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The Pepeliaev Group has successfully challenged the cadastral evaluation of the premises of the Central Children’s Store — a famous Russian toy store, located on Lubyanka street in Moscow — before the Moscow City Court.

The Central Children’s Store — really a shopping mall, with over 100 stores spread over 73,000 square meters and seven stories — is reported to be the biggest complex of children’s stores in the world. The complex — previously known as Detsky Mir, though that brand is now owned by a competitor — was taken over by banking giant VTB in 2008 and was closed for a controversial RUB 8 billion restoration/reconstruction, before reopening in March, 2015.

The Pepeliaev Group successfully persuaded the Court that the cadastral value placed on the premises of the store — more than two and a half times greater than the cadastral value of the actual Central Children’s Store building itself — was unreasonably high. The Court agreed that the cadastral value should be reduced significantly, substantially reducing the amount the owner’s property tax obligation.

“Positive court decisions in such disputes show that challenges to cadastral value are genuinely effective,” commented Pepeliaev Group Managing Partner Sergey Pepeliaev, “and there are mechanisms to reduce the tax base that actually work. What matters is that these have to be applied professionally.”

The Pepeliaev Group project team consisted of Senior Partner Vladimir Sokov, Partner Alexey Konevsky, and attorney Alexey Abramov. 

Image Source: Oleg GawriloFF / Shutterstock.com

Taylor Wessing has announced that Czech lawyers Karin Pomaizlova and Marketa Cvrckova have become new Partners of the firm’s office in Prague.

Pomaizlova specializes in the field of protection and management of IP rights, in particular trademarks, software, protection against unfair competition, and advertisement regulation. According to Taylor Wessing, “she also advises in the areas of legal regulation of pharmaceuticals, technology transfer and the food industry.” Before joining Taylor Wessing, Pomaizlova spent two years as a Partner at B-Legal CZ, and the 7 years before that had her own law office. She also spent 10 years, from 1998-2008, at Linklaters. Karin graduated in 1995 from the Law Faculty of the Charles University in Prague. She speaks English, Russian and French.

Whereas Pomaizlova moves to Taylor Wessing from a different firm, Cvrckova — who joined the firm in 2004 (then legacy ENWC) — was promoted from within. She graduated from the Law Faculty at the Charles University in Prague, as well as the Faulty of International Relations at the University of Economics, and she completed internships at the Faculty of Humanities at the University of Otago in New Zealand and the Law Faculty of the Technische Universitat Dresden in Germany. She speaks English and German.

“I am delighted that not one but two new Partners can join our ranks of Partners in our Prague office, one rising up from the inside of the firm, while the other is joining us from the outside,” said Partner Erwin Hanslik. “The diverse specialisation combined between the two ladies further broadens the spectrum of our services. I trust that our current and future clients can fully appreciate this synergetic effect.” 

K&L Gates has advised the Polish state on an ICSID Additional Facility Arbitration related to a claims that it had acted with bias in improperly levying taxes and sanctions on the claimant’s company. Kochanski Zieba & Partners advised the claimants — Vincent J. Ryan, Schooner Capital LLC, and Atlantic Investment Partners LLP.

According to a summary provided by K&L Gates Partner Wojciech Sadowski, in 1994, Ryan — acting through a legal predecessor of the Schooner venture capital fund controlled by his family — purchased from the Polish state a majority shareholding in a vegetable oil manufacturing plant in Poland, NZPT (later known as Kama Foods), which at that time was the leader on the Polish margarine market.

Sadowski reports that “investors continued with an expansive modernization and expansion program initiated by the old management before 1994, while at the same time purporting to introduce their own management concepts. The situation in the company, however, was gradually deteriorating for a variety of factors, including the increasing saturation of the Polish vegetable oils market, adverse market conditions, including winter conditions and flood, and a dispute between the company [and Polish] tax authorities over management fees.” The company went bankrupt in 2003, at which time Atlantic Investment Partners — a SPV within the Schooner Group — took over its shares.

In the ICSID Additional Facility Arbitration Ryan, Schooner, and Atlantic alleged that the main cause of the company’s bankruptcy were the measures and sanctions imposed on the company by the Polish tax authorities. They alleged that the tax authorities had acted in breach of the US-Poland BIT in denying the company the right to deduct certain management fees from its taxable basis, which in turn triggered a snowball of sanctions. Their total claims varied from PLN 500 to PLN 620 million (approximately USD 125 to 145 USD million, according to the currently-prevailing FX rate.

