CEE Legal Matters

Category: In-house

  • Inside Insight: Vladimira Jicinska Head of Legal for Czech Republic at AHOLD Czech Republic

    Vladimira Jicinska is the Head of Legal at AHOLD, responsible for the Czech market. She first joined the company in December 2012 after spending a little over two years in China working as the Head of Legal and Compliance of Home Credit China. Before that, she worked for AAA Auto holding for nine years, initially as an Acquisition Lawyer, and later as the Group Legal Manager of the company.

    CEELM: To start, please tell our readers a bit about your career leading up to your current role.

    V.J.: After graduating from the law faculty I started working in a middle-sized Czech law firm. Before passing the bar exam I accepted an offer from AAA AUTO Company – a car dealer in the Czech Republic. At the time I joined this company as an acquisition lawyer the company operated only in the Czech Republic. My first transaction was the acquisition of green land in Bratislava, Slovakia, and building an auto center. And then we enlarged the company across all of Slovakia as well as other states: Hungary, Poland, and Romania. I was involved in preparation work for Russia and other states as well. The biggest deal I was involved in with this company was joining the stock markets. I spent a total of nine years with AAA AUTO, and the transactions I was exposed to and managed were interesting and excellent.

    As the company grew it was also necessary to set up local legal departments and hire people. This we managed in cooperation with our HR, but I interviewed people by myself. I was looking for people that I felt were on the same wavelength – people motivated by interesting work. It was an important learning experience for me, as opening a new company in a foreign county was quite a challenging job for all involved: to harmonize internal procedures in line with local law; to be ready for questions from different departments as to how to solve standard issues in the local legal environment; etc. During my stay with AAA AUTO I also passed the bar exam, so I am a licensed lawyer. I look back at it as a challenging and busy time but an extraordinary period running at full speed. 

    After such a long time with one company and such an intense period I felt I needed a break and wanted a real change of direction. As a result, I accepted an offer from Home Credit International and started to work as their Legal Department Manager in China. I was responsible for the legal department, but I also had to set up the compliance department. Whatever you know you can forget when it comes to China. It is a great country, but working and living there is a challenge for an EU person. The way of thinking and the way of management is different than in European countries. It is more about micromanagement, but at the same time also requires a more personal approach and more focus on relations within your team. Despite the fact that it has been four years since I returned to the Czech Republic, I still perceive China like my second home, and living there was an extraordinary experience.

    When I returned from Asia I accepted an offer from the AHOLD group, now the AHOLD-Delhaiz¬¬e group, one of the major food retailers and a leader in Europe and the US. The group operates over 6500 stores worldwide and employs 375,000 people serving 50 million customers a week. 

    This is my work history in brief. 

    CEELM: You’ve worked the better part of your career as an in-house lawyer. Have you considered going into private practice at any point? 

    V.J.: I am a licensed lawyer. and I did start my career in a law firm. However, I do think of myself more as ab in-house lawyer than an external one. [As an in-house lawyer] you are part of the business. You can be with any transaction that is planned in the company from the very beginning until the end. This was what I missed as an independent lawyer. I missed feedback on how the transaction happened. I provided legal services, but if a client accepted it or how he executed my recommendations, I couldn’t see. As an in-house lawyer you are in closer touch with other departments, you are exposed to more details, and you can see how your recommendation is executed. You also get to see what it brings in a concrete case within the whole company. At the end of the day, being in-house means you are exposed to the greater complexity of particular issues and cases. 

    CEELM: Whether automotive, finance, or now retail, your past roles seem to revolve around consumers. What types of specific legal work does this kind of focus present?

    V.J.: In all of those cases the focus was on providing fast legal advice on complex legal issues. In the retail business (it doesn’t matter if you “sell” money, cars, or food) the customer comes first, and you need to be able to combine private law and public regulations on the go. And both must be handled perfectly. 

    CEELM: How does one go about setting up a system of providing legal advice keeping speed as a focus?

    V.J.: It’s a combination. Yes, for contracts we use a large number of templates, and we need a clear system in place for when anything needs to be changed. If it relates to business conditions, that is up to the respective department as the owner and their supervisors. If it relates to contract terms the first line of the organization needs to contact the legal department. But even using templates a huge number of contracts end up on our plate to handle – I’d say around 60-70% of our work revolves around contracts.

