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CMS has advised UniCredit as Mandated Lead Arranger and Sole Underwriter on the financing to Ambienta for its recent acquisition of the Calucem Group from Argus Capital Partners. As in the transaction itself, Italy’s Grimaldi Studio Legale and Croatia’s Porobija & Porobija advised Ambienta on the financing.

In addition to advising UniCredit on the debt Financing of Ambienta’s acquisition of Calucem, as previously reported, CMS also advised sellers Argus Capital Partners and affiliate Calucem Holding S.a.r.l. on the sale itself (as reported by CEE Legal Matters on April 22, 2016).

UniCredit acted as the sole MLA and bookrunner and Agent, through UniCredit Bank Austria AG, Zagrebacka banka d.d., and UniCredit Bank AG. The financing was successfully syndicated with an oversubscription to Erste Group Bank AG, Privredna Banka Zagreb (Banca IMI), and Splitska Banka (Societe Generale) as Mandated Lead Arrangers. 

The CMS team advising UniCredit was led by Prague-based Partner Mark Segall and Senior Associate Elitsa Ivanova of the firm’s International Banking and Finance team and included Eloise Meredith-Owen, Sofia-based Junior Associate Plamena Kostadinova, and from CMS Zagreb Local Partners Jelena Nushol and Ana-Marija Skoko, Consultant Zoran Tasic, and Associate Ana Erceg.

The Grimaldi Studio Legale team was made up of Partners Fabio Pizzoccheri and Riccardo Sallustio, Counsel Roberto de Nardis, and Associates Giuliana Capillo and Giuseppe Buono.

Sayenko Kharenko has acted as lead counsel on the admission of the entire issued shares of natural resource company Bluebird Merchant Ventures Ltd (“Bluebird”) to the Standard Listing segment of the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange.

Bluebird is a Philippine-focused resource company involved in trading of copper concentrates which operated the Batangas Gold Project in the Philippines together with ASX-listed joint venture partner Red Mountain Mining Ltd.

Admission to trading on the Main Market and commencement of dealings in Bluebird’s shares took place on April 13, 2016. The implied market capitalization of Bluebird on admission was deemed to be approximately GBP 10.6 million. 

Bluebird IPO is the first mining IPO on the Main Market since June 2015. Commenting on the transaction, Sayenko Kharenko Partner Andrei Liakhov said: “We are very proud to be involved with the first mining IPO on the Main Market of the London Stock Exchange for some time. This is a demonstration of the strength and dedication of our mining team, which helped Bluebird to achieve success in unstable markets. I hope that this is the first sign of renewed investor interest in the mining industry.”

When asked why Philippino-based Bluebird had asked a Ukrainian law firm to assist with a listing on the London Stock Exchange, a Sayenko Kharenko spokes-person replied, “this deal has no connection whatsoever to the CIS and the client made its choice of lead counsel based on combination of experience, expertise, and fees.” 

Thrings LLP provided English law advice to Optiva Securities Limited, a financial adviser and broker of Bluebird. Walkers assisted Bluebird with BVI law issues.

The core team was led by Liakhov and included Counsel Alina Plyushch and Associates Vasyl Liutyi and Kateryna Zhebanova.

The new EU Market Abuse Regulation (MAR) will take direct effect across EU member states from 3 July 2016 onwards. It will not only extend the market abuse regime to issuers of securities traded on multilateral and organised trading facilities (ie non EU regulated markets), but will also have an impact on disclosure and record keeping obligations of issuers of securities currently listed on EU regulated markets.

1. Disclosure of inside information – Key Changes

As under the current market abuse framework, issuers will be obliged to inform the public as soon as possible, of inside information which directly concerns that issuer (“ad hoc notice”). Key changes / clarifications under MAR include:

• Disclosure obligations will be extended to issuers of securities traded on multilateral and organised trading facilities (ie non EU regulated markets). In Austria, this will affect issuers of securities listed on the Third Market (Dritter Markt) of the Vienna Stock Exchange;
• Ad hoc notices need to be posted in an easily identifiable section of an issuer’s website for at least five years;
• The disclosed inside information needs to clearly indicate date and time of disclosure and must be organised in chronological order;
• Ad hoc notices may not be combined with the marketing of activities.

