Category: Interviews

The Deal: In April 2019 CEE Legal Matters reported that Clifford Chance Badea had advised Alpha Bank Romania on its EUR 1 billion direct issuance global covered bond programme – the first-ever in Romania. RTPR Allen & Overy advised Barclays Bank PLC as arranger on the programme, which came three years after the country’s covered bond law entered into force.

The Players:

• Counsel for Alpha Bank Romania: Madalina Rachieru, Partner, Clifford Chance
• Counsel for Barclays Bank PLC: Andreea Burtoiu, Counsel, RTPR Allen & Overy

CEELM: Madalina, how did you and Clifford Chance become involved with Alpha Bank on this matter? 

Madalina: It was a combination of factors, starting with our team’s involvement in the preparation of the current Romanian covered bonds law, our reputation as a leading Capital Markets law firm, and our collaboration with Alpha Bank Romania on previous projects.

We were at the core of the new Romanian covered bond legislation that came into effect three years ago. Since 2010, I have worked side by side with the Romanian Banks’ Association, the National Bank of Romania, and the Romanian Financial Supervisory Authority to draft a new legal framework in this area, aligning Romanian legislation with European standards and practices. 

We have also built a reputation as the leading law firm assisting on complex transactions that shape the business environment (first-of-its-kind transactions).

It was, therefore, a natural choice for Alpha Bank Romania to consider selecting as legal counsel the firm that helped bring this new legislation to life and who would also be able to assist in introducing a new instrument on the local market. 

CEELM: Andreea, how about you? How did you and RTPR Allen & Overy become involved in this matter?  

Andreea: Allen & Overy has a long history of assisting Barclays Bank PLC on various other complex and first-of-their kind matters in the past.  

CEELM: What, exactly, was the initial mandate when you were each retained for this project, at the very beginning? 

Madalina: We were approached by Alpha Bank Romania at a very incipient phase of the project, in January 2017, when Alpha Bank Romania and Barclays were exploring the features of the Romanian covered bonds legislation and to what extent they could implement a covered bonds programme in Romania. 

Further to that analysis, a significant number of queries resulted and Alpha Bank Romania, which knew that I had assisted the Romanian Banks’ Association in preparing and agreeing with the National Bank the Covered Bonds Law, determined that our team would be best placed to shed light into Barclays queries. 

Once the structure issues had been clarified, Alpha Bank Romania decided to launch a covered bonds programme and we were mandated to assist Alpha Bank Romania on all aspects of the programme, in particular in relation to the base prospectus, the negotiation of all the contracts (cover pool monitor agreement, covered bondholders representative agreement, mortgage agreement, deed of charge, servicing agreement, agency agreement, etc.), the approval of the programme by the National Bank, the corporate approvals, the publicity formalities for the mortgage over the cover pool, issuing legal opinions, etc.

Andreea: Considering the novelty of the envisaged mandate for the Romanian market, our appointment was structured as a two-stage process: in the first stage of our appointment, we assisted with various structuring matters. Once these had been solved, we continued with the preparation of the relevant documentation for the program.

CEELM: Who were the members of your teams, and what were their individual responsibilities?

Madalina: As lead partner, my main tasks were [managing] the relationship with ABR and the other parties, considering the numerous structure issues that arose during the process due to the fact that it was a first-of-its-kind transaction, and providing overall supervision of the transaction and all of the documents.

Counsel Radu Ropota was in charge of the day-to-day management of all the aspects of the transaction, assisted by Associate Georgiana Evi. Also, Associate Yolanda Ghita-Blujdescu supported the team on various regulatory issues.

As our office in Bucharest operates as a fully integrated part of the firm’s international network, we were also able to consult with Partner Christopher Walsh and Associate Theodoros Kotsiras, from our London office, on various issues related to the contractual documentation. 

Andreea: I and Partner Victor Padurari led the RTPR Allen & Overy team and managed the transaction. Our team involved in this project also included Andreea Chiriac, Lia Ilie, and Ioana Ilie, lawyers specialized in finance and capital markets deals.

CEELM: How was the programme structured, ultimately? 

Andreea: The transaction was structured as a programme, with the first issue in the amount of EUR 200,000,000 being made around the time of the establishment of the programme. Programmes are generally preferred to individual issues when the issuer envisages further issues; this is because all documentation is agreed upon at the establishment of the programme and hence subsequent issuances can take place more efficiently from both time and cost perspectives; at the same time, a programme will also expedite things at the investors’ end for future issuances and shows the issuer’s commitment to developing a long-term sustainable product. As Alpha Bank Romania’s programme was the first established under Romania’s covered bonds legal framework, our involvement consisted of harmonizing the parties’ expectations with the requirements of the Romanian law.  

CEELM: What was the most challenging or frustrating part of the process? Why? 

Madalina: First-of-their-kind deals usually face specific delays generated mainly by legal challenges that require flexibility and innovative solutions. 

In this particular case, the work was extremely intense, given the complexity of the project. Among other things, we had to align all contractual mechanisms so that the rights and duties of all parties involved could still function in practice. 

The main challenge came from the fact that Romania’s covered bonds law was inspired from the German Pfandbrief Act, while the covered bonds programme was governed by English law. We needed to identify innovative solutions that satisfied Romanian law specificities while still keeping the features of the various English law concepts of the programme. 

Andreea: Indeed, since this is the first transaction made under Law No. 304/2015, we had to break ground on a number of aspects. Throughout the process, various aspects needed to be solved and/or alternative solutions identified, keeping in mind that that, on the one hand, the Romanian legal framework was new and modern, but did not and could not address in extensive detail the complex mechanics of an international covered bonds issue, and on the other hand, well-established international covered bonds practice and expectations. 

CEELM: Was there any part of the process that was unusually or unexpectedly smooth/easy?

Madalina: We worked very well and efficiently with the team of Alpha Bank Romania, which was very professional thorough the whole process. 

Andreea: Considering that all parties involved had the common goal of getting the transaction finalized, all parties involved cooperated continuously for such purpose. Effective communication and availability of all parties were strong points during the process. Moreover, the legal advice of both parties was undertaken by highly experienced teams with considering capital markets experience on this type of transactions, which we believe made the process smoother.

CEELM: Did the final result match your initial mandate, or did it change/transform somehow from what was initially anticipated? 

Madalina: The structure of the programme kept being adjusted during these two years in order to cater to the particularities of the Romanian legislation and the feedback received from the National Bank. We also needed to accommodate the requirements of various parties who later joined the project (the rating agency, the cover pool monitor, the covered bondholders’ representative, etc). 

We addressed various queries raised by Moody’s in order to be able to issue its rating and comments from the National Bank of Romania. We also dealt with the approval of the prospectus by the Commission de Surveillance du Secteur Financier and the listing process on the Luxembourg Stock Exchange and the Bucharest Stock Exchange. 

The fact that we had a very good relationship with Moody’s even from the time when we were in the process of preparing the Covered Bonds Law and our previous experience in secondary listings of other bonds on the Bucharest Stock Exchange expedited and significantly smoothed the interaction with the other parties. 

As mentioned, the main challenge was to identify solutions that took into account the expectations of the National Bank and of the other parties and the Romanian law specificities, while still keeping the features of an international market standard programme. 

Andreea: The mandate remained along the original lines, however due to the novelty of the transaction on the Romanian market, the timing for completing the transaction was longer than originally envisaged. The structure had to be fine-tuned along the way to accommodate specific requirements either from the issuer’s side or from the other parties involved: the asset monitor, the prospective covered bondholders representative, and the regulator.

CEELM: What specific individuals at Alpha Bank Romania directed your team’s work, and how did you interact with them?

Madalina: The Alpha Bank team was coordinated by Periklis Voulgaris (Wholesale Vice-President) and mainly included Emil Mitescu, Eduard Istratescu (Legal Manager) and Nicoleta Ruxandescu (Deputy CEO of Alpha Finance Romania).  

But I should also mention the fact that, without the involvement of Mr. Sergiu Oprescu (the CEO of Alpha Bank Romania) in the process of drafting the covered bonds legislation and the discussions with the National Bank, the enactment of the current legislation which allowed the covered bonds programme to be established would probably not have been successful.

CEELM: How about you, Andreea? What specific individuals at Barclays Bank PLC directed your team’s work, and how did you interact with them?

Andreea: Our team’s work was generally coordinated by the structuring team at Barclays Bank PLC, and in particular by Director Elena Bortolotti. The team at Barclays Bank PLC are greatly experienced in covered bonds transactions and hence guided all teams involved so as to achieve a great end result.

As part of our involvement in the transaction, we also worked closely with Alpha Bank Romania S.A.’s team, including Periklis Voulgaris, Emil Mitescu, Nicoleta Ruxandescu, Eduard Istratescu and Ioana Dumitrescu.

Considering the international component of this transaction, the majority of our work was generally carried out by phone and email, although several meetings were also held in person in Bucharest. The novelty of the overall transaction lead to extensive correspondence and conference calls either between all parties or sub-divided into legal or commercial workstreams/parties. Barclays Bank PLC and our teams were always available for discussing, sharing prior experience and finding new ways going forward. 

CEELM: How would you describe the working relationship with RTPR Allen & Overy on the deal? 

Madalina: Radu Taracila Padurari Retevoescu is a professional team which we have met in past transactions and, therefore, our work together was efficient and beneficial to all parties involved. Our interpretation of the Romanian law particularities was similar and, as such, we worked together to identify constructive solutions. 

Due to the fact that most of the contracts were drafted by Allen & Overy in London, a large amount of work was done by email and we negotiated mainly by conference calls. There were also weekly conference calls to discuss the progress of the project and planning ahead. 

CEELM: What about you, Andreea? How would you describe the working relationship with Clifford Chance on the deal? 

It was great to have on the other side of the table an international law firm of comparable caliber, which had a highly-qualified team involved on this deal. Having all the parties advised by top international law firms (both having extensive experience in similar transactions in other jurisdictions) helped a lot in completing such a complex and novel transaction. I would describe our working relationship with CC on this transaction as a deal between professionals who were committed to closing the deal in the best interests of their clients.