Sadowski reports that, “in its award of November 24, 2015, the majority of the ICSID Tribunal declared they did not have jurisdiction to hear most of the Claimants’ claims because of the tax carve-out clause in the US-Poland BIT. The remaining charges (primarily the claim of expropriation) were dismissed on the merits as the majority found that the Polish tax authorities acted reasonably and in conformity with international law. The Tribunal was satisfied in that tax measures were applied for no improper reason, nor out of bias, but because Kama Foods was unable to provide evidence that those services were effectively rendered.” In other words, according to the firm, “the outcome essentially was: no jurisdiction except for claims related to expropriation and transfers; the two latter claims dismissed; Claimant ordered to pay most of the Respondent’s costs (approximately USD 2.6 million).”

The Tribunal was made up of Makhdoom Ali Khan (President), Francisco Orrego Vicuna (Claimants’ nominee), and Claus von Wobeser (Respondent’s nominee).

Partner Wojciech Sadowski and Of Counsel Rafal Morek led the K&L Gates team on the deal, working alongside Katarzyna Szostak-Tebbens of the State Treasury Solicitors’ Office in Poland.

The Kochanski Zieba & Partners team was led by Senior Managing Partner Piotr Kochanski and Partner Marek Jezewski.

Gleiss Lutz and Greenberg Traurig have advised Luxembourg-based Atlantik S.A., an indirect controlling shareholder of Pfleiderer Grajewo S.A., on the Pfleiderer Group’s corporate reorganization and on Pfleiderer Grajewo’s share capital increase to finance it.

Atlantik acquired the Pfleiderer Group in 2012 in insolvency plan proceedings, assuming a large portion of its debt as part of the deal. In addition to its German operations, the Pfleiderer Group includes a majority participation in the listed Polish subsidiary Pfleiderer Grajewo S.A.   

According to Greenberg Traurig, which advised Atlantic on Polish matters, “the combined Pfleiderer Group is set to become one of Poland’s leading companies with annual sales of approximately EUR 1 billion and over 3,000 employees.”

Pfleiderer Grajewo is one of the largest and most modern producers of furniture boards, kitchen worktops, and artificial veneers in Poland. It has been listed on the Warsaw Stock Exchange since 1997. 

Greenberg Traurig reports that the reorganization of the Pfleiderer Group, “involves an innovative reverse takeover structure where Pfleiderer GmbH will be fully acquired by Pfleiderer Grajewo with the proceeds from the share capital increase and public offering of shares in Pfleiderer Grajewo. Upon the successful completion of the transaction, Pfleiderer Service GmbH will transfer all its shares in Pfleiderer Grajewo to Atlantik. Simultaneously, Pfleiderer Grajewo will become the parent company of the restructured Pfleiderer Group. Moreover, upon completion of the reorganization, certain stakeholders of Atlantik, including Strategic Value Partners LLC, through its managed or advised funds, will receive existing shares in Pfleiderer Grajewo held by Atlantik in lieu of cash in satisfaction of Atlantik’s obligations under its financial indebtedness (repayment in kind).”

The firm is also advising Pfleiderer Grajewo on the related share capital increase and on Polish aspects of the refinancing of the Pfleiderer Group in connection with the corporate restructuring.

The total value of the transaction, including the private placement and the repayment in kind, amounts to approximately PLN 744 million (approximately EUR 172.7 million).

Greenberg Traurig’s Warsaw team was led by Managing Partner Jaroslaw Grzesiak and Partner Rafal Sienski, supported by Local Partner Rafal Baranowski and Aleksander Janiszewski and Associates Filip Kijowski, Magdalena Bachleda-Ksiedzularz, Maja Gawrysiuk, Martyna Komorniczak, Mateusz Zalenski, Tomasz Szekalski, and Piotr Platnerz.

Partner Dorothee Fischer-Appelt and Counsel Godric Shoesmith from Greenberg Traurig’s London Office advise on US law aspects of the Transaction.

Gleiss Lutz’s team consisted of lead Partner Maximilian von Rom, supported by Partners Helge Kortz, Kai Arne Birke, Stephan Aubel, Eva Reudelhuber, Stefan Mayer, Johann Wagner, Patrick Mossler, Andreas Spahlinger, Matthias Tresselt, and Martin Raible, as well as Frank Schlobach, Jan-Alexander Lange, Domingo de Prada, Nikolos Tsagareli, Franziska von Hutten-Langlotz, Daniel Heck, Micha-Manuel Bues, and Peter Lepper.     