2. Delay of announcement of inside information – Key Changes

Issuers will still be permitted to delay disclosure of inside information to protect their legitimate interests, as long as the public is not mislead and confidentiality can be maintained. Key changes / clarifications under MAR include:

• Ex post notification to the regulator: when publishing ad hoc notices, issuers must notify the regulator immediately thereafter that disclosure of the information was delayed, rather than ex ante, as per the current framework;
• Written explanation of delay: issuers must be prepared to explain to the regulator how the conditions for delaying publication were met (either automatically, or if national legislation so provides, only upon the regulator’s request);
• Internal records: appropriate record keeping of the decision making process that led to the delay of disclosure will be of critical importance. ESMA has published draft technical standards (yet to be adopted by the European Commission) setting out details of the internal records that issuers are expected to maintain where an announcement of inside information has been delayed. Records are expected to be accessible, readable and must be maintained in a durable medium. The prescribed content includes:
  • the dates and times when (i) the inside information first existed within the issuer, (ii) the decision to delay announcement was made and (iii) the issuer is likely to disclose such information;
  • the identity of the persons responsible for (i) deciding about the start of the delay and its likely end, (ii) ensuring the ongoing monitoring of the conditions for delay, (iii) deciding when public disclosure should be made, and (iv) providing the requested information about the delay and a written explanation to the regulator;
  • evidence of the initial fulfilment of the conditions permitting delay. This will include information about any information barriers put in place internally to prevent access to inside information by those persons not entitled to receive it, and the arrangements put in place in cases where confidentiality is no longer ensured.

3. Insider lists – Key Changes

As under the current regime, issuers will be obliged to maintain insider lists documenting details of persons with access to inside information. As of 3 July 2016, insider lists will

• generally also need to be maintained by issuers of securities traded on multilateral and organised trading facilities (ie non EU regulated markets). In Austria, this will affect issuers of securities listed on the Third Market (Dritter Markt) of the Vienna Stock Exchange. However, there are certain alleviating factors for issuers with financial instruments admitted to trading on an SME growth market;
• become more elaborate, as more detailed personal information of insiders will need to be included. This creates an additional burden for issuers when collating such information. The following additional information will need to be documented:
  • time (and not only the date) at which a person obtained, respectively, ceased to have, access to inside information;
  • birth name of insider (if different to current name);
  • professional telephone numbers (direct dial and mobile);
  • national identification number (if applicable); and
  • personal telephone numbers (home and mobile);
  • need to follow the mandatory insider list template prescribed by the European Commission (here). In line with current market practice, insider lists will be split into a “permanent insiders” and a “temporary insiders” section.

With less than two months to go, companies should make sure that adequate processes and policies for identifying, controlling, announcing and delaying inside information, as well as proper record keeping procedures are in place. We will be delighted to guide you through the new framework and related implications for your organisation. Please contact us for further details.

By Ursula Rath, Partner, Schoenherr

Starting in 2013, several investment treaty claims have been filed in the field of renewable energy, more specifically in the field of solar energy, against Spain, Italy, the Czech Republic and other European countries based upon an alleged breach of the Energy Charter Treaty.

There are currently more than 25 treaty claims pending against Spain alone, five against Italy, seven against the Czech Republic and one against Bulgaria. The first one of these cases, Charanne vs Spain, was decided at the beginning of 2016.

In the last 10 to 15 years, many states have provided incentives through favorable feedin tariffs and other subsidies to promote investment in the field of renewable energy. Spain was one of these.

In 2004, with the aim of promoting investment in renewable energy installations, the Spanish Government issued Royal Decree 436/2004, dated 12 March 2004, establishing the methodology for updating and systemizing the legal and financial regime of the electric energy sector production special regime. However, as a consequence of the economic crisis and the need to tackle the ever-growing tariff deficit, these incentives were gradually reduced, first in 2010 and then again in 2013 and 2014, thereby affecting those investments completed during the validity period of the prior subsidy regime.

In 2014, a new regime was introduced which repealed the very favorable tariffs and remuneration regimes established under the old system and created a completely new regime for renewable energies. These changes triggered the initiation of several investment-treaty claims against Spain based upon an alleged breach of the Energy Charter Treaty.

In these cases, claimants have typically argued a breach of fair and equitable treatment and have requested protection from measures equivalent to expropriation without compensation. Spain’s defense revolves around its right to regulate the electricity sector, particularly in light of the economic crisis it was suffering. The state has further argued that the regulatory changes did not discriminate against foreign investors and that investors should never reasonably expect the state to guarantee a fixed return on investments.