CEELM: How would you describe the significance of the deal to Romania, or to the region?  

Madalina: With the covered bonds issued by Alpha Bank, Romania has finally joined the other EU countries which have active covered bonds markets.

I am confident that this is a major step for the Romanian economy in general, as it allows the expansion of financial intermediation and stability in the financial system – it is known that banks with a broad and diversified range of funding tools are more resilient. 

Covered bonds are viewed as low-risk investments and help diversifying the funding structures of banks and securing sources to support lending growth. Its positive impact can also be transferred to banks’ individual clients through lower costs in real estate loans. 

Andreea: The programme established by Alpha Bank Romania S.A. is the first covered bond programme established in Romania. We are therefore privileged to be part of the team that finalized this pioneering transaction on the Romanian market. Covered bonds are a feasible financing solution for the banks in Romania and until now we had a modern but untested legal basis, and a well-established international practice of bond issues, but no local experience. With this first covered bonds programme, credit institutions are more likely to consider covered bonds as a feasible instrument for attracting liquidities.

This deal marks another “first” for the Romanian capital markets.

This Article was originally published in Issue 6.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Adam Mycyk, a Ukrainian-American from the United States, is a partner in Dentons’ Kyiv office, and he has nearly 25 years of experience advising both Ukrainian and international companies, banks, investment banks and a range of other financial institutions and investors.

CEELM: Run us through your background, and how you ended up in your current role with Dentons.     

Adam: Back in 1995, I interviewed with two firms in Kyiv – Altheimer & Gray and our legacy firm, Salans – and decided to work with A&G. When A&G disbanded in 2003, I once again spoke to Salans (most of the former A&G offices in CEE ended up joining Salans), but our Kyiv office decided to go with Chadbourne & Parke instead. In 2007, CMS Cameron McKenna recruited me together with four other partners to open its Kyiv office, and then in 2013 Chadbourne wooed me back to transition into the managing partner role after the planned retirement of the managing partner there. Unfortunately, in 2014 Chadbourne decided to close its Kyiv office, and that’s when I found myself for the third time at Salans’s (now Dentons) door – it’s just that this time, I was the one doing the knocking.  Thankfully, the door opened, and in the short time I’ve been here I’ve witnessed the firm grow and develop even more rapidly and dynamically than I could have imagined it would.

CEELM: Was it always your goal to work abroad?

Adam: One would have thought that with my educational background – I graduated with a B.A. in International Relations from George Washington University, where I concentrated on Soviet and Eastern European Studies and received a minor in Russian Language and Literature – working abroad should have been in my sights, but it really wasn’t anything that I even imagined would ever be possible. After college, I went to law school in DC and ended up working for a boutique mortgage banking firm just blocks from the White House. One cold February day in 1994, when I was a second-year associate, a friend of mine called me up to say that he had just read a help-wanted ad in one of the Washington, D.C. legal weeklies for a firm that was looking for an associate with 0-3 years of experience with Russian and/or Ukrainian language skills willing to relocate to their newly opened Kyiv office – “that sounds like it was made for you!”. 

Well, I wasn’t too sure about that at first, as I was quite comfortable living in DC (despite the long dreadfully hot and humid summers – thank God for air conditioning!). I lost sleep thinking about it for a week, and then finally decided to apply. Within a week, I had an interview, a week after that an offer, and one month after that I landed in Kyiv. I was a few months shy of my 28th birthday, I had never travelled outside of the United States (not even to Canada), and I didn’t even have a passport. But I figured – why not? I knew the language, so that was already one hurdle crossed, and if I ever was going to have an adventure, that was the time to try it. Plus, if I didn’t like it, nothing prevented me from coming back to D.C.  And here I am – 24 years (and two revolutions) later, having traded D.C.’s long humid summers for Kyiv’s even longer freezing winters…  

CEELM: Tell us briefly about your practice, and how you built it up over the years. 

Adam: Much like a number of my other expat colleagues in these markets, most of my time is spent advising international clients entering the market, but I often work with Ukrainian clients as well (knowing the language helps with that). My practice is largely transactional in nature, and mainly consists of corporate/M&A transactions. I also regularly work on financing matters, although less so now given the very capable team we have here in our office. Over the years, I’ve been involved on so many different matters – when I first arrived it seemed as though I worked on anything that came in the door – but I’ve found that I’m happiest doing transactional work. Even now, though, I find myself picking up new practice areas, most recently in renewable energy. I’ve found that the best way to develop the practice is to just do good work and to build and foster a strong team. The recognition of that by your clients and your peers is often your best advertisement.      

CEELM: How would clients describe your style?    

Adam: From what I’ve read, clients say that I’m nice, easy-going, and pleasant to work with, which is always a good thing to hear. Ultimately, though, I think what clients expect from a partner is that he or she be pragmatic, commercial, and solution-oriented, and know when to reach compromises, rather than be pedantic, overly theoretical, impractical, or combative.  That’s something that I try to bring to the table on every matter I handle.  So far, it seems to work well.

CEELM: There are obviously many differences between the Ukrainian and American judicial systems and legal markets. What idiosyncrasies or differences stand out the most?

Adam: There’s the obvious civil vs. common law difference, which took some time to adapt to, and the fact that there isn’t really any court precedent or thorough legislative history to fall back on when something isn’t quite clear in the law as written. In addition, form is often more important than substance, and courts are often reluctant to go beyond the four corners of a law to interpret the meaning of unclear provisions or gaps, or to uncover the true spirit of the law. Add to that a (sometimes) corrupt and often inexperienced judiciary and administrative system, and you’re regularly faced with some big challenges when advising clients trying to quantify the impact of a particular risk or to assess the likelihood of that risk occurring. For those reasons, many lawyers here often take very conservative positions, which doesn’t necessarily help in advancing the progress of the law. Also, the practice doesn’t necessarily always reflect the law, and this is particularly true of land law where the advice of a local practitioner familiar with the peculiarities of how local governments operate can often be quite helpful in reconciling the differences between what’s written in the law and what the local government always does.        

CEELM: How about the cultures? What differences strike you as most resonant and significant?

Adam: Ukrainians are known for their generous hospitality, and that’s something that I encountered almost immediately after arriving. You may often find yourself being invited as a guest to someone’s home after a particularly successful business meeting, in which case you should be prepared to bring along your appetite together with a small gift of flowers or chocolate. Important delegations are often given the red carpet treatment, and occasionally the hospitality precedes the actual conduct of business. I remember one of my first negotiations in a small town in Western Ukraine at a run-down state-owned agricultural machinery plant with whom one of my clients was planning on setting up a joint venture for the production of combines. We were welcomed in the director’s immense office at 8:30 in the morning, at which a long table had been laid out with so many plates of food that I couldn’t even count them all, and when the director found out that my parents were originally from Ukraine, he started trying to marry me off to his daughter! Luckily the deal didn’t go through and I didn’t have to go back, so that was a narrow escape! Oh, and toasts! Toasts are a normal part of any celebration or social gathering! Be prepared for many toasts – and remember to bring along your aspirin for the morning after! 

CEELM: What particular value do you think a senior expatriate lawyer in your role adds – both to a firm and to its clients?

Adam: We (Dentons) couldn’t do what we do as well as we do it in as many places as we are without cohesive teams of solid local lawyers in each of the jurisdictions in which we operate. Expats are a nice “add-on.” In our firm, expats play a number of different roles, with some having a more regional role based on a particular specialty or practice area that allows them to work on transactions throughout a region, and others, like myself, having a more country-specific role due to my knowledge of both Ukrainian and Russian, which coupled with my Western training enables me to work more on purely Ukrainian matters as well as cross-border deals. That said, very often the most valuable benefit is as simple as just being able to bridge the language and cultural gap between foreigners and locals and quickly spotting when something that seems like a problem is really just something that got “lost in translation.” It happens more often than you may think, and the sooner you can catch it, the more time and frustration you can save.

CEELM: Do you have any plans to move back to the US?   

Adam: As much as I love Ukraine and Ukrainians, I’m still a “Yankee” at heart, and the US will always be home.  But at this point, I don’t have any concrete plans to move back, and I’m not really sure where I would move if I were to ever move back. I’m not a big fan of winter weather, so that cuts out a good chunk of the country, and D.C. – well, you know, hot and humid, and as much as I’d love to live out the rest of my days on Maui, I’ve lived most of my life now in a big city and need to be near the hustle and bustle. So who knows where or when it will happen (but definitely not before 2021…)!     

CEELM: Outside of Ukraine, which CEE country do you enjoy visiting the most, and why?      

Adam: I had to look up the list of CEE countries before answering this question, and when I did, I’m embarrassed to say that I’ve only visited about five of them…  But I am partial to the Czech Republic and, in particular, Prague. It’s just one of those magical cities that you can easily get lost in and not mind wandering around for hours and hours.  But yes, I need to get out more…

CEELM: What’s your favorite place to take visitors in Kyiv?  

Adam: There’s lots to see in Kyiv, and when I first arrived here I spent months and months just walking around everywhere and familiarizing myself with the city and its architecture, the different neighborhoods and parks, and the many churches, monuments, squares, and markets. While I could spend hours in a farmers’ market trying pickled vegetables, caviar, smoked meats, and cheeses, and haggling with the vendors over the price of a kilo of farm fresh corn, I like to end the day somewhere with a panoramic view. Kyiv has a lot of hills and parks with great views of the city, including St. Volodymyr’s Hill, the Motherland Monument (Rodyna Mat’), which is about 102 meters high, and the Bell Tower at St. Sophia’s Cathedral.  And after you’ve climbed all of those steps at the Bell Tower to catch that perfect view of the city, if you’re legs still aren’t too tired, you can just walk across the street to the beautiful Hyatt hotel and sip some vodka at their 8th floor terrace bar while you enjoy the view from there.  And grab a hamburger while you’re at it!

