant search for innovative and alternative approaches to solving the issues.

CEELM: What type of preparation was needed to build your case in front of the two bodies and how did you split that work with the firm?

I.G: Since Dimitrov, Petrov and Co.’s team was familiar with the way our pharmacies operate from our previous work with them, we explained very easily how the limitations affected our business. We also provided the law firm with the relevant contracts, statistics, and other operational information which they requested in order to support their legal arguments. All the legal paperwork such as drafting and submitting the necessary applications, complaints, statements, and other submissions, attending the hearings, as well as the correspondence with the relevant competitive and regulatory authorities was assigned to the law firm.   

CEELM: What affect do you believe this ruling will have on the pharmaceutical retail sector as a whole in the country?

I.G: It will relieve the pharmacies from unnecessary administrative requirements to dispense medicines subject to reimbursement by the NHIF to patients – as a result of which service will be faster and more efficient. We hope that, after the repeal, the competent authorities such as the Ministry of Health, the National Health Insurance Fund, and other administrative/regulatory bodies will refrain from setting unreasonable and unjustified requirements for pharmacies when it comes to dispensing medicines that are subject to reimbursement. The pharmacies will not face sanctions for not meeting formal requirements and will be able to organize their personnel in the most efficient way. 

On November 17, 2016, CEELM reported on the merger of two shopping malls in Romania – Bucuresti Mall and Plaza Mall – owned and operated by the real estate and development company Anchor Group. We reached out to Mihaela Marin, the Head of Legal Department at Anchor Group, who agreed to elaborate on the merger.

CEELM: What where the main drivers that led to Anchor Group’s decision to merge the two shopping mall management companies?

M.M: The merger of the companies who owned Plaza Romania Mall and Bucharest Mall was mainly motivated by the following:

a) The implementation of the merger was aimed at eliminating duplication of administrative structures, as well as unifying and simplifying decision-making in the two companies involved. The merger was achieved by implementing a management improvement that became more dynamic and effective with no need for separating the management activity of two different companies;

b) By implementing the merger of the two companies, a unified policy of marketing was ensured, as was an optimal use of human and material resources available, simplified reporting procedures to the authorities, reducing the cost price, etc.;

c) From the economic point of view, the implementation of the merger is expected to increase the efficiency of commercial activities between the two shopping centers, streamlining the time factor in the negotiation and conclusion of commercial contracts regarding ancillary services necessary for the proper functioning of the two centers (e.g., security contracts, service contracts for cleaning, maintenance contracts / equipment maintenance, housing repair contracts, etc.), so it will be possible to better adapt the coordination and monitoring of the specific requirements of each commercial facility.

CEELM: What aspects of the merger were the most challenging for you? 

M.M: Considering that most probably this merger of two shopping centers under one company is among the first such in the Romanian market, for me, as the Coordination Lawyer for Anchor Group, the most challenging aspects of the merger process were the collecting of the internal financial information and the organizing of the transfer of the assets in cooperation with the Notary and the Cadastral Office and Land Registry.

The process also involved a step-by-step coordination of the external lawyers during the Trade Registry and the Competition Council process, as well as the various local authorities’ procedures up until the hearing before the Bucharest Tribunal who approved the merger.     

CEELM: Why did you decide to outsource the legal work if this related to an intra-group merger?

M.M: Generally, for the more complex legal projects, Anchor Group hires outside legal services from among the most reputable law firms in Romanian market.

Also, as already indicated, the complexity of the merger, where two shopping centers, fully rented and ongoing daily operations, are merged into a single company, as well as the multitude of procedures that we need to fulfill starting with the transfer of the assets made with Cadastral Office, the local authorities for transferring the various authorizations and permits, and ending with the procedures before the Trade Registry and Bucharest Tribunal, made us decide that the internal Legal Department, under my coordination, was ensuring the preparing of the internal documentation and supervision of the external law firm during the merger process.

CEELM: Why did you select PeliFilip as your external counsel on this merger? 

M.M: We chose the PeliFilip Law Office based on their experience and reputation in dealing with such complex legal operations such as merger procedures. In addition, since the merger process between our two shopping centers involved various areas of law practice, such as corporate, competition, permits & authorizations, etc., we have benefitted from the expertise and professionalism of the specialized lawyers in the various departments of PeliFilip Law Office.

We are very satisfied with our cooperation with the PeliFilip Law Office.   

CEELM: What were the aspects of the merger that you handled in-house and which ones did you outsource to the firm?

M.M: The matters handled in-house were of course the internal corporate approvals and shareholders’ decisions of the merging companies, the internal inventory of assets and the valuation reports, and the preparing of the financial elements of the merger project.