An important aspect of the cases is the participation of the European Commission as amicus curiae on the side of the respondent states which are members of the European Union, including Spain. The position of the European Commission is that European investors cannot bring claims based upon the Energy Charter Treaty against EU member states based on article 344 of the TFEU.

Charanne vs. Spain is the first award of the more than 25 investment treaty arbitrations filed and pending against Spain. The distinctive feature of this first arbitration is that it was filed at the beginning of 2013, and thus did not challenge the legislative amendments that were brought in 2013/2014. The majority of the Tribunal did not find any breach of the Energy Charter Treaty. The Tribunal’s rationale for reaching this decision was as follows:

First, the Tribunal came to the conclusion that a mere decrease in profitability, despite its serious and economic financial consequences, does not amount to an “expropriation”, unless the loss of value can be considered equivalent to a deprivation of property.

The majority of the Tribunal also came to the conclusion that there was no breach of the principle of fair and equitable treatment. The tribunal mentioned that in the absence of a specific commitment on the part of the state, an investor cannot expect the regulatory framework to remain unchanged. As a second step, the Tribunal analyzed whether the regulatory framework generated legitimate expectations that this framework would not be modified as it was in 2010. The tribunal held that the expectations must be reasonable and objective and that investors, as part of their due diligence in a highly regulated industry such as energy, must exhaustively analyze the applicable framework before they make their investment.

The Tribunal further went on to analyze whether the modified regulatory framework frustrated the legitimate expectation that the state would not act unreasonably, contrary to public interest or disproportionately. Here, the tribunal compared the maximum lifespan of a solar plant, which is in the Tribunal’s view 30 years, with the extension of the application of the original tariffs to the first 30 years of the plant’s operation, and came to the conclusion that there was not a breach of legitimate expectations.

A positive aspect of the Charanne award for foreign investors is the rejection of the arguments brought by Spain and the European Commission that European investors cannot bring any Energy Charter claims against EU member states. This is important for the viability of all of the pending renewable energy cases against EU member states.

The Charanne award illustrates that the success of claims based upon violations of the Energy Charter Treaty in the context of the renewable energy field will not be straight forward. However, investment treaty arbitrations filed later in 2013 and 2014 will have a considerably higher chance of successfully demonstrating violations of the obligations under the Energy Charter Treaty. We will most certainly have to wait a few years for all of these matters to be decided.

The Wolf Theiss Arbitration Team stands ready to assist you in evaluating those matters raised by the Charanne award and their applicability to your investments in the field of renewable energy in our region.

By Bryan W. Jardine, Partner and Ceyda Akbal Schwimann, Consultant, Wolf Theiss 

Transposition in action

The new Bulgarian Public Procurement Act (“PPA”), introduced in mid-February 2016, is now in full force and effect. It provides the procurement rules which correspond to the new procurement package (Directive 2014/24/EU and Directive 2014/24/EU), except the rules for concessions (since Directive 2014/23/EU is expecting transposition in a separate piece of legislation).

The PPA is an attempt to preserve the balance between the already established rules, and those which Europe now puts on the table. It certainly does not constitute a copy-pasted version of the EU legislation, where the unique and specific focus of the Bulgarian legislator, as presented in the PPA, is in some cases positive, but alas – not in all.

Regarding the European legislator’s aim of making the new procurement framework easier to use, more flexible, and less burdensome, unfortunately the Bulgarian legislature has definitely not managed to achieve this aim – PPA is multi-structured, too complex, and too dependent on its by-laws (which are complicated in and of themselves). A separate issue is that on an EU level, the ambitious desire for enacting simpler legislation, has proven difficult to implement in reality, and this affects the transposition in the Member States’ national legislations as well.

Positive approach

One of the positive aspects of the new PPA is that it does not use the opportunity, provided by Directive 2014/24/EU (Art. 67, para 2, last sentence), to completely give up on the “lowest price” criterion. This criterion continues to exist in practice as a sub-criterion of the “most economically advantageous tender”. For countries with high levels of corruption in the procurement sector, as is the case in Bulgaria, the excuse to expand the assessment of the contracting authority further, and to rely on a subjective approach would have a detrimental effect on the procurement process. For this reason, this moderate line taken by the Bulgarian legislator is appreciated.

