Category: Deals and Cases

CMS has advised iCotton, a manufacturer of hygiene products in Eastern Europe, on its acquisition of a controlling 59.95% stake Harper Hygienics from Polish Enterprise Fund V, a private equity fund managed by Enterprise Investors. Gessel advised the sellers on the deal.

Founded in 1990, Harper Hygienics is a Polish producer of skin care products. Since 2010, it has been listed on the Warsaw Stock Exchange. It has a workforce of over 500 people, and its revenue for Q1 through Q3 2016 was PLN 155 million. Harper Hygienics’ main product is Cleanic cotton pads. iCotton is based in Latvia and has a distribution network in Ukraine, Belarus, Kazakhstan, Moldova, Tajikistan, and Uzbekistan, as well as a production facility in Latvia.

Active since 1990, Enterprise Investors is one of the largest private equity groups in Central and Eastern Europe. It has established eight funds with combined capital of over EUR 2 billion. The various Enterprise Investors funds have invested over EUR 1.7 billion in 137 companies from various sectors and effectuated 120 exits, achieving gross revenue approaching EUR 3 billion.

“This transaction is perfect evidence of a business development strategy that is based on the acquisition of favorably valued assets,” said Rafal Kluziak, responsible for the project at CMS. “In experienced hands, transactions of this kind can be a very effective tool for expansion into new markets, as the purchaser can benefit from a well-established brand and the existing potential of the purchased company, as well as its client portfolio.”

Kluziak was supported by CMS Senior Lawyer Julita Mazurkiewicz. The firm’s team also included Lawyers Jakub Szczygieł and Karolina Stepaniuk from the Corporate/M&A Department, Senior Lawyer Michał Lisawa from the labor law team, Lawyer Adriana Zdanowicz in the intellectual property protection and new technologies team, and Kyiv-based Partner Olga Belyakova and Moscow-based Partner Maxim Boulba. The Supervising Partner on the project was Michal Pawłowski, from the firm’s Corporate/M&A Department, who heads CMS’s capital markets team in Central and Eastern Europe.

The Gessel team working on this project was supervised by Managing Partner Marcin Macieszczak and was led by Advocate Karol Sokol, with input by Bartłomiej Wozniak and Michał Osowski. The firm previously advised PEF on its acquisition of a 75% stake in Harper Hygienics in 2004 and the remaining 25% in 2007, and on Harper Hygienics’ IPO in 2010.

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Slaughter and May has advised Attarat Power Company (APCO) and project sponsors Eesti Energia AS (EE) and YTL Power International Berhad (YTL) on the construction and project financing of a 554MW gross oil shale fired mine mouth power station and open cast oil shale mine in Attarat um Ghudran, Jordan.

Financial close of the USD 1.582 million 15-year debt facility, which comprises the entire senior debt requirement for the project, was achieved on March 16, 2017.

Slaughter and May also advised on the sell-down of EE’s equity stake to YTL and to incoming investor Guangdong Yudean Group Co. Limited (Yudean) of P.R. China in advance of Financial Close. APCO is now owned 45% by each of YTL and Yudean and 10% by EE. The shareholders have committed to provide base shareholder funding of USD528 million.

The financing will be provided on the basis of export credit insurance provided by China Export & Credit Insurance Corporation (Sinosure). This is the largest private project financing supported by Sinosure to date.

APCO has entered into a fixed cost fixed term engineering, procurement and construction contract with Guangdong Power Engineering Corporation, a subsidiary of China Energy Engineering Group Co Ltd. Commercial operations of the two units are scheduled for 38 and 42 months from financial close and the power station is scheduled to start operation in mid-2020.

This project is the first to commercially utilize Jordan’s oil shale reserves, and will significantly reduce Jordan’s reliance on imported oil and gas. Power will be delivered to Jordanian state-owned National Electric Power Corporation (NEPCO), the single off-taker, under a 30-year power purchase agreement. With an investment value of USD2.1 billion, the project is the largest foreign direct investment in Jordan to date. The two unit power station will be the first oil shale fired power station and mine project in the world funded by limited recourse project financing.

Slaughter and May acted alongside Ali Sharif Zu’bi Advocates & Legal Consultants in relation to matters of Jordanian law and NautaDutilh in relation to matters of Dutch Law.