This Article was originally published in Issue 5.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The Deal: In September 2018, CEE Legal Matters reported that Sayenko Kharenko had advised Mriya Agro Holding and Hogan Lovells had advised the company’s ad hoc committee of note-holders on the restructuring of its USD 1.1 billion debt, and that the two firms had advised the company on its subsequent sale of the company’s assets, including infrastructure facilities, machinery and land lease rights, to the Saudi Agricultural & Livestock Investment Company United Kingdom (SALIC). Dickson Minto and Redcliffe Partners advised SALIC on its acquisition.

We reached out to Sayenko Kharenko for more information about the restructuring, and to Redcliffe Partners for details of the sale.

The Players:

• Counsel for Mriya Agro Holding: Anton Korobeynikov, Partner, Sayenko Kharenko
• Counsel for SALIC: Zoryana Sozanska-Matviychuk, Partner, Redcliffe Partners

CEELM: Marcin, Anton, how did you and Sayenko Kharenko become involved with Mriya Agro Holding on this matter? Why and when were you selected as external counsel initially?  

Anton: Sayenko Kharenko was engaged several months after the process actually started. Initially, the Noteholders, representing one category of creditors of Mriya Agro Holding, put the holding company into liquidation and new management was appointed. The group, however, had other creditors and the new management was required to act in the interest of all creditors. For this reason, they needed to engage an external advisor who would be different from the advisors acting for a particular group of creditors. That is when we met with the provisional liquidator of Mriya Agro Holding Public Limited and the new management of the group. We discussed the then-current situation and the ultimate goal of the creditors and gave our views on structuring and expressed several ideas on how the then-existing plan could be improved. I believe that the management and provisional liquidator saw that the firm could add value to the process and approved our appointment. 

CEELM: Zoryana, what about you? How did you and Redcliffe Partners get the mandate from SALIC?

Zoryana: It was a referral from another law firm (for which we are very grateful). We initially started working on this matter in March of this year, at the pre-acquisition review stage.

CEELM: What, exactly, were the initial mandates when you were each retained for this project?

Anton: Generally, our mandate never changed throughout the process. We, as well as other advisors involved, were requested to come up with a legal structuring solution to get the commercial terms of restructuring implemented and, along the way, transform the complicated debt structure into something simple and straightforward. It was the implementation elements that changed, because the tax itself was challenging and the jurisdictions involved (including Ukraine) did not have legal regimes that would allow for an easy and effective plan for with this type of situation.

Zoryana: The initial mandate was limited to pre-acquisition review. Even that scope turned out to be quite a task. It is fair to say that we did not know what we were getting ourselves into, as this was by no means a regular due diligence exercise. The nature of the target, with its history and also with many ongoing processes which no one could or would pause so that the lawyers could do their “static” pre-acquisition review, made the due diligence alone challenging and very interesting. At the start of the due diligence, we had a few meetings with the top management of Mriya, who patiently guided us through the various processes at Mriya.  

CEELM: Anton, who was on the Sayenko Kharenko team, and what were their individual responsibilities?

Anton: Our work on the project involved the firm’s corporate, finance and restructuring, tax, and litigation practices. The participation of corporate and finance and restructuring practice was required due to the nature of the project. The firm’s tax team provided support in the assessment of tax viability of the structuring, which was an important (and very difficult) aspect of it. Since the project also involved certain court procedures (e.g., restructuring in insolvency or pre-insolvency rehabilitation procedure), we involved our litigation team to assist with that.

Alina Plyushch and I were the two coordinating partners on this project. Apart from general coordinating responsibilities, Alina primarily dealt with the corporate aspects of the project, and I, together with Olexander Droug (the firm partner experienced in insolvency and restructuring matters) was responsible for debt restructuring elements. We had great support from the firm’s Banking and Finance team (consisting of Counsel Olexander Olshansky and Associates Vira Pankiv and Denis Nakonechniy), Corporate team (led by Associates Dmytro Hotsyn and Dmitriy Riabikin), Tax team (led by Associate Yuriy Dmytrenko), and Litigation team (led by Associate Oleksiy Koltok).

CEELM: Zoryana, who was on your team at Redcliffe Partners?

Zoryana: Dmytro [Fedoruk] and Rob [Shantz], both Partners in our Corporate and M&A department, gave overall supervision and held our hands at the most challenging times. I supervised the due diligence work and was a primary contact for all due diligence matters. The due diligence team was big and included many colleagues from Corporate, Banking and Finance, Litigation, Real Estate, and other departments. The other team members included Senior Associates Anna Pushkaryova, Natalia Kovalyova, Associates Olesia Mykhailenko and Yulia Brusko, and Junior Associates Anton Rekun and Bogdan Nykytiuk. As the matter progressed, we got more and more involved in the debt restructuring, corporate restructuring, and also transactional work. It is one of those projects which cannot be done without a good team effort, and each member of the team was eager and ready to help with all sorts of tasks.

CEELM: Please describe the final agreements with all parties in as much detail as possible: How were they structured, why were they structured in that way, and what was your role in helping reach those agreements? 

Anton: According to the final restructuring arrangement, the creditors of the group were split into two main categories: secured and unsecured creditors. For secured creditors, the market value of their collateral was determined and agreed, following which their claims in the amount covered by this value were restructured on individual terms. The amount of their claims not covered by the value of the collateral was included into the pool of unsecured creditors and dealt with on the same terms.

The restructuring arrangement for the group’s unsecured creditors envisaged that Mriya Agro Holding Public Limited would transfer most of the group’s assets into a new holding company in exchange of the new sustainable amount of debt and shares issued by the holding company. The new debt instruments and shares were offered to unsecured creditors proportionally to their share in the overall debt pool. Each creditor had an option to either choose the new debt and equity or request that these be sold in the market, with proceeds from the sale paid to the creditor. In exchange for receiving the new instruments or cash creditors were required to surrender their existing claims by transferring them to a group company. The Ukrainian operating companies of the group have also been going through restructuring in insolvency (in the end the most effective and clear way to deal with their debt in Ukraine).

While we have travelled a long way to this result and looked at all possible structures and legal solutions, ultimately this turned out to be the most effective and maybe the only practically way possible to achieve the required result. Sayenko Kharenko dealt with the Ukrainian elements of the structuring and provided Ukrainian input to the documentation relating to the issuance of new debt securities and their exchange. The firm was also responsible for preparing documentation relating to the surrender of the Ukrainian debt, as well as assisting the management analyze the matters relating to the restructuring in insolvency of the Ukrainian operating companies.

CEELM: Zoryana, how was the acquisition of Mriya by SALIC structured?

Zoryana: Our role was limited to Ukrainian law matters. That said, the transaction documents included a lot of provisions regarding Ukrainian matters, e.g., things that had to be done before completion in Ukraine and also various items to be dealt with post-completion in Ukraine. Apart from the usual SPA and related documents, there were also agreements dealing with various post-completion matters, where the target and the buyer agreed to co-operate on a number of matters post-closing, including completion of some ongoing processes such as transfer of material assets. 

CEELM: What’s the current status of the restructuring and sale? 

Anton: The restructuring has now finally been closed successfully and the creditors received either new debt and equity in the new group, or cash, if they so opted. Furthermore, following the restructuring the deal was signed to sell the Mriya group to SALIC.

Zoryana: The acquisition successfully closed on November 5. 

CEELM: What was the most challenging or frustrating part of the process for each of you? 

Anton: While the whole process was quite challenging, the most difficult part was to come up with an appropriate structuring solution which would achieve the commercial goals and work properly and with sufficient predictability across all jurisdictions. I believe the global structure in this project changed around four or five times, and within each global structure there were elements that had to be changed dozens of times. The legal teams took apart every restructuring instrument available under Cypriot, Ukrainian, and English law to see if it could be effectively applied to this transaction. Most of the times we would face either currency control issues, or tax issues, or untested procedures with unacceptable implementation risks or another issue or risk that made it impossible to use this or that element.

Zoryana: To me, this transaction is the most complex and challenging transaction I have done to date. This project was very non-static, from the due diligence stage and all the way till closing. 

CEELM: Was there any part of the process that was unusually or unexpectedly smooth/easy?

Anton: In fact, the execution process turned out to be unexpectedly smooth, which was because a tremendous amount of time and effort was put into the preparation process.

Zoryana: There were no easy parts in this process but working for an experienced/ sophisticated client like SALIC certainly made our life easier on this transaction. SALIC was familiar with the Ukrainian market before Mriya, so no lengthy explanations were required of even complex issues.

CEELM: Did the final result match your initial mandate, or did it change/transform somehow from what was initially anticipated?

Anton: Because the initial mandate was quite broad, in the end the result was exactly what we were engaged for.

Zoryana: The final mandate was nothing like what we anticipated, and overall, our involvement was greater than expected, especially at the stage of preparing transaction documents. 

CEELM: What specific individuals at Mryia Agro Holding directed you, Anton, and how did you interact with them?

Anton: We primarily communicated with Ton Huls, the group’s CFO, Sergiy Ignatovskiy, Chief Legal Officer of the group, and Chris Iacovides and Andri Antoniou, the joint liquidators of Mriya Agro Holding Public Limited.

CEELM: What about you, Zoryana, with SALIC?

Zoryana: We mainly worked with Alastair Stewart, Chief Financial Officer at Continental Farmers Group. Alastair would come to Ukraine quite often so we had a few personal meetings, which was very helpful in discussing many key, strategic matters. On a daily basis we interacted by email.  Alastair normally responded very quickly, which is great from the point of view of a lawyer requiring quick feedback from the client in order to be able to progress things.

CEELM: How would you describe the working relationship with other firms on the deal? 