Editorial Note: After this article was published Allen & Overy announced that it had advised Commerzbank International S.A. as the agent and the Luxembourg branch of Commerzbank Aktiengesellschaft as security agent of the lenders of Atlantik S.A. in connection with the reverse takeover within the Pfleiderer Group. A&O’s team was led by Partners Peter Hoegen and Franz Bernhard Herding, and included Partners Sven Prufer, Asmus Mihm, Pierre Schleimer, Henri Wagner, and Jean Schaffner, Counsel Jacques Graas, Senior Counsel Yanmei Wie, Senior Associates Simone Bohm, Fatih Coskun, Jan Boeing, Marine Tarditi, and Julie Carbiener, and Associates Lennart Lautenschlager, Dietmar Schubert, Christopher Kranz, Benedikt Dumbacher, Paul Weber, and Jaimie Hughey.  

Similarly, Weil announced that it had advised Deutsche Bank AG, London Branch, in connection with the offering of shares in Pfleiderer Grajewo S.A. The firm’s team was led by Partner Anna Frankowska and Associate Anna Blonska, supported by Associate Jakub Leszczynski.

Subsequently, Norton Rose Fulbright announced that it had “advised the lead arrangers, facility agent, and security agent in relation to the EUR 60 million and PLN 200 million revolving credit facilities granted to Pfleiderer Grajewo S.A. for the refinancing and amendment of the terms of its existing debt and other subsidiaries of the company.” According to Norton Rose Fulbright, “the mandated lead arrangers on the transaction included Alior Bank S.A., Bank Millennium S.A., Bank Zachodni WBK S.A., and Powszechna Kasa Oszczednosci Bank Polski S.A., with Commerzbank AG as the facility agent and Commerzbank AG, Filiale Luxemburg as security agent.” As part of the limit granted by the banks under the revolving facilities agreement, Pfleiderer Group companies also concluded ancillary facility agreements providing the companies with access to a number of banking products, such as overdrafts, guarantees and letters of credit.

The Norton Rose Fulbright team was led by Partner Grzegorz Dyczkowski with support from Senior Associates Tomasz Rogalski and Joanna Braciszewska-Szarapa and Associate Maksymilian Jarzabek

The Moral law firm has advised Borusan EnBW Enerji Yatirimlari ve Uretim A.S. (“Borusan EnBW”) — an energy joint-venture company in Turkey established by Borusan Holding A.S. (“Borusan”) and Germany’s EnBW Energie Baden-Wurttemberg AG (“EnBW”) — on its November 4, 2015 acquisition of 99.95% of an unnamed Ankara-based Turkish energy company.

The remaining 0.05% was acquired by Borusan Danismanlik ve Ortak Hizmetler, a subsidiary of Borusan, acting in concert with Borusan EnBW. The value of the transaction was not disclosed.

Borusan EnBW focuses mainly on hydro-electric and wind-powered plants and establishments, while the Ankara-based target specializes in the establishment and construction of hydro-electric and wind-powered power plants in Turkey.

Moral advised and represented Borusan EnBW and  Borusan Danismanlik ve Ortak Hizmetler in all phases of the share purchase and transfer transactions. The firm’s team was led by Vefa Resat Moral, supported by Efe Kinikoglu, Serkan Pamukkale, Asli Pamukkale, and Karaca Kacar.

Avellum Partners has acted as Ukrainian legal counsel to ING Bank N.V. in connection with an up to USD 100 million secured pre-export revolving loan facility to Myronivsky Hliboproduct Group.

MHP is one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain. Loan proceeds were used for the purchase of sunflower seeds in the Ukrainian market and processing of sunflower seeds into sunflower oil and sunflower meal for further export.

The Avellum Partners team was led by Partner Glib Bondar, with significant support from Associates Taras Dmukhovskyy, Taras Stadniichuk, and Orest Franchuk.

Sorainen Estonia has advised Olympic Casino Eesti, a company belonging to the Olympic Entertainment Group (OEG), on its acquisition of a 100% shareholding in Estonian casino operator MC Kasiinod and its fully-owned subsidiary Oma & Hea (a provider of casino bar services) from AS Alexela Entertainment. Varul advised MC Kasiinod on the deal. Completion of the transaction is dependent on the several conditions, including approval by the Estonian Competition Authority. Upon completion, OEG will own 24 casinos in Estonia. The transaction price was not disclosed.

MC Kasiinod operates 4 slot casinos and a total of 160 slot machines in Estonia. Company revenue in 2014 was EUR 3 million and it had 65 employees. According to Sorainen, “the casinos to be acquired will be brought into compliance with the quality standards of OEG within one year, after which they will be rebranded as Olympic Casino.”