    Trainings are a critical aspect too. We have special departments tasked with organizing tenders and buying products and food. Both of these departments are trained and re-trained regularly, not just on regulatory aspects but also on how to use the templates in place: how to complete them, what each term entails, how to find information on the suppliers, and how they should circulate the contracts in the pipeline. I say “re-trained regularly” because these are not one-off trainings. We need to refresh those on a constant basis. 

    CEELM: In your previous roles you were also involved in establishing or restructuring legal and compliance departments. Looking at the latter in particular, what best practices have you developed in terms of setting up compliance procedures? If you had to start a new function right now, what would be the very first steps you’d take based on your experience?

    V.J.: That’s an interesting question and a difficult one to answer in short. No matter what, you have to know the company inside out. You must know how the company works internally and cooperates and also its internal approach or policies. Then you can technically set up competencies of legal/compliance departments and internal regulations as to what other departments can expect from legal/compliance and how to “order” work. Other departments are “clients” for the legal/compliance work and both sides have to be satisfied. Legal has to be a part of the business and provide effective, business solutions and not block business – but on the other side legal is the final stop and has to make sure everything is in full compliance with the law. To find the balance is always difficult. 

    CEELM: How do you effectively integrate legal into business? 

    V.J.: It’s in everything we do. Trainings are critical on that side as well. We have a good organizational set-up that allows the legal function to be in constant touch with the Board and the business as a whole. We participate in the Board meetings and even on ad-hoc external meetings – whatever helps us better understand the business side of things. This kind of real participation is critical. We are also in constant touch with our risk and our compliance departments. The general approach is that of a full immersion in the business. 

    CEELM: In your current role, you need to look out for the legal aspects related to over 300 supermarkets. What are the main types of recurring legal work that you and your team need to address?

    V.J.: Ahold has around 17,000 employees in the Czech Republic, and it is developing quite fast. We merged with Spar in the Czech market in 2014 and recently saw the merger of the AHOLD group with the Delhaize group on the EU and US levels. Most of the work relates to real estate, commercial, HR, and acquisition. I suppose that we don’t differ from other big companies on the market in this regard. 

    CEELM: Since you mentioned them, what challenges did these mergers raise locally for your legal team?

    V.J.: Some redundancies did take place with the merger with Spar. The critical aspect for us was that we were involved from the very beginning of the deal. Legal was part of the acquisition team. We were involved in the actual acquisition and we had to file the recommendations to the EU Commission and the local competition authority. That involved a lot of data being prepared, and we also worked closely with the real estate team to figure out which of the stores would need to close for competition concerns. 

    After all of that, the “real merger” happened, meaning we had to integrate offices, archives, sort out documentation – all of it quite time- and emotion-consuming. At the end of the day this was not just about papers but was a real internal combination where we had to see what was good within Ahold that we wanted to carry over and what we wanted to incorporate from the Delhaize side. For example, we kept the compliance model from Ahold but applied the internal organizational reporting lines from Delhaize. All of these had to be synchronized at the end of the day, which was a very interesting exercise. 

    CEELM: I would assume labor matters come up regularly for a company that employs over 17,000 people. If you could change any one aspect in terms of the current labor legislation in the Czech Republic, what would it be?

    V.J.: Unfortunately, the current legal development in the Czech market has many limitations and restrictions, not only in the HR area. Generally, having less limitations and better wording of laws would make our life easier. 

    CEELM: What specific limitation gives you the most headaches?

    V.J.: Inspections are a big one, as they happen on an almost daily basis, and the local teams require our support. 

    At the moment, the big one for us is the Act on Significant Market Power, which was issued in 2010 and established a set of obligations on retailers of food with a turnover of over five billion Czech crowns a year. The penalty for failing to meet any of the obligations is huge, but the real challenge is that we need to ensure our suppliers apply the same standards – it can be difficult to chase them up when they do not face the same penalties. At the same time, there are two possible interpretations on the table in terms of what we need to do to be compliant. The Competition Office issued an interpretation in March, which we worked hard to ensure we satisfied. Then, in September, the Office brought new explanations that are stricter, and now we need to renegotiate a good number of agreements to ensure we align with them. 

    CEELM: On the lighter side, what is your favorite thing to do to relax after a long day at the office?

    V.J.: I love travelling very much. I am able to pack myself in a couple of hours and just leave. I especially love going to countries that are not yet discovered as popular tourist destinations. Beyond that, I love any type of “weekend sport” like cycling or skiing. When I was in Asia I spent a lot of time scuba diving and I had a chance to scuba dive in Micronesia – a paradise for divers.