This effectively means that procurements for which complex technical requirements are not needed can be assessed only by a price criterion without the use of complicated assessment methodology which often leads to discrimination against participants. This criterion has already proven to be positive in the selection of contractor/s for certain procurements and, despite the criticism from Europe that the preference of the “lower price” criterion somehow stops innovative development, its application could not be abolished in Bulgaria.

Ulcers in the process

Again, in spite of the exaltation of the new European standards in part of the Member States, some, completely new to the Bulgarian legislative techniques rules, have already encountered disapproval from practitioners, although they have still not been used in practice.

A typical example in this regard is the represented “self-cleaning” mechanism that will be used now in Bulgaria as well, as is the case in other Member States which already have experience in applying this mechanism, even before the implementation of the new rules (such as in Germany, the Netherlands, and Austria).

The provision of article 57 par. 6 of Directive 2014/24/EU is reproduced almost verbatim in the Bulgarian PPA. All too common legislative decisions such as “a participant has clarified the facts and circumstances exhaustively and has actively cooperated with the competent authorities and fulfils specific prescriptions, technical, organisational and staffing measures aimed to prevent new crimes or offenses” (Art. 56, para 1, it 3 PPA) now only arouse laughter. Clearly, such provision gives complete freedom to the contracting authority at its own discretion (or “properly advised”) to determine whether the candidate should remain in the procurement procedure or not. It is totally unacceptable that the spending of public funds be regulated by terms such as “exhaustive”, “active assistance”, “measures to prevent future violations”, without their corresponding strict definition being set out in the law… Yet again, this is not only an omission of the Bulgarian legislator, but also of the European framework as a whole. Regrettably, too liberal an approach to regulation in some cases is totally inappropriate.

The above criticism represents only a few basic and initially spotted features of the new law. We look forward to its enactment in practice. Still, practitioners have already expressed questions as to whether the new law will follow the fate of the previous one and will be doomed to endless amendments throughout the next decade.

By Irena Georgieva, Attorney at law, Schoenherr

Schoenherr has advised UniCredit Bank Austria AG as arranger, agent, security agent and original lender in connection with a senior term facility for the construction and operation of several hydro power plants in Turkey for the Austrian-based Enso Group. Moroglu Arseven as local counsel to the Enso Group in Turkey, with bpv Huegel advising in Austria. The deal closed on March 31, 2016.  

The Enso Group operates and manages hydro power plants in Turkey, Norway, and Albania. The financing was structured as a non-recourse financing under Austrian law with security provided to the security agent both in Turkey and Austria.   

The Schoenherr team was led by Partner Robert Bachner and included Partners Levent Celepci and Martin Ebner, Associate Laurenz Schwitzer and Attorney Burke Serbetci.

The Moroglu Arseven team consisted of Lead Partner Benan Arseven, Partner Seyfi Moroglu, Counsel Nilay Goker, and Associate Hazal Tuncay.

Noerr has announced that healthcare and corporate/M&A lawyer Agnes Tompa has joined the firm as head of its Corporate/M&A department and leader of the Pharma/Healthcare/Life Sciences practice group in Budapest.

According to Noerr, Tompa “has advised on a broad range of corporate transactions, including M&A, joint ventures, restructuring and private equity transactions.” The firm also reports that she “has extensive experience in the pharma sector, has advised companies in the pharmaceutical, biotechnology and medical device industry – from startups to large publicly listed companies.”

Tompa graduated from Hungary’s University of Debrecen in 2003 and obtained a Master’s in European law from the University of Peter Pazmany in Budapest in 2006. She has worked in-house with Pfizer, as an Associate focusing on pharma work at White & Case, and since September 2012 on her own, at the Tompa Agnes Law Firm.

Acting on behalf of the Russian Federation, Cleary Gottlieb and the Belgian Hanotiau & van den Berg law firm (which Cleary instructed) have successfully persuaded the District Court of The Hague to set aside the landmark July 2014 arbitral award ordering the Russian Federation to pay over USD 50 billion to the former majority shareholders of Yukos Oil Company (reported on by CEE Legal Matters on July 28, 2014). Cleary Gottlieb also engaged Netherlands-based Houthoff Buruma to provide further Dutch law support.

Shearman & Sterling and the Amsterdam-based De Brauw Blackstone Westbroek law firm advised the former majority shareholders.

According to a Shearman & Sterling press release, “in its April 20, 2016 decision, the District Court held that the award could not stand on the ground that the Russian Federation was not bound by the provisional application of Article 26 of the Energy Charter Treaty containing the offer to arbitrate, despite Russia having consented to its provisional application pursuant to Article 45 of the Treaty.”