Anton: We worked with Hogan Lovells a lot on this. Hogan Lovell Partner Alex Kay and his team were the ones who took the leading role in driving this restructuring forward. We also had regular communications with Latham & Watkins until the latest stage of the project, when they became less actively involved. L&W, representing another group of creditors (bank lenders), provided substantial input and alternative structuring ideas that helped to make sure that the restructuring was acceptable to all types of creditors. Most of the communications were done by phone or e-mail, with just a few meetings in person in Kyiv. We had a structured communication schedule, with weekly update calls among all the parties where major issues and status updates were discussed, following which everyone knew what they should be doing and follow-up communications took place within smaller relevant groups. It is difficult to establish a point where the “final negotiations” started, but you could say that finalization of the restructuring took a couple of months.

Zoryana: We mainly worked with Mriya directly, so there was not so much interaction with HL or SK. We did work a lot through Dickson Minto, who were the lead counsel on this matter from the buyer’s side. 

CEELM: How would you describe the significance of the deal to Ukraine? 

Anton: I believe this is a benchmark deal for the whole region, not only for Ukraine. It showed that even in such adverse circumstance, you can get an abandoned and sinking business afloat. We have heard mixed comments on the result of this restructuring, with skeptics saying that many creditors exited before the end of the restructuring and ultimately creditors suffered a loss. However, I believe that the starting point to determine the success or failure of the restructuring exercise should be the point of distress, where the risk was that the creditors would not receive anything at all. From this point, successfully restructuring the business of this size and complexity and selling it is definitely a successful ending.

Zoryana: Ukraine needs more deals like the SALIC/Mriya deal.  It sends a very good message to other potential investors who may be hesitant to do business in Ukraine. Agriculture is big in Ukraine so more investment in the agricultural sectors would, in my humble view, be good for the economy overall.

Editor’s Note: This article was changed slightly to reflect Zoryana Sozanska-Matviychuk’s December 2018 promotion from Counsel to Partner at Redcliffe Partners.

This Article was originally published in Issue 5.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In summer 2017, after Sejdiu & Qerkini Partner Korab Sejdiu was elected to the Kosovo Parliament, he suspended his law license and left private practice. We checked in with Sejdiu to learn more about his new role and experience.

CEELM: What is the position you hold in the Parliament? When did you assume it?

Korab: I joined the Parliament as a Member in June of 2017, taking the office in August of 2017.  I am currently serving my mandate as one of the 120 members of the Kosovo Parliament, which is formally called the Assembly of the Republic of Kosovo.  I am also a member of the Legislative Committee, which is one of the two key committees in the Parliament.  

CEELM: Were you selected or elected? Can you give us the details?

Korab: I was elected as a member of the Kosovo Parliament.  I ran for the seat as part of a pre-election coalition with the Democratic League of Kosovo, which is a center-right party, and is also the largest party in Kosovo.  Along with 24 of my other colleagues, we form the largest caucus in the Kosovo Parliament, however, we are now in opposition.  

CEELM: What does your work entail at the Parliament?

Korab: Along with representing my constituency, namely addressing matters that affect their lives the most, I am also a member of the Legislative Committee, where most of my work is concentrated.  As an attorney, I provide useful input in drafting and amending key justice sector legislation, and I am a constant member of working groups for said legislation.  However, considering that I ran during election on a four-pillared platform, I also participate in other committees’ work that impact youth, economic development, and the Kosovo diaspora rights.  Just as an example, I am chairing the working group for the amendment of the General Election Law, so to permit voting by our diaspora in our Embassies and Consulates across the globe.  Another example is my input in the Law on Business Organizations, which was passed along with my amendments in May of this year.  And on top of all that, I try to do my best to stay in touch with my electorate, through personal visits and social networks.  

CEELM: Is it for a specific term? Are you planning to return to a private practice?

Korab: Kosovo is a Parliamentary Republic, very similar to many countries you find across Europe.  In that vein, a Member of Parliament is elected for a mandate of four years.  However, should the Government fall before the four years expire, which normally causes the disbanding of the Parliament, then the mandate is cut short and extraordinary general elections are held.   

Regarding the second part of the question, it is still early for me to decide whether I am going to return to private practice.  I believe in due time, I will have the opportunity to decide whether I would like to continue with my public function, or to return to my law firm, which continues its successful work in Kosovo and beyond. 

CEELM: Why did you decide to make this (temporary) change? 

Korab: Kosovo, as a new country, has some substantial challenges, and the rule of law is probably the largest.  With that said, I believed that my experience as an attorney at law in the United States and Kosovo, would provide me with the necessary tools to contribute to addressing some of the major rule of law issues facing Kosovo today.  It was simply a call of duty to serve our country in the time of need, and I responded to that call by temporarily shifting gears and joining public service.  

CEELM: What is your impression of working in the Parliament?

Korab: Well, funny you ask.  It is very different from private practice, which is way more dynamic and more focused.  The Parliament work, but I think most public work, is much slower in the making, and the results are often not what you initially expected, because compromise is always part of the picture.  But luckily, my reputation among colleagues as an able legal professional, provides me with ample authority and support from all political parties when it comes to legal reform issues that I recommend.  Thus, the work is challenging, but when a success is reached, one gets huge satisfaction out of it because the result impacts so many people.  

CEELM: How did your colleagues react to the news? And your clients? Your family?

Korab: Well, my family and my law firm colleagues were supportive of the idea because they know my desire to help Kosovo during these foundational years of existence.  In fact, my wife is largely responsible for my success in being elected, because she was my personal campaign manager.  Thus, they did all they could to support me in this regard.  They did this because they knew that the reason why I departed my private practice and life in the United States and relocated to Kosovo was so to help Kosovo in its post-independence path.  And I have done so ever since 2007, in various capacities, and finally now, as a member of the highest institution in the country, the Parliament.   

Of course, the clients continue to be served by my law partner and firm associates, and they too are appreciative of the work I do in the public sector, because it is directed to reforming the justice sector, which helps everyone, including the clients I once used to serve. 

CEELM: Do you have specific projects/initiatives you’re promoting in your role in Parliament?

Korab: I am heavily involved in rule of law legislation that is part of Kosovo’s EU integration process.  Therefore, I take part in working groups for all laws that are required as part of this process, and provide valuable input thereto.  Moreover, this year, I am focused in amending the Law on General Elections, as noted earlier, that would permit our vast diaspora to vote in Kosovo Embassies and Consulates around the world.  I am also working on drafting legislation that would establish a Youth Informative Centre for Education Abroad, which would serve as a go-to center for our bright youth wanting to continue their bachelor, masters, or doctoral studies abroad.  Importantly, I just finished chairing the working group on the new Law on Courts, which needed substantial work and input on my part.  As part of this endeavour, we have made substantial strides in providing judiciary with the necessary tools to dispense fair and efficient justice, such as support staff, better organization, and etc.  

CEELM: In general, what are your feelings about what you’re doing?

Korab: I do enjoy the work I am doing.  Naturally, not being a career politician, I tend to get annoyed often by the political games that occur in the Parliament and the political spectrum in general, which I see as hindrance to actually implementing meaningful reforms.  But I try to navigate such murky waters with professionalism and by building trusting relationships with my colleagues, regardless of their political affiliation.  And this makes my work even more enjoyable.  I only get disappointed by the fact that we have so many limitations that prevent us from doing more, but as a new country, I have become aware that we have to also learn to be patient and understand that major reforms and development take time to occur.  

This Article was originally published in Issue 5.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

On March 9, 2018, CEE Legal Matters reported on the expansion of the European act legal alliance with the addition of Hungary’s Ban Karika law firm and Fort Advocaten from the Netherlands. With the alliance now counting 13 offices in Europe – including five in CEE – CEE Legal Matters sat down with Sven Tischendorf of act legal Germany, AC Tischendorf Rechtsanwälte to learn more about the alliance’s plans.

CEELM: Tell us a bit about act legal – what was the rationale behind the alliance, and why did you focus on the initial jurisdictions that you did?

S.T.: The rationale behind act legal is multi-fold. At the end of the day it was/is the clear intention of the alliance’s initiating firms to create a new and unique market segment that is highly attractive for all relevant stakeholders: (1) For our existing clients, regarding business which is currently not assigned to us; (2) for new clients from the individual act legal countries; (3) for US and Asian law firms who want to refer business – but not to a potential competitor; (4) for general counsels, tax advisors, and CPA companies as well as international management consultancy firms who want to refer business – but formerly felt a “mental” barrier to doing so; and (5) for potential talent and external hires.

Act legal’s aspiration is to be counted among the top commercial law firms in Europe and to offer the performance profile of a major international law firm while, at the same time, benefiting from the efficient structures of a boutique. This clearly differentiates act legal from other relevant players on the legal market. The combination of (individual) sizes and reputations under a new (joint) strong brand has already clearly resulted in a marked increase of market awareness and visibility. Rankings of all act legal firms in Legal 500, Chambers, JUVE, etc. have improved, reflecting the newly acquired strength. All the alliance’s firms are facing an increased number of requests for proposals for both cross-border transactions and for one-stop shop solutions for day-to-day legal business for international clients. And indeed, the average client basis generated since the launch of act legal shows a comparably higher blue chip factor than before.

Unlike many of the local state-of-the-art firms, the significant international footprint and the significant increase of “firepower” which we have gained through our foundation in 2017 has let us become a credible competitor to the major international law firms.

Unlike from many of the major international law firms, clients of act legal firms can rely on efficient structures, senior counselling based on entrepreneurial competence and commercial understanding, and direct partner attention.

Within just a year since its incorporation we have managed to grow to 13 offices in 9 countries in the economic heart of Europe – Austria, the Czech Republic, France (operating also a Brussels office), Germany, Hungary, the Netherlands, Poland, and Slovakia – pooling around 300 first-class corporate and commercial legal professionals. 

One of the strongest Spanish medium-sized firms will join on October 1, 2018, adding an office in Madrid with about 70 professionals.