Our external lawyers assisted us for the more complex procedures of the merger process such as the 2-step procedures of registration with the Trade Registry, the publication in the Official Monitor, obtaining the approval from the Competition Council for the merger, approval from the various authorities involved in the process of transferring the permits and authorization, and the final hearing in front of the Bucharest Tribunal, which approved the merger. 

On October 28, 2016, CEELM reported that P3, a leading pan-European owner, developer and manager of logistics properties, had announced that it had completed a EUR 1.4 billion long-term refinancing, arranged with a group of leading international financial institutions. We invited Katie Schoultz, the Group General Counsel at P3, to share her thoughts on the deal.

CEELM: What would you describe as the most challenging or frustrating part of the restructuring process, and why?

K.S: Coordinating the new funding lines with the pre-payment of existing ones was particularly difficult. We had to draw down four new facilities with six banks and prepay three existing facilities with seven banks (some the same, some different), while releasing and replacing security, all in five days. The banks are all culturally and operationally very different so it was a real challenge to coordinate it all, but also really interesting to knock everyone’s heads together.

CEELM: What were the circumstances behind the refinancing? Why was it deemed necessary, or advisable? 

K.S: P3 is already one of Europe’s largest fully integrated logistics property platforms, but we have ambitious plans for further growth. The refinancing provides us with additional flexibility to support this strategy.     

CEELM: Dentons advised P3 on Polish and Romanian aspects, with White & Case advising on Czech and Slovak aspects and Freshfields on separate facilities for Western Europe and Poland. Why did you choose to work with three separate law firms rather than one firm across the region?

K.S: We were working across 13 different countries, which would have been a lot for any single law firm.  We felt it was better to work with firms that had specific, relevant experience and local expertise. Since Dentons and White & Case were involved in the original facilities, they knew the assets well in those countries and are in any case strong in those respective jurisdictions. Similarly, Freshfields had worked on the previous Western Europe facility.

CEELM: Which of the facilities was the most challenging to arrange? Why was that? 

K.S: They were all very complex and each had its own complications. We were grateful for the market expertise and support from our advisor, Eastdil Secured, and our tireless external legal teams.   

CEELM: What was the role of your in-house legal team in the restructuring? What tasks did you delegate to your in-house team and which ones to your external advisors?

K.S: Establishing, organizing and updating the data room required for the banks’ due diligence processes was an in-house task. Ten local law firms also assisted us in pulling together and organizing over 65,000 documents. The in-house team ran the lender Q&A, using the (German based) Architrave smart data room platform. We worked on the negotiation of the loan terms with our external advisors, in particular where the terms impacted on day-to-day business operations, and the ongoing financial reporting and compliance requirements placed on P3. External advisors handled security packages and all the document drafting. Under a range of powers of attorney, I signed 99% of the documents myself, sustaining a signing (but not life-threatening) blistered hand injury in the process! 

On October 14, 2016, CEE Legal Matters reported that the Norwegian property company Linstow AS had sold its stake in UAB Baltijos Parkai, the holder of Park Inn hotels in Lithuania, to UAB Green Hotel. We reached out to Knut Loken, the Chief Investment Officer at Linstow, for more information on the sale.

CEELM: In selling its stake in UAB Baltijos Parkai, is Linstow exiting Lithuania? If so, is it currently searching for other options or opportunities in the country?

K.L: We are not exiting Lithuania, the majority of our business remains.

CEELM: Who led Linstow’s internal team on the sale? Does Linstow have an in-house legal function? If yes, what aspects of the deal did it handle? 

K.L: Investment Manager Salman Saeed (who has now left the company) led the Linstow team. We have an in-house General Counsel. The deal was handled fully by Glimstedt. Our General Counsel only offered some general advice and was not heavily involved.     

CEELM: Green Hotel, apparently, was not represented by external counsel. Did you consider handling the deal without external counsel on your side as well?

K.L: No, we did not consider that. We typically use external counsel when we do transactions. Additionally, given that this deal was in a foreign (for us) jurisdiction, the distance from our main office in Norway, and to some extent the language [meant that] handling it ourselves was never an option.

CEELM: Why did Linstow opt to use Glimstedt in particular on the sale? What specific tasks did you delegate to handle to Glimstedt and how did they cope with them? 

K.L: Linstow had used Glimstedt on at least one previous occasion, and was happy with the work then. On this sale Glimstedt helped in the due diligence process, handled contract drafting, and also helped quite a bit (together with the broker Newsec) in the process and negotiations as such. Glimstedt did a very good job and helped the process move forward, and took a lot of responsibility for the process.   