Marnix Leijten, Partner at De Brauw Blackstone Westbroek, who acted on behalf of the claimants in the Hague court proceedings, said: “The District Court incorrectly applied the provisional application mechanism of the Energy Charter Treaty, as well as the relevant Russian law provisions. I am confident that this decision will be corrected in due course.”

Immediately following the decision, the claimants announced that they will be exercising their right of appeal to the Court of Appeal in The Hague. In the meantime, according to Shearman & Sterling, “recognition and enforcement proceedings for the award are ongoing in various jurisdictions, including the United States, the United Kingdom, France, Belgium, Germany and India.”

The Cleary Gottlieb team consisted of Partners Claudia Annacker, David Sabel, Lawrence Friedman, and Matthew Slater, Counsel Laurie Achtouk-Spivak, Cameron Murphy, and Milo Molfa, and Senior Attorney Eniko Horvath. Partner Albert Jan van den Berg of Hanotiau & van den Berg was instructed by Cleary on the matter.

The Shearman & Sterling team was led by Paris-based Partners Emmanuel Gaillard and Yas Banifatemi and Senior Associates Elise Edson and Ilija Mitrev Penusliski, Counsel Emmanuel Jacomy in Hong Kong.

The De Brauw Blackstone Westbroek team was led by Partners Marnix Leijten, Marc Ynzonides, and Albert Marsman.

Gide and Dvorak Hager & Partners have advised Societe Generale and Komercni Banka on the acquisition by their subsidiary Essox s.r.o. of 100% of the share capital of PSA Finance Ceska Republika s.r.o. and of PSA Finance Slovakia, s.r.o., the Czech and Slovak subsidiaries of Banque PSA Finance. Peterka & Partners advised PSA Finance on the acquisitions, which remain subject to the approval of the local competition authorities.

Essox s.r.o. is one of the main non-bank providers of financial services in the Czech Republic. Its share capital is 50.93% owned by Komercni Banka and 49.07% by SG Consumer Finance, Societe Generale group.

Both PSA Finance Ceska Republika and PSA Finance Slovakia provide financing to automotive dealerships and clients of the Peugeot, Citroen, and DS brands. 

The acquisition followed Societe Generale’s February 2016 acquisition of BPF Financiranje d.o.o., a subsidiary of Banque PSA Finance in Slovenia, on which Gide also advised. Kirm Perpar worked alongside Gide in that matter.

The Gide team in both deals consisted of Partner Guillaume Rougier-Brierre and Associates Christophe Monnet and Alexandre Heydel.

Neither Kirm Perpar nor Peterka & Partners responded to our inquiries about the make-up of their teams. Gide did not reply to our inquiry about counsel for PSA Finance in its acquisition of BPF Financiranje.

Editor’s Note: After this story was published, Kirm Perpar informed us that the firm’s team advising Societe Generale on its acquisition of BPF Financiranje consisted of Partner Matej Perpar and Senior Legal Associates Sana Koudila and Jan Gorjup.

Subsequently, Peterka & Partners informed us that its team advising Banque PSA Finance consisted of Prague-based Partner Zdenek Beranek and Attorney Milan Listik and Bratislava-based Partner Jan Makara and Associate Andrea Farinic Stefanicikova.

BPV Grigorescu Stefanica has advised Wienerberger, the largest producer of bricks and ceramic blocks in Romania, on its acquisition of a brick factory in Berca, Romania, from Constanta-based Search Chemicals.

The transaction involved the transfer of business — including the takeover of the manufacturing facility. 

“Wienerberger runs its Romanian business at international standards, having some of the most modern production facilities in the country,” declared bpv Grigorescu Stefanica Managing Partner Catalin Grigorescu, who led the firm’s team on the deal. “We are happy to be supporting such a dynamic team that we have been privileged to work with for almost 10 years. They always have in focus the latest trends and the most innovative solutions.” 

BPV Grigorescu Stefanica advised throughout the transaction process, “covering all corporate, real estate, natural resources, labour, commercial, and competition aspects involved in the acquisition process.” In addition to Grigorescu, the firm’s team included Managing Associate Cristina Mihai and Associate Andreea Carare.

BPV Grigorescu explained that it was unable to disclose the identity of the firm advising Search Chemicals on the deal.