Act legal has a clear roadmap. Geography and economy have determined the focus on the initial jurisdictions and are further determining its expansion. So, we have started in the heart of Europe with the clear intention to cover more or less all economically relevant countries in Europe within the next few years. The focus of act legal should be Europe, to be clearly distinctive and to build a strong marketing argument for clients, prospective clients, and foreign (in particular from the US and from Asia) law firms for referral work. Strong and effective support for clients outside of Europe is secured through a longstanding membership in one of the strongest international networks, which has around 60 prestigious law firms in all major business centers of the world.

CEELM: Can you describe the structure of the alliance? Is it a mandatory referral structure?

S.T.: The legal “constitution” is a Cooperation Agreement setting out all relevant principles of the Alliance, such as a unified trademark and market approach, the highest quality of service, joint budget, joint back-office, shared marketing, alignment of design and style, promotion of the alliance, conflict check, expansion, coordination of the Alliance, and so on.

The back-office functions and the IP (for example, the trademark) of act legal are operated/held through a joint legal entity in which each act legal firm holds an equal share.

Act legal sees itself as a highly integrated firm with a joint international market approach. In this kind of a structure, it is natural that the alliance’s firms in the various countries should always be preferred partners when clients require support abroad. But it is also natural that if in the interest of the client there are good reasons to ask outside firms for help, this is possible. Anything different would not be 100% professional – and we clearly stand for highest quality and 100% professionalism.

From the very beginning, we have set up the alliance quite professionally, with a powerful and dedicated Coordination Committee, a full-time Alliance Manager supported by a powerful back-office, regular all-partner meetings, various practice groups, interchanging of professionals, a unified brand, a common website (www.actlegal.com), joint marketing, joint pitching, to a large extent unified documentation (e.g. engagement letter, pitch documentation, power point master, stationaries, etc.) sharing of IT in terms of a common platform, joint social media tools and campaigns, constant exchange of ideas leading to adoption of best practices, synergies in purchasing, and so on.

CEELM: How are you integrated at this stage? Is formal integration expected down the road?

S.T.: Act legal was set up in two phases. Phase No. 1 is leaving member firms their individual styles and names – but connecting the various individual styles through an identifying brand and a unique design feature. Phase No. 2, which is expected to occur in the next two or three years, will align more things – however, the details will be agreed further down the road in line with certain principles already pre-agreed by all member firms in the Cooperation Agreement.

Due to the great success and acceptance of the act legal structure – and much earlier than originally envisaged – we are already somewhere between Phase No. 1 and Phase No. 2. However, legally, all member firms will continue to stay independent.

When clients approach act legal firms, they are already experiencing a highly integrated firm: a common website, an act legal engagement letter offering clients the choice of one bill or multiple billing, a unified brand, letterheads of the same style, very well-rehearsed cross-firm teams, one central “client partner,” cross-firm billing policies, cross-firm conflict checks, and very well-coordinated marketing and pitch approaches.

CEELM: How does management of the alliance work?

S.T.: Day-to-day affairs are run by the members of the Coordination Committee, the Alliance Manager, and her direct point of contacts within each act legal firm. Fundamental decisions are first discussed between the managing partners of all member firms and, if necessary, are then presented to the local partnerships for final decision. In addition, market activities/initiatives are regularly initiated by the various practice groups. In general, the management of act legal is very easy, business-oriented (with no politics), and efficient.

CEELM: We recently reported on the addition of a Hungarian and a Dutch firm into the alliance. Why these two jurisdictions in particular?

S.T.: Both jurisdictions clearly belong to the economic (and geographical) heart of Europe. So, it has been a kind of a “natural” evolution to add the well-known firms Ban Karika from Hungary and the Dutch Fort Advocaten. Due to the joint membership in the international legal network LAWorld most of the initiating firms had already successfully worked with Ban Karika for many years. With regard to Fort Advocaten the situation was different. Fort Advocaten had only once, but in a positive sense very memorably, cooperated in a challenging cross-border restructuring situation with AC Tischendorf, the German act legal firm. Following initial discussions with Fort Advocaten other act legal firms had sent up trial balloons with Fort Advocaten, leaving no doubt that it was in all respects a perfect fit for the alliance.

CEELM: How did you identify the firms to be included? 

S.T.: We have set very high standards for act legal firms. They must be full-service commercial firms, highly modern and fully invested. They must be market leaders among the medium-sized business law firms in their respective home countries with a first-class reputation. Act legal firms should serve a demanding local and international corporate clientele, private equity investors, entrepreneurs, and alike. Head offices must be in international centers of commerce. And last, but not least: they must have strong international exposure and a considerable number of the partners should have gained professional experience with international corporate law firms.

A comparable setup of all members is one of the key success factors of any joint operation. 

The initiating act legal firms from the Czech Republic (Randa Havel Legal), Germany (AC Tischendorf), Poland (BSWW), and Slovakia (MPH) had known each other and successfully worked together for many years through membership in the international LAWorld legal network. The Austrian firm (WMWP) and AC Tischendorf from Germany had come into contact in a different legal network, while the French/Belgium firm (Vivien & Associes) was one with which the members had no prior contact and was identified as a result of a careful due diligence on the French legal market. 

As part of the admission process, all act legal firms have undergone a thorough review on business philosophy, personality of partners, client basis, range of services, quality of work, KPI’s, age structure of the professionals, office space, etc., combined with multiple meetings.

CEELM: The alliance now has 13 offices in Europe – but none in the United Kingdom. Why is that?

S.T.: There is no secret about it. As I mentioned earlier, we decided to build act legal from the economical and geographical heart of Europe to outer Europe. And we have not yet fully covered the heart of Europe – we would see, for example, Italy and Romania more as a priority. But of course, act legal is open to a UK firm if the time is right and a perfect fit is identified.

CEELM: Is there a further expansion on the horizon? What markets are you contemplating/exploring and why?

S.T.: Sure. As I mentioned before, a superb Spanish firm is joining on October 1, 2018. Italy would be key to cover and we are currently exploring the Italian market. The same is the case for Romania as one of the fastest-developing Central European countries with a larger population. Switzerland is surely interesting. And the Nordics are also in our focus. Now you are perfectly familiar with all our secret expansion plans.

This Article was originally published in Issue 5.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The Deal: On April 25, 2018, CEE Legal Matters reported that Clifford Chance had advised Czech Media Invest on its acquisition of Lagardere’s sale of its radio businesses in the Czech Republic, Slovakia, and Romania. Herbert Smith Freehills and Wolf Theiss advised Lagardere on the deal.

Czech Media Invest is 50% owned by Czech investor Daniel Kretinsky – who also owns the EPH energy group – and 50% owned by Patrik Tkac and Roman Korbacka.

We spoke to Clifford Chance Prague Managing Partner Alex Cook about his team’s work on the deal.

CEELM: How did you and Clifford Chance originally become involved with Czech Media Invest in this matter?

A.C.: It was a pitch process. We know EPH well, have done a lot of their financing work, though less of their corporate work. The pitch came from one of our former finance colleagues who moved to EPH a year or two ago – I forget exactly when. We were approached with the RFP in November 2017 and instructed in February this year.

CEELM: At what stage in the process were you brought on board, and what, exactly, was Clifford Chance’s initial mandate?

A.C.: EPH tends to be quite hands on – they have a strong internal team – so our original remit was subsequently reformulated to DD support in Poland and Romania and SPA support on French law issues through our colleagues at CC Paris.

CEELM: Who were the members of your team, and what were their individual responsibilities?

A.C.: Stanislav Holec in Prague acted as overall coordinator and interface with the client. Additional team members included Partner Laurent Schoenstein and Counsel Xavier Petet in Paris (French law SPA); Counsel Krzysztof Hajdamowicz and Associates Zuzanna Potoczna and Aleksandra Wlaszczuk in Warsaw (Polish DD, merger filing); and Counsel Mihai Macelaru and Associates Radu Costin and Claudia Grosu in Bucharest (Romanian DD)

CEELM: How was the transaction structured, and how did you help it get there?

A.C.: Czech Media Invest acquired certain affiliates of Lagadere Active Radio International SAS. The structuring of the transaction was done primarily by EPH internally.

CEELM: How long did the process take, overall?

A.C.: It was a relatively quick process, certainly as far as our involvement was concerned. The deal was signed in April, only two months after we were instructed – although clearly commercial discussions had been ongoing for longer.

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

A.C.: Nothing really – frustrating that the client did a lot of the work themselves!

CEELM: Was there any part of the process that was unusually or unexpectedly smooth? 

A.C.: It was smooth from the point of view of being quick – a focused, commercially driven transaction.

CEELM: Did the final result match your initial mandate, or did it change/transform somehow from what was initially anticipated?

A.C.: See above – our scope of work reduced as the client team did more of the work.

CEELM: What specific individuals at Czech Media Invest directed you, and how would you describe your working relationship with them? 

A.C.: Although the client did a lot of the work themselves we developed an excellent relationship (and have since been instructed on a larger deal where our involvement will inevitably be greater). The deal was primarily done over the phone as far as our role was concerned; the client did much/most of the negotiating and transaction document drafting themselves.The client was pleased about our responsiveness, particularly close to signing when our team was always available at short notice.

CEELM: How would you describe the significance of the deal in the Czech Republic, Poland, and the region?

A.C.: Quite limited, to be honest.

This Article was originally published in Issue 5.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Freshfields boasts of its “international mobile lawyers” – but, in this part of the world, few are as international or mobile as Freshfields’ Partner Sebastian Lawson.

In 1987, 15-year-old Sebastian Lawson arrived in Prague as part of a school trip – his first venture behind the Iron Curtain – and discovered the “wonderful other world” the English teenager had previously known almost nothing about. 

“Prague was a complete revelation,” Lawson recalls with a smile. “A wonderful medieval city. Nothing was as I imagined – I was completely captivated by the cultural and historical aspects and the beauty of the city, but also the classical and jazz music.”