    This Article was originally published in Issue 3.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Deal 5: General Counsel at Inter Cars Jacek Piotrowiak on Loan Facility

    Deal 5: General Counsel at Inter Cars Jacek Piotrowiak on Loan Facility

    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.

  • Deal 5: In-house Attorney at Mareshki Medicines Irena Georgieva on Litigation at Bulgaria’s Supreme Administrative Court

    Deal 5: In-house Attorney at Mareshki Medicines Irena Georgieva on Litigation at Bulgaria’s Supreme Administrative Court

    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. 

  • Deal 5: Head of Legal Department at Anchor Group Mihaela Marin on the Merger of Two Shopping Malls in Romania

    Deal 5: Head of Legal Department at Anchor Group Mihaela Marin on the Merger of Two Shopping Malls in Romania

    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. 

  • Deal 5: Group General Counsel at P3 Katie Schoultz on P3 Refinancing

    Deal 5: Group General Counsel at P3 Katie Schoultz on P3 Refinancing

    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! 

  • Inside Insight: Bora Kaya Managing Legal Counsel at Gama

    Based in Ankara, Bora Kaya is the Managing Legal Counsel at Gama Power Systems Engineering and Contracting, a company that he first joined in March 2015. Prior to that he was the Head of Legal at Ronesans Holding from October 2012 to December 2014. Earlier still, he worked for Eregli Iron and Steel Works Co. as the Assistant to the Head of Legal Department.

    CEELM:

    Please tell us a bit about your career up to this point.

    B.K.: Putting aside my personal history in academic life, which will hopefully shift to a slower pace when I complete my PhD at the end of this year, before being appointed as the General Counsel to Gama Power Systems Engineering and Contracting Co. I was the Head of Legal at a multi-national, Russia-originated company called Renaissance Holding for two and a half years, which was after my almost six year- long service for publicly owned Eregli Iron and Steel Works JSC as the Assistant Lawyer to the General Counsel.   

    CEELM:

    How large is your team at Gama Power, and how is it structured?    

    B.K.: The GC office consists of 10 colleagues in two separate departments: the legal department and the contracts and claims management department. The latter has both engineers from various disciplines and people with legal qualifications from other countries such as Belarus. We assign one or two contracts and claim managers to individual projects, and of course we also liaise with external local law firms and/or counsels wherever our projects are, as a standard practice.

    CEELM:

    What does a “normal” day in the office look like for you? What types of work end up taking most of you time?  

    B.K.: Various kinds of meetings consume most of my time, and even though we discussed at the GC Summit in 2015 that GCs should allocate their time to more strategic and high-level issues I sometimes unfortunately end up drafting letters, notices, contracts, etc., all day. Of course they are somewhat more important than the ones being prepared daily within the company, but nevertheless, spending time on these deprives me of the chance to pursue some other management duties.

    CEELM:

    What would you describe as the most challenging project you worked on with Gama, and what were the main lessons you learned from it?  

    B.K.: Getting ready for a negotiation or an arbitration requires a huge amount of paperwork to be done for substantiation purposes, and it cannot be done easily three or four years after the completion of the project. We learned this the hard way, and afterwards we designed a check list for the documents to be collected monthly while the project is ongoing and described how we require them to be recorded and reported so that even long after the completion of the project we can have access to any information that might be necessary.  

    CEELM:

    When you need to externalize legal work, what are the main criteria you use to select what law firms you’ll be working with?  

    B.K.: We acknowledge the fact that the Partners of the external law firms we work with do not always have the time to deal with our daily questions and requests, so evaluating the experience and qualifications of the Associates that are proposed to work for us is of vital importance. The second important thing is the budget, of course. Since we are working with most of the well-known international law firms we know the market very well in terms of hourly rates and payment schemes, so the firm’s approach in offering blended or discounted rates and fixed or capped fees tells us a lot about what we may face in the future. We very much value different and flexible approaches to fee structures in long-term relationships. Local reputation, recognition, and personal traits are also important. That’s why we prefer to meet in person with the people we plan to work with before signing any engagement letters.  

    CEELM:

    If you need to hire a new person for your in-house legal team, what are the main traits you look out for?  

