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Sayenko Kharenko’s international trade team has advised the Dniepropetrovsk Tube Works PJSC on the potential initiation of an interim review of anti-dumping duties applied to imports into the Eurasian Economic Union of casing pipe, oilwell tubing, oil and gas piping, and hot finished conventional pipes originating in Ukraine.

According to a Sayenko Kharenko announcement, its legal services “included … advice on the possibility of initiating an interim review and associated risks; preliminary calculation of dumping margin; [and] drafting an application on interim review initiation.”

Sayenko Kharenko describes Dniepropetrovsk Tube Works as “one of the leading pipes manufacturers in Ukraine,” and says that it “manufactures more than 3,000 types of seamless and electric-welded pipes from carbon and low-alloy steels in compliance with foreign standards. The goods are supplied both domestically and abroad.” 

Sayenko Kharenko’s team was led by Partner Tatyana Slipachuk, and Senior Associate Anzhela Makhinova and Associate Oleksandra Brovko.

Soltysinski Kawecki & Szlezak have advised the Mexican company Grupo Industrial Saltillo (GIS) in the acquisition of a stake in Automotive Components Europe (ACE), a company listed on the Warsaw Stock Exchange.

The market value of the transaction amounted to PLN 350 million. SK&S reports that in the second half of December GIS “acquired more than 90% of ACE’s share, then immediately after the settlement of the tender offer, proceeded with the compulsory buyout (squeeze-out) of minority shareholders and became 100% owner of ACE’s shares.” The shares were then transferred to a Spanish company in the GIS Group. 

SK&S reports advising GIS “on all elements of the transaction, including: in the field of regulatory obligations, obtaining the approvals of antitrust authorities, and matters related with transactions funding. Due to the fact that ACE was in a group of companies in a Luxembourg group, and listed on the Stock Exchange in Warsaw, this was a precedent-setting transaction and required close co-operation with law offices in Mexico, Luxembourg, Spain and other jurisdictions, in particular with regard to performing tender offer duties, notification duties, antitrust duties and conducting the squeeze-out procedure.”

The SK&S team was headed by Partner Krzysztof Pawlisz, and included Andrzej Motyka, Justyna Mlodzianowska, Witold Kurek, Jan Pierzgalski and Anna Bartosiewicz. Partner Krzysztof Kanton was responsible for antitrust matters and competition law.

SK&S did not reply to inquiries about identify of the seller or its external counsel on the deal.

Editor’s Note: After this article was published SK&S Partner Krzysztof Pawlisz contacted CEE Legal Matters to report that his firm worked “together with panel of prestigious law firms from Mexico (Santamarina y Steta), Luxembourg (Arendt & Medernach), Spain (Cuatrecasas, Goncalves, Pereira) and other involved jurisdictions.” He explained that “it was a very interesting and demanding project, which ended in full success of our Client and I am proud that I was a Partner in charge of this project from SK&S’s side.”

Finally, Pawlisz explained, “due to the character of the transaction (tender offer addressed to all shareholders of a listed company – ACE) there was no leading counsel on the other side.”

Image Source: junrong / Shutterstock.com

Ukraine’s Aequo has advised the Ukrainian subsidiary of Russia’s Sberbank on the restructuring of a loan facility granted to the Smila Electromechanical Plant Research and Development Enterprise OJSC.

According to Smila’s website, it is “one of the biggest businesses in the field of production, manufacture, repair and modernization of railway electric machines stock, large-capacity vehicles, municipal passenger electric transport, port facilities, and industrial lifting devices.” In addition, it “also specializes in the production of the whole range of spare parts used in manufacturing and repairing the above-mentioned electric machines.”

Aequo advised Sberbank on potential enforcement procedures in Ukraine and abroad, negotiated the revised repayment terms, and drafted the restructuring documentation, among other things. Upon completion of the transaction Aequo issued a legal opinion in favor of the Sberbank.

The firm’s team was led by Partner Yulia Kyrpa, the head of Aequo’s Banking & Finance practice group. She was assisted by Senior Associate Denys Kulgavyi.

bpv Grigorescu Stefanica has advised Acton Capital Partners and CommerzVentures on Romanian matters related to their capital infusion into the German company Mambu.