The Slaughter and May team was led by Partner Simon Hall, supported by Associates Samay Shah and Philippa Harris.

Tark Grunte Sutkiene has advised Estonian company 1Home Group AS on its acquisition and takeover of management of a student hotel in Riga and its obtaining of EUR 8.4 million financing from AS DNB Banka for the expansion of its business of providing rental housing for students in the Baltics and Poland.

“The number of foreign students in Estonia has skyrocketed in recent years, people come to study here for 3-5 years. However, many of them are unable to find a good dwelling during that time,” Kroot Kilvet, Chief of Corporate Banking at DNB Estonia, said, adding that she hoped the planned expansion would provide fresh momentum to the dwelling rental market in the Baltic countries.

The Tark Grunte Sutkiene team was led by Partner Andra Rubene, supported by Associates Raivis Znotins, Gundars Madelis, and Rudolfs Vilsons.

According to Tark Grunte Sutkiene, the sellers were advised by “a number of various local legal counsels,” and DNB Banka relied on its in-house legal team on the financing. 

CHSH and Balcioglu Selcuk Akman Keki Avukatlik Ortakligi have advised OMV in connection with the sale of all of 100% of its shares in Turkish mineral oil distribution company OMV Petrol Ofisi AS to Vitol Group. Kolcioglu Demirkan Kocakli worked with Hengeler Mueller in advising the Vitol Group, which was selected as purchaser by OMV after a competitive auction process, on the sale. The total purchase price of the transaction amounts to EUR 1.368 million, and closing is expected to occur in the third quarter of 2017, subject to conditions including the relevant regulatory approvals.

CHSH Partner Clemens Hasenauer, who led his firm’s team on the deal, described it as “likely one of the largest Austrian M&A transactions in 2017.”

Hasenauer was supported by CHSH Partner Johannes Prinz, Harald Stingl, Senior Attorney Lorenz Pracht, and Associates Julia Berent and Ferdinand Guggenmos. The OMV in-house legal team was led by Andreas Aigner, Head of M&A Legal, and Michael Riegler, Senior Counsel M&A Legal. Aigner commented that it was “good to see that we were able to execute this landmark deal for OMV in the given difficult environment.”

The Balcioglu Selcuk Akman Keki Avukatlik Ortakligi team consisted of Partners Selim Keki and Sahin Ardiyok and Counsel Tuluu Harsa.

The Kolcuoglu Demirkan Kocakli team was led by Partner Umut Kolcuoglu and Senior Associate Begum Incecam.

Hengeler Mueller declined to comment.

Editor’s Note: On June 17, 2017, Kolcioglu Demirkan Kocakli informed CEE Legal Matters that the deal had closed on June 13, 2017.

Vasil Kisil & Partners has successfully represented Roche Ukraine in a labor dispute with a former employee.

According to VKP, “the employee appealed his dismissal to a court and sought to be reinstated in the job and to recover from the company his average salary for the period of involuntary idle time and a considerable amount of moral damages.”

The High Specialized Court of Ukraine for Civil and Criminal Matters upheld the judgments of the first instance court and the court of appeals and dismissed the former employee’s claims in their entirety.

The VKP team consisted of Partner Oksana Voynarovska and Senior Associate Valeriya Savchuk.

Drakopoulos has advised Yalco, a major Greek distributor of household goods and hotel equipment listed on the Athens Stock Exchange, on the EUR 1.9 million sale of its 100% Romanian subsidiary to a Cypriot purchaser.

The transaction, according to Drakopoulos, “was in line with the Yalco’s intention to restructure its debt through exiting the Romanian market” and “focus on its core activities in Greece.”

The deal was entirely coordinated by Drakopoulos — with a team led by Partner Panagiotis Drakopoulos — in both Greece and Romania.

Drakopoulos explained that it was not authorized to identify the buyers or their counsel on the deal.

Gleiss Lutz and CMS have advised the Pradera retail property fund and asset managers on its EUR 900 million acquisition of 25 prime retail parks in eight European countries from IKEA Centres. The sellers were advised by Mannheimer Swartling.

The parks, each located beside an Ikea store, were acquired by the Pradera European Retail Parks SCSp fund, which is backed by equity investments from private wealth partnership, LJ Partnership. LJ Partnership took a significant minority stake in the business in May 2016.