    B.K.: It changes depending on the position. For junior positions all I look for is a bright mind with a bit of curiosity about the profession in the eyes. For senior positions I look for relevant experience, management skills, and profound reasoning abilities on complex legal issues. I prefer outgoing personalities rather than introverts because an in-house counsel has to team up with others most of the time to be able to fulfill his/her tasks.  

    CEELM:

    Looking at the market overall, how has the current climate in Turkey impacted your company and the work of your legal team?  

    B.K.: Gama Power, with its almost 60 years of history, is like a huge cargo ship out in the ocean. I believe very few things can really have a negative material impact on the business (knock on wood). Gama Power as an international EPC contractor has most of its projects outside of Turkey. Therefore, aside from the massive workload arising from tracking recent enactments or amendments in local legislation, the work of the legal team has not changed considerably. 

    CEELM:

    On the lighter side, what was the favorite corporate team building exercise you attended?  

    B.K.: We are currently discussing the possibility of organizing a sailing event for team building purposes; that’s what I am looking forward to impatiently. The company is also promoting some cultural events and sports organizations as well. 

    This Article was originally published in Issue 3.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Inside Insight: Dennis Avrouschenko Head of Legal & Compliance, CIS & East Europe at DHL

    Dennis Avrouschenko is the recently appointed Head of Legal & Compliance, CIS & East Europe at DHL. Previously, he worked for Gazprombank, where he was a Business Support Head / Capital Markets. Earlier still, he was the Head of Legal & Compliance at ZAO Standard Bank, a Legal Adviser with Deutsche Bank, and the Head of Corporate and HR Department with RAO UES. Before moving in-house, he worked with Allen & Overy Legal Services in Moscow

    CEELM:

    As a warm up, please tell our readers a few words about your career leading up to DHL.

    D.A.: I graduated from Moscow State University in 1997. Early in my career, I spent about a year and a half with the international law firm Allen & Overy, where I focused mostly on capital markets and banking. As you might know, 1998 was a crisis year here in Russia and A&O reduced their practice in capital markets, which meant that, unfortunately, most of us in the team had to leave. This marked the beginning of my in-house life, which I have spent mostly with large banking institution such as Deutsche, South African Standard Bank, and Gazprombank, where I stayed for more than seven years. 

    As to my current role, I’d say simply that one meeting with my predecessor here changed my life, as he made me consider changing my focus from the financial sector to something absolutely different in DHL and coming back to a purely legal and compliance role, which I had missed during my life with Gazprombank. To clarify, with Gazprombank I spent a lot of time on the administration and business side of things. That included some compliance work, some corporate governance, and so on, but not really any pure legal work. Missing that area is the main reason I agreed to talk to DHL at the initial stage. If I am completely honest, the fact that I didn’t see any prospects for me personally at the bank also played a part – in part because of the lack of future interesting projects in the banking sector for various reasons. Putting the two together, I thought it’d be a great opportunity to join DHL, and I am highly appreciative towards the DHL management, who gave me the opportunity to come in and strengthen the legal function here.   

    CEELM:

    Your previous role with Gazprombank is indeed not the typical one we see for in-house counsel. Can you elaborate for our readers what role you played as a lawyer in – as you describe it on Linkedin – “developing capital markets business for the bank.”    

    D.A.: At the time I joined the bank there was a drive to hire lawyers in various departments – such as in capital markets but also in some of the general banking areas – not to act as legal advisers but to focus mostly on deals and day-to-day transactions. We were focused on brokerage, sales, and trading, establishing new entities and setting up intergroup structures within the capital markets team, and our legal expertise was useful in that exercise. We’d of course push matters towards the legal team when necessary. 

    As the business support head I also focused on the administration of different affiliated companies established in Russia and abroad. For example, we arranged and started up the Hong Kong presence – a rather difficult project in light of the sanctions in place.

    CEELM:

    Why did the sanctions impact that particular project?  

    D.A.: When we’re talking about China, which does not support any of the sanctions applied by the EU or US, there is a sense that the general environment is not particularly welcoming when it comes to entering. There is a general feeling that people do not really trust you in terms of what is being introduced and whether you are trying to breach the sanctions imposed on you. Even outside the list of countries that agreed to the sanctions, all are rather suspicious of Russian businesses. 

    I should stress that Gazprombank was never aiming to breach the sanctions in place. It was simply looking to expand its presence – which is only normal for a large institution and natural, since China is an interesting and promising market in general.