Back at school, Lawson’s passion for Central and Eastern Europe was encouraged by his instructors, many of whom had personal ties to the region. One of his Russian teachers, he recalls, had escaped a collapsing Russian monarchy in the early decades of the 20th century. “He was around his seventies or eighties when he taught me,” Lawson says, “having come from a Russian aristocratic family, his family having fled Russia (with my teacher hid under a cabbage-leaf on a horse-drawn cart), and lost all their money – he really had a remarkable life.” With teachers encouraging his interest, Lawson was eager to learn more about Russia’s culture and literature, which he described as “seeming simultaneously exotic and yet quite familiar.”

In 1990, after the Berlin Wall had fallen, and with revolution in the Eastern European air, Lawson, then a first-year student at Oxford, responded to his university’s call for volunteers to teach English in Romania. He went to Bucharest that summer – and then again the next – and then returned in 1994 yet again to conduct research for his Master’s thesis on the politics of Romania and Moldova.

Ultimately, Lawson’s youthful affinity for the cultures, languages, and lands of Central and Eastern Europe set his path. Almost thirty years later he is now a widely-respected Partner at Freshfields Bruckhaus Deringer, speaks English, French, German, Romanian, and Russian, has spent the better part of one decade lawyering in Romania and the better part of another in Russia, and he has worked on many of the largest deals in CEE and CIS. The student of CEE’s cultures and languages, who has recently relocated again to Vienna, is a familiar face across the region.

Lift-Off: A Different Plan

Surprisingly, looking back on a successful career with one of the best-known and highest-regarded law firm brands on the planet, Lawson admits that the law wasn’t his first choice. “When I was at school and university, I never considered law, to be honest,” he admits. “My hope was to stay at the university and do a Doctorate in East European politics and economics, but then I did a Masters and found academic life a bit restricting.” He decided to replace his original plans with, as he says, “something less limited, but equally intellectually challenging.”

Still, even within the law, there was little indication early on that Lawson’s career would take the path it did, as he started with Freshfields in the early years of the 21st century with a resolutely English (and non-transactional) practice. “I was just another City of London lawyer,” he laughs, pointing out that “being a corporate tax lawyer is one of the least international practices you can have as a lawyer.” Still, and resolutely cheerful, Lawson describes those early years as “interesting and enjoyable.”  

A couple years later, Lawson came across an open call for lawyers to join a different Magic Circle firm in the Romanian city he had spent several summers in during his studies. “When I became a tax lawyer, I did not really expect to be working overseas,” he says. “Certainly, to see an advert from Linklaters seeking a lawyer to join the office in Romania was a huge surprise.”

Intrigued and encouraged, Lawson made some inquiries, received an offer, and spent 2003 and 2004 as part of Linklaters’ legendary Bucharest-based CEE “Flying Team.” 

At the end of 2004, however, he agreed to return to Freshfields, to help build up the firm’s practice in South-Eastern Europe. Although the firm had no office in Bucharest Lawson stayed there, making weekly commutes to the firm’s nearest office in Budapest.

Stage Two: Settling in CEE

In the first decade of this century Romania was ramping up to join the EU (it eventually did so in 2007), and business was thriving. “There were numerous opportunities for privatizations, large investments in the banking and energy sectors, and growing interest of investors from the West,” Lawson recollects, while hastening to note that business was growing in Bulgaria and the former Yugoslavian markets he covered as well.     

Nonetheless, competition was fierce, and Lawson faced the challenge of Freshfields having less of an on-the-ground CEE presence than many of the firms he was competing against. “We were not always well-known, and persuading people that even without having a local office we could add value to projects in the region was not always easy,” he says.

In 2009, after five years working outside the firm’s office network, Lawson returned to London, timing his return with his promotion to the firm’s partnership.

Stephen Revell,  now a Senior Corporate Partner in Freshfields’ Asia practice, has known Lawson from the Oxford graduate’s earliest days in the firm’s London office, and who became a good friend of Lawson, says his candidacy was an easy call. “I was a very strong supporter of him becoming a partner at Freshfields. I think Seb is an extremely good lawyer who is always rigorous in his approach. He is always willing to really understand the local law and to get involved in the analysis with local lawyers – as a result he brings to bear his experience from not only the UK, but all of CEE and CIS.” 

Once Again Into the Breach: Moving Back to CEE

After two years back in London, Lawson once again packed his suitcase and moved to Freshfields office in Moscow. He remembers adapting to life in the Russian capital as a wholly new experience. “I was overwhelmed,” Lawson says of his first months in Russia. “The scale of Moscow … the city is much greater than anything you find in Eastern Europe. The work that we do in Moscow is not fundamentally different, but the cultural shock you get when you arrive in Moscow has its impact.” As a result, he says, it took him several months to adjust to the new environment. 

Lawson found Russian clients different from those he had been working with in the UK as well, though he insists “not in a negative way.” According to him, “they are intelligent, quick, and sophisticated, and they challenge you to think about the basic first principles on how you do a deal.” Whereas in London, he says, where the long history of practice means that basic advice is rarely questioned, “in Moscow you can expect clients not to accept the argument that ‘we do this because we have always done it like this.’ You always need to be much more thoughtful when you are dealing with Russian clients.”

Lawson eventually spent six years in Moscow, working with clients such as Rosneft, Russian Railways, and many private Russian companies, including a number in the steel industry and transport sector. As the head of Freshfields’ English-law corporate practice in Moscow, he also advised international investors on opportunities in Russia. 

Even then, Lawson’s practice was not limited to Russia, and Revell, who moved to Hong Kong about the same time Lawson moved to Moscow, recalls many of the deals the two worked on in various emerging markets. “He and I have worked in many countries across the region: we worked on IPOs and M&As in Kazakhstan, IPOs in Serbia and Croatia, M&As in Bulgaria, a project in Lithuania … the list goes on.” 

Vienna Calling: From the Land of the Tsars to the Land of the Hapsburgs

Several years later, however, Western sanctions imposed against Putin’s Russia in 2014 took a toll on incoming investment into the country, which the simultaneous drop in global oil prices exacerbated. As a result, the Russian legal market became more domestic in nature, and although Lawson says some deals are still done under English law, “now it is more common to have Russian clients on both sides of the table,” which reduces the need for expatriate involvement. 

Thus, it was decided that having one of Freshfields’ key CEE/CIS experts based in Moscow made little sense in the current situation, and Lawson moved to Vienna in January 2018. Freshfields Partner Willibald Plesser, who co-heads Freshfields’ CEE/CIS group, had been instrumental in bringing Lawson back to the firm from Linklaters in 2004, and was so again in encouraging Lawson to join him in Vienna this year. He expresses enthusiasm about finally being able to work in the same office as his long-time friend and colleague, describing Lawson as a “great negotiator and an excellent jurist with a good analytical mind,” and reports that he has “the highest respect for him.”

And Lawson believes that joining Freshfields in Vienna – an office the firm has built up over the course of many years as the regional hub for CEE and CIS countries – fits his practice well. He says, “I don’t want to be limited to one particular market, instead of working throughout the region and following the deals. Having a base in the Vienna office is very important for me. The ability to be in the same office as my finance or arbitration colleagues is helpful and good for me and my clients.”

Lawson sees many similarities between the city he’s now based in and the one he recently left, describing both post-imperial cities as having a rich history, providing cultural facilities that few others in Europe can match. But he doesn’t deny the significant differences. “Business here has a clear strategy,” he says, “and though the Austrian market is small on its own, everybody is outward looking. Moscow is a much more inward looking place.” Indeed, while imperialistic glories of both countries are a thing of the past, he says, “Moscow hasn’t come in to terms with that yet, while Vienna is much more at ease, as it adjusted to its new circumstances a long time ago, and is much more comfortable in its own skin.” This comfort is noticeable in other ways as well, he says. “People in Austria have a very fine sense of work/life balance,” though he admits with a laugh that “I don’t think I have found it yet.”

In addition, Austria’s relative proximity to the UK matters as well, as it allows Lawson to stay more closely connected with his two young children back home. “When I was in Moscow, I travelled back to see them usually every other weekend – and now I travel back every weekend.” It’s not the ideal solution, perhaps, but he looks on the bright side. “I am very lucky with modern technology. It’s not completely easy, but I Skype with them every evening, and in terms of time that we spend in video conferencing, it is probably more than I would spend talking to them if I were burning the midnight oil in our London office.”

Conclusion

It is probably premature to predict Lawson will be in Vienna forever, but he insists he expects to stay. And he reflects with pride on the practice he’s created in this part of the world. “I think it is incredibly important to lawyers to understand the countries where they operate,” Lawson says. “The culture, the history, and the politics: without understanding all of these things intimately, you won’t be able to give the same quality advice to your clients. It is partly having that background knowledge, but it is also partly having the enthusiasm and the excitement to do the job. I find my job incredibly interesting, and I think I made the right career decision. Combining it with the countries I find so interesting makes it a dream career for me.”.

This Article was originally published in Issue 5.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The Deal: On October 4, 2017, CEE Legal Matters reported that Dentons’ Bratislava office had advised CNIC Corporation Ltd., an investment company owned by the Chinese government, on its acquisition of Prologis Park Galanta-Gan in Slovakia – which Dentons described as “the largest logistics asset, both by area and investment volume, ever sold in the CEE region” – from Prologis, and that Kinstellar had advised Prologis on the deal.

The Players:

• Counsel for CNIC Corporation: Martin Mendel, Partner, Dentons Bratislava
• Counsel for Prologis: Roman Oleksik, Partner, Kinstellar Bratislava

CEELM: Roman, how did you and Kinstellar originally become involved with Prologis in this matter?

R.O.: We’ve been advising Prologis since they entered the Slovak market back in 2006. We’ve been involved in many interesting and challenging transactions with the Prologis team over the years. We had just finished assisting them with the sale of the logistics park in Nove Mesto nad Vahom [to Arete Invest – ed.] at the beginning of 2017. The Prologis team was happy with our work and it was probably natural for them to approach us with the Galanta transaction.

Our mandate was clearly defined from the very beginning and included assisting Prologis with the set-up of the data room, answering questions of the buyer related to the due diligence, negotiating all transaction documents, as well as assisting it with signing and closing.  