The portfolio of retail parks situated next to IKEA stores includes around 500 units with a gross lettable area of around 538,000 square meters. Completion on 17 assets located in Germany, France, and Poland is expected on April 4, 2017, with a further eight retail parks in Sweden, Finland, Denmark, the Czech Republic, and Switzerland due to complete on August 31. 

Founded in 1999, Pradera’s EUR 2.7 billion portfolio prior to the acquisition included 44 shopping centers and retail parks in the UK, Spain, Italy, Germany, Poland, the Czech Republic, Greece, Turkey, and China with more than 2,500 stores. 

Gleiss Lutz advised on German law as well as on the overall transaction and coordinated the work of the law firms involved, including CMS in Poland and the Czech Republic, Accura (Denmark), Cederquist (Sweden), Hannes Snellman (Finland), Michelez & Associes (France), Stephenson Harwood (France), Walder Wyss (Switzerland), SJL Jimenez Lunz (Luxembourg), Loyens & Loeff (Netherlands), Addleshaw Goddard (Great Britain). 

The Gleiss Lutz team was headed by Partners Tim Weber and Burkhard Jakel and included Frank Schlobach, Svenja Bender, Isabel Jahn, Johannes Grob, Vanessa Bayliss, Andreas Kohlheim, Patrick Steinhausen, Oksana Weber-Kim; Tobias Johannes Abend, Michael Ilter, and Alexander Kruger (in Frankfurt), and Konrad Discher, Jonas Rybarz, and Matthias Schilde (all Berlin), and Jacob von Andreae, Kevin Grimmeiss, Eva Koch, and Antonia Harbusch (and Dusseldorf).

The CMS team was led by Partners Wojciech Koczara and Lukas Hejduk, supported by Marcin Pasik, Joanna Pierzchala, Michał Maslak, Grzegorz Paczek, and Konrad Werner in Poland and Petr Koral, Petr Huk, and Lukas Valusek in the Czech Republic. The CMS team was responsible for the due diligence of the Polish and Czech assets and supporting in the preparation of transaction documentation including financing documentation.

The Mannheimer Swartling team was led by Tomas Johansson in Sweden, as well as other law firms in the relevant jurisdictions.

Holman Fenwick Willan and Zivkovic Samardzic have advised Serbian industrial conglomerate MK Group on the proposed acquisition by its subsidiary AIK Banka of Alpha Bank A.E.’s Serbian subsidiary. Alpha Bank was advised by White & Case and Drazic, Beatovic & Stojic on the transaction. Financial details were not disclosed.

Alpha Bank, which presently has 67 branches across Serbia, entered the market in 2002. In 2005, it acquired Jubanka, Serbia’s seventh largest bank, in a EUR 152 million privatization deal. The Greek parent company bank has been selling its subsidiaries in South East Europe, in line with the EU-backed restructuring plan that was approved by the European Commission in 2014/15, which foresees the restructuring of the four Greek systemic lenders — Alpha Bank, Piraeus, Eurobank EFG, and the National Bank of Greece — and includes capital hikes and a reduction of their presence abroad.

In March of last year Alpha Bank sold its Bulgarian branch to Postbank, a unit of Greece’s Eurobank EFG, in a deal first announced in July 2015. In July, MK Group purchased the shares held by minority shareholders in AIK Banka and delisted the lender from the Belgrade stock exchange. Alpha Bank retains its presence in Macedonia, Albania, and Romania.

The London-based Holman Fenwick Willan team was led by Corporate Partner Alex Kyriakoulis with assistance from Senior Associate Catherine Emsellem-Rope and Associate Charlotte Britton.

The Zivkovic Samardzic team was led by Partners Branislav Zivkovic and Milos Milosevic, supported by Associate Sava Pavlovic.

The London-based White & Case team was led by Partner Gavin Weir and Associates Hyder Jumabhoy and Tina Kostelenos.

Drazic, Beatovic & Stojic did not reply to our inquiry on the matter.

Dominas Derling has advised the selling shareholders of Litagra on the transfer of its trading business and grain elevator network in Lithuania and Latvia to the Achema Group. Leadell Balciunas & Grajauskas represented the buying side.

As a result of the deal, Achema Group acquired Litagra group’s trading business and grain elevators network, i.e. Litagros Prekyba AB, along with its Latvian subsidiary Litagra SIA. The previous owners will retain the name “Litagra,” though the acquired companies will be able to use it until 2019.