CEELM: Were any elements of the deal unexpected or unusually challenging, in any way?

K.L: Financing took longer time than expected. 

On November 24, 2017, CEELM reported that Austrian real estate developer WM Group had sold its six retail parks in Slovakia to Immofinanz AG, designed to expand the latter’s STOP SHOP brand. Michael Wakolbinger, Managing Director of WM Slovakia, who also acts as a General Counsel to the senior owner of the WM/MID Group, agreed to comment on the sale.

CEELM: Why did you opt to use both CHSH and bpv as counsel on the deal when both firms have teams in both Austria and Slovakia?

M.W: My choice was driven very much by lawyer’s personality and not so much by law firm. 

As I always tend to rely on personality, I opted in both countries for the lawyers I know best and trust most. This was without any doubt Johannes Aehrenthal from CHSH in Vienna as the leading over-all partner and Igor Augustinic with bpv Braun in Bratislava for local work. Igor was working for CHSH a long time and was in this role already involved in the development of the real estate projects we sold [in this deal]. This was a big advantage and saved a lot of time and coordination efforts.

CEELM: Since lawyers from both jurisdictions were involved, did the two parties of the deal opt to have Slovak or Austrian law govern the agreement? What was the rationale for the choice? 

M.W: The situation was quite specific and we decided (and in fact were also forced) to mix up: 

Two Austrian based holding-companies were discussing a real estate portfolio deal in Slovakia, with assets and both buyer and seller under Slovak jurisdiction. Therefore details of deal (including the ownership transfer of the properties) were [required to be] under Slovakian law. But for the big guidelines and the remaining legal issues (including representations and warranties) we all wanted to act in German language and under Austrian law, which is a lot more familiar to people acting on both sides.     

CEELM: In what way, if at all, is negotiating on an agreement that involves a portfolio such as this different than transactions involving individual assets?

M.W: As matter of fact, a portfolio always is (a bit) more than the sum of its single assets. This makes things easier on the one hand and more complicated on the other. Talking about similar projects within one single portfolio deal allows both parties to compensate for disadvantages within one project with advantages in another. Therefore some details might be not as crucial as in one single deal. On the other hand within a portfolio transaction all single projects are somehow interlinked and interdependent. At the end of the day, this could have meant that the total deal would have to be cancelled because of one project alone not meeting all requirements for closing. This “take-all-or-leave-all-principle” must always be kept in mind to avoid fundamental frustration.

CEELM: Were you or your legal team involved in the negotiations themselves, or did you externalize that side to your legal counsel? 

M.W: In general I do negotiations on my own, representing the owner of my group and executing his ideas. During these negotiations I love to have one of my external counsels at my side, while purely legal things are handled solely by lawyers. I have been working with Johannes Aehrenthal now for more than a decade and we know very well how each other ticks. This shared and silent understanding is crucial for me to do my job well, and Johannes is the perfect companion during (sometimes tough) negotiations.   

CEELM: To the extent you can provide some insight on this for our readers, what were the trickier aspects of the agreement in terms of reaching a compromise with the buyer?

M.W: As already mentioned, the “take-all-or-leave-all-principle” is sometimes a bit tricky as the default of one project (out of six) could kill the whole deal. However, the most demanding issue was to bring together the interests of a big listed buyer and of a small family-owned seller in terms of structuring, pricing, and even timing. This took quite a bit of time, especially as far as the structure of the deal(s) was concerned and gave my owner some reason for irritation. But as soon as common ground was reached in the main issues, everything went well in a constructive atmosphere. 

On November 28, 2016, CEELM reported that the Bulgarian electricity power distributor Energo-Pro Varna EAD had sold seven-year bonds worth of EUR 130 million to international investors. We invited Tsvetanka Vasileva, Head of Legal and Compliance at Balkan Advisory Company to provide us an insider’s view on the matter.

CEELM: Energo-Pro Varna’s bond issuance was reported to be the largest bond sale in Bulgaria. What were the specific challenges a deal of this size entailed?

T.V: The biggest challenges were related to size of the deal, keeping a very high hurdle on minimum size when deals of that size, even on the minimum size, are rarely seen in Central and Eastern Europe. We succeeded in reaching high diversity between foreign and local investors, which ended up 50/50, as well as type of investors, having one IFI, regional banks in Central Europe, South Eastern Europe and Austria, local pension funds, asset managers, and corporate treasuries.