CEELM: Had CNIC already expressed its interest in Galanta-Gan before you were retained, or did you actually help Prologis find CNIC?

R.O.: No, we were not involved in finding CNIC and we are not able to say when exactly CNIC expressed their interest in the transaction.

CEELM: Were you tasked with assisting in negotiations over price and other terms?

R.O.: No, we were not asked to handle the business terms of the transaction. Our involvement was limited to negotiating the legal text and assisting the client with the business decisions which arise during such negotiations.    

CEELM: What about you, Martin? How and when were you and Dentons brought on board?

M.M.: We were requested to prepare our fee proposal on Friday, April 7, 2017.  The client sent its request by e-mail at 9.00 am in the morning and asked for our proposal on the very same date. Thanks to our marketing department and very swift response by our Managing Partner (Peter Kubina), who received the initial e-mail, we were able to clarify the main points of the client request and prepare our fee proposal that same day. I understand that the client requested fee proposals from various international law firms in Slovakia. After an initial review by the client our fee proposal was finalized on April 11, 2017 and we met the client on April 24, 2017 to present our fee proposal and our team. The client made its decision after the personal meeting. Next day, we were already discussing the time plan of the transaction and our services. 

Our initial mandate was pretty standard – to perform legal due diligence and to prepare/revise transaction documentation and advise the client in negotiation of the contracts. 

CEELM: Who were the members of your teams, and what were their individual responsibilities?

R.O.: I led this transaction on behalf of Kinstellar. In addition to being the supervising partner on this matter, I was actually engaged in almost every single document exchanged on the matter and thus did a very hands-on job for the client. The team had strong support in Miroslav Kapinaj and Michaela Nemethova, as both are very talented and hardworking lawyers.   

M.M.: Our team consisted of five people. I led the team and dealt with day-to-day issues both for the due diligence and the transaction. Finalization of the transaction took much longer than initially contemplated – ten weeks (the purchase price was paid to the sellers on Oct 13, 2017 (nearly five and half months after we commenced our work)) – so we had to deal with substitutions. During my absence, Miroslava Jesikova was the main contact for the client in negotiating the shares purchase agreement and escrow agreement. Tatiana Mergesova also worked on the transaction – in particular she drafted and negotiated various documents and agreements executed by the parties at the signing meeting in addition to the main share purchase agreement. Both of them also did due diligence, with Miroslava reviewing lease agreements and Tatiana examining documents related to title of SPVs to real estate (land and buildings in Galanta). In addition, Katarina Pecnova reviewed corporate documents provided in the data room.  

My involvement in legal due diligence was limited to guidance (if and when needed) and the final revision of the due diligence report before we sent it to the client. The final member of our team, Peter Kubina, monitored the project and became involved when strategic decisions were needed.

CEELM: How was the transaction structured, and how did you help it get there?

R.O.: The transaction was structured as a share deal – sale of shares in four entities of Prologis. The purchase price was transferred to an escrow account and paid to the seller after the share transfer was registered in the Commercial Registry.

M.M.: The transaction was a quite standard share deal in which six Dutch and Luxembourg sellers entered into a long form share purchase agreement with a Luxembourg purchaser. The same parties entered into an escrow agreement with UniCredit Bank in Slovakia. And finally, on the very same date, the parties executed also short form transfer agreements that were registered with the Commercial Register.   

CEELM: How long did the process take, overall, from your first contact with your clients until signing?

R.O.: We were approached by Prologis in March 2017. The deal was signed in September 2017. It was probably not my fastest transaction, but given the size and importance of the deal, it went relatively fast.

M.M.: Our work started on April 25, 2017 when we had kick-off meeting with CNIC. The share purchase agreement was signed on September 25, 2017. That means it took five months to get there.

CEELM: Roman, you describe it as not being particularly fast. Why was that? We’ve heard that Chinese investors require more time, usually, than local investors, to get the necessary approvals and authorizations. Was that why?

R.O.: The deal was quite big and it is probably not surprising that it took longer to close. Moreover, the negotiations continued during summer vacation season which usually has impact on timing. Of course, CNIC had to obtain all internal approvals. I do not have insight into how such internal approval procedures worked, but I did not have the feeling that they were unusually burdensome or delayed.     

CEELM: What would you each describe as the most challenging or frustrating part of the process? 

R.O.: I do not think that there was any feeling of frustration in this transaction. Of course, negotiations were not always easy, but in my view they were fair, productive, and to the point on both sides. As often is the case in such deals, the challenge was to meet the deadline for signing agreed by the parties. There are always last minute changes, some documents are missing apostille, and so on.

M.M.: The difference between the legal systems and cultures of (i) our client and the sellers on one side, and (ii) our client and the Slovak jurisdiction – the jurisdiction of the target companies – on the other side meant that we had to spend more time explaining certain specifics of the transaction and the Slovak legal system (for example, the mandatory use of electronic mailboxes by legal entities and the legal risks related thereto).

CEELM: Was there any part of the process that was unusually or unexpectedly smooth? 

R.O.: Prologis logistics parks are valuable assets.This results from a combination of factors: location, quality of construction, no compromises when it comes to management services, a very good portfolio of tenants, balanced lease terms, and professional legal support from the outset. Therefore, it is no surprise that the structure of the transaction did not involve any changes. I think that the outcome of the due diligence was more than satisfactory for the buyer. There was no need to implement any additional material measures to improve the shape of the assets or negotiate any complex conditions precedents or conditions for the release of the purchase price. All this allowed the parties to proceed with the registration of the transfer of shares immediately after the signing and timely payment of the purchase price.

M.M.: Thanks to the smooth cooperation with Kinstellar, discussion of due diligence findings and arranging for remedies was extremely swift and needed nearly no client involvement.

CEELM: Did the final result match your initial mandate, or did it change/transform somehow from what was initially anticipated?

R.O.: There were no material changes in the scope of the mandate and so we were more or less able to stick to our original fee estimates.   

M.M.: We performed our original mandate to the full extent and we had to do much more than that. We advised the client on establishing the entity in Luxembourg that was used as a purchaser, we cooperated with tax advisors in order to explain the distribution of net profit from Slovak SPVs in relation to the “company in crisis” concept of the Slovak Commercial code, we assisted the client in obtaining residency permits in Slovakia, and so on.

CEELM: What specific individuals at Prologis directed you, and how would you describe your working relationship with them? 

R.O.: Ildiko Kollar [Legal Counsel CEE at Prologis – ed.] supervised all legal aspects of the transaction. Daan van den Hoven and Martin Polak [Prologis Vice President Transactions, Europe and Prologis Senior Vice President – ed.] took the lead on the commercial side of the deal. The Prologis team are of a type that never loses sight of all pieces in a transaction (including all legal aspects). They are able to communicate with their external counsels in an effective way, understand the legal issues at stake, and take the most appropriate commercial decisions (without the need to accuse their lawyers of making their lives difficult or the transaction more complicated).

M.M.: I worked with Siwei Kirk Lai, project manager at CNIC Corporation. Our cooperation was very intensive. In addition to a regular exchange of e-mails, it was not unusual to have three or more phone calls a day. Kirk was working very hard to have the deal closed and despite the time difference he responded to e-mails anytime, as if he never slept.

CEELM: Roman, how would you describe the working relationship with your counterparts at Dentons on the deal?

R.O.: We made our fee estimate subject to the assumption that the buyer would be represented by a law firm that not only understood how to run complex transactions, but also had a real grasp of the particular issues in the local real estate market. I can confirm that the qualities of the local Dentons team were in line with all our assumptions. Another aspect which I personally appreciated is that Dentons has no urge to decorate their meeting rooms with the scalps of the lawyers representing the other side. This allowed us to concentrate on real issues. It was a great pleasure working with Martin Mendel and his team. 

CEELM: And Martin, what are your feelings about working with your counterparts at Kinstellar?

M.M.: Kinstellar and especially Roman Oleksik demonstrated extremely wide experience in transactions of this type. Despite the complexity of the deal, Roman’s approach significantly helped to negotiate all transaction documents in a very effective and professional way without needing to play a “game” for the client, pretending a fierce fight between lawyers to earn their fees. It was really a great pleasure to work with Roman and I look forward to having such an opportunity again.

CEELM:  How would you describe the significance of the deal in Slovakia, and the region?

R.O.: Is the purchase of Galanta logistics parks by CNIC part of One Belt One Road initiative run by China? – one can only speculate. In any regard, I believe the transaction has an important place in the development of economic relationships between CEE and China.      

M.M.: The deal proves that a balanced project (technically and commercially) in Slovakia has no problem in attracting investments from any part of the world.

This Article was originally published in Issue 5.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

English lawyer Christopher Noblet has been based on Hogan Lovells’ associated Budapest office since 2000 and leads its transactional and real estate team in Hungary. He studied law at King’s Kollege London.

CEELM: Run us through your background, and how you ended up in your current role with Hogan Lovells in Budapest. 

C.N.: I first came to Hungary back in 1989 as part of a gap year, just before the fall of the Iron Curtain, and it was then that I met my wife-to-be and my love of Hungary began. I then trained and spent my first years as a lawyer in the Hogan Lovells London office (Lovell White Durrant as it was then known) and when the firm opened its Budapest office in 2000, there was a possibility to come to Budapest on a secondment. So I came to Budapest, my secondment was extended, and now here I am 18 years later. 

CEELM: Was it always your goal to work abroad? 

C.N.: During my youth I spent quite a bit of time visiting family outside the UK as well as my time in Hungary. This certainly opened my mind to the opportunity of living and working abroad. 

CEELM: Tell us briefly about your practice, and how you built it up over the years. 

C.N.: My practice is basically a transactional one, which has developed on the one hand through relationships with Hogan Lovells’ firm-wide clients here in Hungary and on the other through building relationships with clients in Hungary and CEE region. I have also combined this with an active participation in the British business community – for example through the British Chamber of Commerce in Hungary (BCCH), where I am currently the longest serving member on the BCCH council.