Before acquiring MC Kasiinod and its subsidiary Oma & Hea, Olympic Casino operated 20 casinos in Estonia with 817 slot machines and 20 gaming tables. In 2014, the Estonian casino entity of OEG generated revenue of approx EUR 32 million and employed 446 people.

The Sorainen team was headed by Partner Toomas Prangli, and included Specialist Counsel Kadri Kallas, Senior Associate Piibe Lehtsaar, and Associates Triin Tigane and Kai Vainola.

The Varul team was led by Partner Leonid Tolstov.

This marks the second deal Sorainen has advised OEG on in recent weeks, following the company’s acquisition earlier this fall of a 100% shareholding in the Lithuanian sports-betting company Orakulas (reported on by CEE Legal Matters on November 4, 2015).

Dentons has advised Polish energy giant Tauron Polska Energia S.A. on a bond issue worth PLN 6.27 billion (approximately EUR 8.7 billion)— which the firm describes as “one of the biggest financing transactions in Poland.” Allen & Overy advised Bank Handlowy w Warszawie S.A., Bank of Tokyo-Mitsubishi UFJ (Polska) S.A., Bank Zachodni WBK S.A., Caixabank S.A. (Spolka Akcyjna) Oddzial w Polsce, Industrial and Commercial Bank of China (Europe) S.A. Oddzial w Polsce, ING Bank Slaski S.A., and PKO BP S.A. on the matter.

Dentons’ Capital Markets team in Warsaw prepared and executed the bond issue documentation and provided Tauron Polska Energia S.A. with legal advice throughout the financing. The transaction was led by Counsel Michal Smiechowski,, working under the supervision of Partner Robert Dulewicz, who co-heads the firm’s Capital Markets practice in Poland and Europe.

Partner Piotr Lesinski led Allen & Overy’s team on the matter.

Taylor Wessing Vienna has advised the shareholders of Austria’s K+K Hotel Group on the sale of its holding and operating companies to a joint venture of Goldman Sachs and Highgate Hotels. The buyers were advised by Jones Day (London office) as lead counsel, with Schoenherr advising on matters of Austrian law.

As a result of the deal, 10 four-star and four-star superior hotels in Austria, Czech Republic, France, Germany, Hungary, Romania, Spain, and the UK will change ownership. Following the approval of the Austrian Competition Authorities, the closing of the deal took place on December 1m, 2015 in Vienna. The purchase price was not disclosed.

“A hotel group selling one of its hotels is something quite usual,” said Taylor Wessing Partner Raimund Cancola. “A hotel group selling 10 hotels in eight European countries in one go, is something different. Highgate Hotel Group, which is well-known on the US market for its top hotels, instantly gains a strong presence in Europe.”

According to a Taylor Wessing press release, the bidding process that took place prior to the deal was carried out with Credit Suisse and Jones Lang LaSalle. According to Cancola, “due to the attractive target, the bidding process was very comprehensive. Numerous top-class investors from Asia, USA and Europe were involved.”

The Taylor Wessing team consisted of Partner Raimund Cancola (lead) and Partner Philip Hoflehner, along with other Taylor Wessing lawyers in Vienna and abroad. Konrad Ferner of Ferner, Hornung & Partner in Salzburg was also involved. 

The Schoenherr team was led by Partner Christian Herbst, and included Partners Stefan Kuhteubl, Bernd Rajal, and Christoph Haid, Attorneys Maximilian Lang, Ayla Ilicali, and Michael Woller, and Associates Teresa Waidmann and Serap Aydin. 

Image Source: kkhotels.com

Sorainen Belarus has acted as local counsel for the International Finance Corporation (IFC) on the extension of a EUR 15 million loan to the Alutech Group of Companies to refinance short-term bridging loans for capital investment obtained in 2013-2014.

According to the firm “the project is aimed at supporting Alutech Group expansion plans, further market penetration, and broader product offering.”

Alutech, headquartered in Belarus, is a leading CIS producer of roller shutter systems, sectional doors and aluminium profile systems that operates manufacturing and sales companies in Belarus, Russia, Ukraine, the Czech Republic, Germany, and Austria. 

This is the third investment in the Alutech Group by IFC: the first IFC loan, of EUR 22 million, was granted in 2010, and the second, of EUR 25 million, in 2012.  The Sorainen team assisting the client on this project was led by Partner Kiryl Apanasevich and Associate Hanna Volchak.