CEELM: The bonds were placed with investors from Bulgaria, Austria, and Central and Southeastern Europe. Did managing a wider geographical scope pose any challenges and how did you overcome them? 

T.V: Yes, it involved preparing a prospectus that touches not only on Bulgaria law, but more importantly incorporates many aspects of UK law effectively into Bulgarian law. We had 17 different versions of the Offering Circular, but regardless never lost an investor, despite the resignation of the Bulgarian government on the final day of issuance.  

CEELM: Why did you turn to Boyanov & Co. for advice on the deal?

T.V: Because of past successful experience and several deals together. They have excellent capital markets experience, and we were very happy with their work.

CEELM: How did you split the work between your in-house legal team and your external counsel? 

T.V: The work was split among our in-house team and our legal advisers of Boyanov & Co. The Issuer’s Counsel of Tsvetkova, Bebov & Partners also provided significant part of the work and dedicated their effort to a very successful deal. Ultimately, I consider the two law firms involved to be the best in capital markets in Bulgaria and among the best in the region.   

CEELM: Drawing upon this experience, what are the critical aspects that a GC has to particularly be on the lookout when working on such an issuance? What were things that, looking back, you would have taken more time if possible to work more on?

T.V: A critical point was working on dual language versions on the legal side. One of the challenges we always find critical to saving time is working with capable translators in the financial area. This still continues to be a challenge everywhere in South-Eastern Europe, but at least the help of the Issuer’s Counsel and our legal advisers helped a lot to circumvent this issue. 

On October 11, 2017, CEELM reported that UAB Bite Lietuva had received a license from the Bank of Lithuania to operate as an electronic money institution. Jurgita Pelediene, the Legal Manager at Bite Lietuva, agreed to answer our questions on the procedure.

CEELM: How difficult was the process of securing the license? Were there any specific ambiguities that stood out/posed a challenge in the exercise?

J.P.: Securing the license revealed the best sides of our partner – the Cobalt law firm – and we were also lucky with the efficient cooperation of the Bank of Lithuania. Any issues we encountered were quickly resolved and the procedures ran smoothly, thank to effective collaboration with the Bank of Lithuania and also Cobalt’s excellent team. I’m really happy how smoothly it all went.

CEELM: What were the main criteria you had to fulfill in order to be awarded the license? 

J.P.: There were several processes we had to go through. The first was to have a business plan with a detailed description of the service, including what the service is going to be like and how it is going to work. Second, we had to ensure that all of the processes would be done securely, meaning that all the measures for safeguarding the funds of electronic money holders and internal control mechanisms would be established and operating. We also had to demonstrate the competence and experience of our key executives. Obviously, it is important that services are run securely and are managed by experts with impeccable reputations.  

CEELM: According to Cobalt, the license will enable Bite to offer “the safe transfer of money in just a few seconds knowing only the recipient’s phone number.” Could you explain to our readers what technology is behind the instant payments and when it will be available to your customers?

J.P.: The solution itself is going to be quite complex and will require input from all the organizational functions: legal, business, and IT. However, the number one priority was to set up the relevant legal framework and create the IT infrastructure. The Bank of Lithuania is playing a big role in this. At later stages our IT department will have to ensure that everything works well from the technological point of view. That is why it is still too soon to name the date when it will be available to customers. However, we are satisfied that the changes will make the Lithuanian payment market more competitive and more user friendly for our clients.

CEELM: According to Cobalt, your company will now join the National Payments Strategy infrastructure development project implemented by the Bank of Lithuania. Are there any benefits/incentives provided to companies that join the project? 

J.P.: We joined the project by signing the Memorandum of Understanding, which supports the National Payments Strategy prepared by the Bank of Lithuania. The goal of this initiative is to create ways for innovative, reliable, and convenient methods of payment. It will definitely encourage greater competition, which is finally always beneficial for customers. And we are sincerely interested in making the life of our clients easier. We are sure that the future belongs to instant and closely-integrated business payment methods, therefore we are happy to be a part of this process.   

CEELM: Why did you choose Cobalt to support you?

J.P.: We have been working with the team at Cobalt for a long time; we particularly appreciate their expertise in the banking and finance sectors. Our confidence in Cobalt has once again been justified – they did their job very well.

CEELM: How was your collaboration on the matter set up? Was your legal function involved in any way directly or did you leave it up to Cobalt to handle the application process entirely?

J.P.: The application process was closely related to the business vision and actual information, which was on our side, therefore to make the whole process efficient we had to synchronize processes with Cobalt. They managed the formalities of the application process, while we took care of the business details, collecting all the documents and information they needed to portray our vision in detail.