CEELM: What do your clients appreciate most about you? 

C.N.: I think it is important to be able to provide prompt, clear, and concise advice, and to be proactive as far as possible in assisting clients. This is what I try to do. It is also critical to understand the local background and this is one of the reasons that led me to qualify as a Hungarian lawyer as well while I have been living here.

CEELM: Do you find Hungarian clients enthusiastic about working with foreign lawyers, or – all things considered – do they prefer working with local lawyers? 

C.N.: I have always found Hungarian clients enthusiastic working together with non-Hungarian lawyers. I think for most though the essential point is having a lawyer who can effectively help them with their legal needs whatever their nationality.

CEELM: There are obviously many differences between the Hungarian and English judicial systems and legal markets. What idiosyncrasies or differences stand out the most? 

C.N.: People often like to emphasize the differences between legal systems, however, I think there are often more similarities than may first meet the eye. Frequently our role is to demystify these apparent differences and help people realize they may actually be saying the same things, perhaps just from another perspective. 

CEELM: How about the cultures? What differences strike you as most resonant and significant? 

C.N.: There are clearly differences between the two cultures, but there is actually much linking the two. Both countries have such a strong cultural heritage. They also share long, rich histories with a historic reputation for hospitality.

CEELM: What particular value do you think a senior expatriate lawyer in your role adds – both to a firm and to its clients? 

C.N.: Given the increasing use of UK/US style contracts and concepts in CEE, a lawyer with experience from such a jurisdiction is able to bring a knowledge of how this works in practice. What is also beneficial for a client is where the lawyer at the same time has a deep knowledge of the local market and expectations and is able to combine the two.

CEELM: Do you plan to return to the UK at some point? 

C.N.: I have no plans to return, as Hungary is home for me and my family.  

CEELM: What’s your favorite place to take visitors in Budapest? 

C.N.: The castle district. The views over all compass points of the city and over the Danube always impress visitors.   

This Article was originally published in Issue 5.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

On January 11, 2018, CEE Legal Matters reported that Dentons advised the London branch of UniCredit Bank AG and MUFG as coordinators on a EUR 750 million revolving credit facility provided by a group of 13 banks to MOL Plc, the Hungarian multinational oil and gas company. CMS advised MOL on the deal, which represented the largest financing deal in Hungary in 2017.

We reached out to both firms for more information.

The Players:

•  Counsel for the Lenders: Gergely Horvath, Partner, Dentons Budapest 

•  Counsel for MOL Plc: Erika Papp, Partner, CMS Budapest

CEELM: Gergely, how were you and Dentons selected initially by UniCredit Bank and MUFG?

G.H.: Our Hungarian team (currently at Dentons, formerly at White & Case) has been a trusted legal advisor of the MOL group for over a decade, advising the company or its financing banks (including UniCredit Bank and MUFG) on a number of such transactions several times since 2005. With excellent support from Dentons’ London office, the excellent relation has been maintained and strengthened in recent years.  

For this matter, we were selected in a competitive procurement process at the beginning of Q4 2017.

CEELM: Erika, how about you? How did you and CMS become involved in this matter? 

E.P.: In the Hungarian market we believe it is very prestigious to work for MOL, especially on their financing matters, so we were keen to get involved with their financing projects. Eventually our work paid off and last year we were appointed for the first time and this year the second time. It was a great acknowledgement of our work on the first transaction that MOL came back to us and selected CMS for another project too. They involved us very early – i.e., not just in the documentation phase, but even in the term sheet phase, which MOL always negotiates bilaterally.

CEELM: At what stage in the process were you each brought on board and what exactly was your mandates when you were retained?

G.H.: We were engaged by the banks once the term sheet was principally agreed. We assisted the banks during the negotiations with MOL and their legal counsel and in the course of signing of the facility agreement.

E.P.: We were asked to assist MOL on the term sheet, which is, as I mentioned, not the documentation phase but the bilateral negotiation phase. This is especially interesting for lawyers because you can see the dynamics of the negotiation between MOL and its financing banks. We assisted MOL in putting the main terms of the commercial deal in place before we started to draft the finance documents. 

CEELM: Who were the members of your teams and what were their individual responsibilities? 

G.H.: I, being the relationship partner for both MOL and UniCredit, led the transaction from Budapest and coordinated the Hungarian legal aspects of the financing, and I was the main point of contact at Dentons for our clients. As the governing law was English, our local team was supported by a senior legal team from our London office, led by Partner Lee Federman, who has been involved in multiple financings for the MOL Group in past years and is intimately familiar with recent developments in the international markets and the LMA standards.

E.P.: Our English law legal advisor was Simon Dayes, an English-law qualified partner in Bucharest. 

I assisted MOL in generally coordinating the deal, looking at Hungarian legal aspects and keeping contact with MOL since I am based in Budapest and I have a longstanding relationship with the MOL treasury team. 

CEELM: How was the transaction structured and how did you each help it get there?

G.H.: The new facility was arranged as a club deal with a group of MOL’s relationship banks. It has a tenor of five years (with two one-year extension options) and can be drawn in both euros and US dollars. This new Agreement replaces the EUR 561 million tranche of the original EUR 1 billion 2011 revolving credit facility, on which we also advised the banks. 

As the current Facility Agreement and related documents were based on the existing benchmark documentation of a revolving credit facility agreement dated from 2016 our work was less substantial as compared to other financing transactions where we have to start from scratch. 

E.P.: MOL transactions are usually very well prepared and there is not much to negotiate. MOL is in a strong position and they have long-standing relationships with their financing banks so the lawyers’ role is not very significant. Obviously on both sides there are lawyers – both the banks and MOL are always represented by international law firms – and they make sure that every detail is correct, but we do not have to play a very active role in these transactions in light of MOL’s strong position on the financial market.

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

G.H.: As we were advising UniCredit Bank AG, London branch and MUFG as coordinators of the credit facility provided by a group of 13 international banks; the most challenging part of the matter was aligning the interests of all the banks involved in the transaction, along with time, as the transaction was completed within two months from kick-off. 

E.P.: These deals always involve a very high value and because of that a lot of banks need to be involved in them. The typical syndicated loans of MOL are subscribed by over 10 banks – both Hungarian and foreign. The most challenging part of the process is to communicate with the two coordinating banks and MOL and to organize meetings in a way that allows everyone to participate and to ensure that all of the banks’ interests are aligned and harmonized.

CEELM: Was there any part of the process that was unusually or unexpectedly smooth?

G.H.: Since we have advised the MOL Group for over ten years regarding their financing we knew quite well what was expected from our side within the transaction. MOL has a very good in-house team and is always advised by top-tier lawyers so their transactions usually flow much smoother and close quicker than the market average. 

E.P.: A finance transaction – especially syndicated financings – are long transactions with several participants. For this reason these deals usually take two, three, four, or sometimes even six months, just because of the sheer number of participants. But with MOL, they always make sure that their deals close really fast. On this particular deal I think there was not more than three or four weeks between kick-off and signing. It always requires an extraordinary amount of organization to achieve this short completion time. This was partly due to MOL’s treasury team and we would like to think that it was also partly due to the two law firms involved.

CEELM: Did the final result match your initial mandate or did it change somehow from what was initially anticipated?

G.H.: Our mandate did not change throughout the transaction, it stayed the way we agreed and signed our engagement letter. 

E.P.: We think that the final result matched our original mandate because everything was on track. Everything happened very fast and smooth. 

CEELM: Gergely, who at the banks directed you, and how would you describe your working relationship with them?

G.H.: On the banks’ side, the coordination was done primarily (and perfectly) by Richard Daniell (Director of Syndications, Debt Capital Markets – Loans and Bonds, Investment Banking Division for EMEA at MUFG) and Jana Petkova’s team at UniCredit London, including, inter alia, Peter Czajkowski, Ivana Kojic, and Paula Hryckowiak.

We have a longstanding working relationship with UniCredit, having advised them on many other matters in Hungary and CEE. We have had less experience in the past with the team of MUFG, but naturally I can only compliment them as well as they are very professional and well-prepared, as were all the other banks who were involved in the transaction. In these types of financing transactions we are primarily in contact with the in-house lawyers and the financing team of the banks who are all experts in their field. 

CEELM: Erika, what individuals at MOL directed you and how would you describe your working relationship with them?

E.P.: Both the lawyers and the financing experts of MOL were involved in the deal and we got instructions from both the legal and the treasury teams. We know this team quite well and we like to work with them. Also it was very easy to have a good working and personal level relationship with them because they are good communicators – very much to the point and easy to work with. Apparently the oil and gas sector attracts women and these transactions was done by an all-women team. I could say that both Simon and I enjoyed working with them.

CEELM: How would you describe the working relationship with your counterparts on the deal?

G.H.: Erika and I are ranked amongst the few Band 1 individuals in Banking & Finance in Hungary according to a prominent guide. I’m always happy to work with Erika and her team at CMS, as she is a very clever and respected banking lawyer who I trust. Naturally we know and respect our colleagues at CMS, as this was not our first encounter across the table from them on a financing transaction. 

E.P.: This is not the first MOL financing we have worked on with Dentons so we feel that we know each other quite well and know what to expect from each other. We have a good working relationship with this Dentons team. 

CEELM: How would you describe the significance of the deal in Hungary?

G.H.: This was the largest financing deal in Hungary in 2017, and we are delighted to have advised UniCredit and MUFG on it. The new facility will serve to further enhance MOL’s financial profile and liquidity position.

The size of the deal shows that international banks have trust in the Hungarian market and these type of deals can also act as examples for other companies looking to finance their operation by international financial institutions. 

E.P.: Syndicated financings of this type will occur only two or three times every year in Hungary. The deal size was 750 million euros, which is not a number that you often see on a finance document in Hungary. In the London market these deals happen every day. But in Hungary this is rare and therefore very prestigious to be involved in. 

This Article was originally published in Issue 5.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.