The deal was announced by Invalda INVL – an asset management company that invested in Litagra in 2011, acquiring a 36.9% equity stake – on February 27. Other major shareholders in Litagra are Gintaras Kateiva and the Amber Trust II investment fund. According to the Invalda press release, the Litagra group has “decided to focus on production activities” and will continue to run its primary farming production business. 

“We think the funds we invested and our intellectual contribution have strengthened the company and had a positive impact on the growth of Litagra’s value,” said Darius Sulnis, the President of Invalda INVL and a Member of the Board of Litagra. “We’ve participated actively in preparing for the reorganization of the Litagra group and the mutually beneficial transaction with Achema Group. Litagra will continue to focus on production business where it can benefit from competitive advantages as a participant in the global food supply chain.”

“In line with the long-term strategy of the concern, we’re expanding operations in one of our core areas – agricultural services business,” added Audrius Bendaravicius, the CEO of Achema Group and Chairman of the Board of Agrochema. “Integration, after the transaction, of Litagra’s trading operations into the group of companies that the concern owns will strengthen the group company Agrochema which has analogous activities, broaden its activities, and complete the supply chain from the grain elevators to the Klaipeda port.”

Completion of the transaction is planned after obtaining the approval of the Competition Council and carrying out other actions foreseen in the agreement, including the reorganization of Litagra. The final amount of the transaction depends on Litagra’s financial indicators on the accounting date of the transaction and will only be clear after the transaction is completed.

Advising on the sale side, the Dominas Derling team consisted of Lead Partner Gediminas Dominas and Associate Domas Sileika.

The Leadell Balciunas & Grajauskas team representing the buyer consisted of Partner Gintaras Balciunas, Senior Associates Vaidas Radvila, Ruta Syminaite, and Vilma Plateliene, and Legal Assistant Tautvydas Vedrickas.

Editor’s Note: After this article was published Leadell Partners Gintaras Balciunas and Karlis Vitols informed CEE Legal Matters that the deal had closed. In addition, they emphasized that lawyers from Leadell Fogels, Vitols & Paipa in in Latvia had worked alongside their Leadell Balciunas & Grajauskas colleagues in Lithuania on the deal. Karlis Vitols co-led the joint team alongside Gintaras Balciunas, and the team also included, in addition to the lawyers identified in the original story, Lithuanian Senior Associate Jurgita Najulyte and Associate Tomas Mickus, and Latvian Senior Associate Ilze Jankevica and Associates Arturs Rubins. 

Zivkovic Samardzic has secured a victory for its clients, Petrol d.d. Ljubljana and Petrol Crna Gora MNE d.o.o, the leading Slovenian energy company and its Montenegrin subsidiary, in their dispute with Konim d.o.o. Belgrade in the Montenegrin Court of Appeal.

According to Zivkovic Samardzic, “the dispute concerned certain consultancy services provided by Konim d.o.o. Belgrade with regards to Petrol’s successful bid at the 2007 international tender for setting up a 50/50 joint venture company with Montenegro Bonus, a Montenegrin state-owned firm that was operating the oil and gas depots in the country. Konim d.o.o. Belgrade contended that it was entitled to receive a success fee in the amount of EUR 1.46 million, pro rata to the amount of the investment as anticipated in the agreement to set up a joint venture company. However, the 2007 agreement entered into between Montenegro Bonus and Petrol was terminated in 2011, up to which point only some 10 million out of the anticipated EUR 154.55 million were invested.”

In its decision, the Court of Appeal of Montenegro upheld the July 2016 decision of the Montenegrin Commercial Court rejecting the plaintiff’s success fee claim. According to Zivkovic Samardzic, “in delivering the judgment, the Court of Appeal of Montenegro held that Konim was not entitled to a success fee solely on the fact that Petrol has entered into the joint venture agreement, but rather under the condition that the actual investment has taken place which, besides some EUR 10 million, has never actually happened.”

The Zivkovic Samardzic team representing Petrol and its Montenegrin subsidiary was led by Partner Milos Milosevic, who explained that “for Zivkovic Samardzic, it was important to prove our regional footprint, our capacity to support the client, an important player on the energy field of South Eastern Europe in this particular case, beyond Serbia as our base.” Milosevic was supported by Senior Associate Marko Trisic.