    CEELM:

    You only spent a relatively brief period in private practice. What made you stay in-house since 1998?  

    D.A.: Indeed, as I mentioned, I started with A&O, which is a very good experience for anybody coming in from university benches. We were exposed to different fields of law: oil and gas, corporate, etc., which means you can try different areas and explore what you would want to go deeper into. I spent a lot of time with lawyers who were a lot more senior than me, and that helped me learn a lot about the banking world – that’s when I gained my understanding of the industry: Not just out of books but first-hand experience in the industry, working with the biggest names. 

    As I mentioned, the crisis made the decision for me and eventually I had to move on. I can say now that I prefer staying on the corporate side – I understand it much more by now and to be an external lawyer, again, you should (in a higher position of course) spend a lot of time on administration stuff which is not law at all. Such administration concerns are rarer on the corporate side. For example, you don’t need to worry about attracting various clients – you have just the one and you can focus on its legal needs.  

    CEELM:

    In our interview with your predecessor, Sergei Stefanishin, in the April 2016 issue of the CEE Legal Matters magazine, he talked about the extensive process of getting to know the company when he first joined. Almost two months into that same role, now, how settled in do you feel?  

    D.A.: Keep in mind I changed roles dramatically. I came to a field where the applicable law is rather unfamiliar to me (not capital markets and not banking at all). Sure, the general rules and environment in Russia is more or less common but the specifics are, of course, quite different. I am now trying to understand the business from different angles. I do enjoy seeing another industry. 

    I have known Sergey for quite a long period. The team that is in place, as I can see now, is very tight – the members of the team have been together for a long time and are now very experienced. Most of them have been here for over five years, and they’ve helped me understand how things work around here. With that in mind, I can’t see any big changes in terms of the team here. If it’s not broken, don’t fix it! 

    CEELM:

    Looking towards the future, what is the next big project for your legal team?  

    D.A.: Looking at the current set-up, I think there are several types of risks in terms of the changes in the Russian legislation related to post services and freight forwarding, and I would like to focus on that and generate various scenarios as to how we’ll need to move forward. The new rules don’t appear to apply to us, in theory, but if it turns out they will apply to DHL we’ll need to spend quite a lot resources to comply. At the moment we are not regulated as much, and if we are, we’d need to address many areas. Again, officially we shouldn’t have to, but we may need to be proactive on it to manage the risk.  

    CEELM:

    Turning our attention to the Russian market, how is the climate these days both in terms of the economy as a whole and your own business?  

    D.A.: I’ve had a lot of internal meetings, and the general impression I got is that business is going very well. The news here is a bit surprising, because in general the Russian economy is not in a great place. The ruble value for the last two years is very unfriendly to a lot of people and most have slowed down in spending. 

    In terms of the market in general, we’re still struggling with the sanctions because providing even some services as an international company we need to always control and be in line with the sanctions in place. We are very careful here because I would say even our business is affected. 

    CEELM:

    On the lighter side, looking back at your career, what was the funniest moment in the workplace?  

    D.A.: Not a lot of funny stories to share really. One that I can recall is from about ten years ago. It was an April Fool’s Day joke: We had quite a lot of foreigners in Moscow, and we circulated a message that the Russian Government decided to implement a rule based on which they’d need pass exams on the Russian language, the history of the Russian banking system, etc., to be able to work in the management of a bank. They all scrambled and a few hours later they had all even written to HQ asking for a budget line for the needed courses.

    This Article was originally published in Issue 3.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Deal 5: Chief Investment Officer at Linstow Knut Loken on the Sale of Stake in Park Inn Hotels in Lithuania

    Deal 5: Chief Investment Officer at Linstow Knut Loken on the Sale of Stake in Park Inn Hotels in Lithuania

    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. 

  • Deal 5: Managing Director of WM Slovakia Michael Wakolbinger on Sale of Slovak Retail Parks

    Deal 5: Managing Director of WM Slovakia Michael Wakolbinger on Sale of Slovak Retail Parks

    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. 

  • Deal 5: Tsvetanka Vasileva, Head of Legal and Compliance at Balkan Advisory Company, on Energo-Pro Varna Bond Issuance

    Deal 5: Tsvetanka Vasileva, Head of Legal and Compliance at Balkan Advisory Company, on Energo-Pro Varna Bond Issuance

    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.