Mambu is a SaaS banking platform provider. The company’s name is, according to its website, “the original Malaysian word for bamboo.” According to the website: “Bamboo is the fastest growing plant in the world, but only when all the conditions are right. Bamboo has been eaten, worn, used to build bicycles and homes. It is versatile and obtainable to all. We like how that sounds.”

The series B funding round to Mambu amounted to EUR 8 million, with the capital intended to be used for “the development and expansion of the innovative banking services offered by Mambu through its SaaS platform to its clients, various financial institutions around the world.” Mambu, which is headquartered in Berlin, is also present in Romania, with an IT development centre in Iasi.

The bpv team that advised on various transactional aspects and performed due diligence focusing on corporate, IT, intellectual property rights, and labour law aspects, was led by Partner Anca Grigorescu.

Orrick has advised Zarubezhneft, a major Russian state-owned oil company, on its acquisition of a majority stake in the Kharyaga oil field from Total, France’s largest oil and gas producer. Dentons advised Total on the deal.

Total agreed to divest half of its stake in the Kharyaga production sharing agreement (one of only three such agreements in Russia), transferring a 20 percent share to Zarubezhneft. Subject to the approval of Russian authorities, Zarubezhneft will now hold a 40 percent interest in the project, alongside Total (20 percent), Statoil (30 percent) and Nenets Oil Company (10 percent). In a first for Russia, the farm-out transaction also involved the negotiation of a bespoke operating transfer agreement, transferring the project’s operatorship to Zarubezhneft. 

A cross-practice team from Orrick’s Moscow, London, and Paris offices advised Zarubezhneft in the acquisition. The team was led by Corporate Partner Konstantin Kroll and included Banking and Regulatory Managing Associate Svetlana Gareeva, Energy Partner Colin Graham, and Energy Associate Gabin Gabas.

The Dentons team was led by Moscow Partner Maria Oleinik, with key support from Moscow Associates Antonina Zhigalova and Victoria Gorbunova.

The Czech Republic’s Z/C/H Legal has provided legal advisory services to Raiffeisenlandesbank Oberosterreich Aktiengesellschaft Group concerning the sale of the Hodlmayr Logistics Center, which has a storage capacity of 3,400 to 3,800 vehicles.

According to the firm, the Hodlmayr Group “is the leading European provider of services associated with vehicle logistics and has been on the market for more than 60 years.”

Editorial Note: After this article was published Z/C/H Legal contacted CEE Legal Matters to explain that Hodlmayr Logistics Czech Republic — a 100% subsidiary of Hodlmayr International AG — had acquired the logistics center from Z/C/H client Raiffeisenlandesbank Oberosterreich Aktiengesellschaft Group (ROAG) once the terms of its lease with ROAG concluded. The firm’s team was led by Partner Radek Hladky and Senior Associate David Pavlicek.

Z/C/H Legal also said that, according to its knowledge, “Hodlmayr Logistics Czech Republic a.s. was not represented by any law firm.”

FKA Furtek Komosa Aleksandrowicz has advised mBank S.A. on sale of all shares in Call Center Poland S.A. to the Wroclaw-based CCIG Group sp. z o.o., a company of a group operating in the sales support processes outsourcing sector (including call centers). The CCIG Group was represented by Olesinski i Wspolnicy.

FKA Partner Leszek Rydzewski, who co-headed the team managing the transaction for mBank, commented: ”Our work on this transaction crowns our representation of mBank in its engagement in Call Center Poland group over the past several years, starting from the restructuring of the Bank’s debtor who had owned the group, through takeover in the debtor’s arrangement proceedings and reorganisation of a group, up to the final sale of these assets. We are happy that FKA had the opportunity to advise at yet another transaction within the BPO and call centre services sector that has been consolidated and is consolidating in Poland.”

FKA Partner Edyta Jusiel co-headed the team with Rydzewski, with both assisted by Partner Mariusz Aleksandrowicz. 

The Olesinski i Wspolnicy team conducting the due diligence process and SPA negotiations for the CCIG Group was coordinated by Manager Grzegorz Lesniewski, and included Partner Magdalena Tyrakowska and Consultants Magdalena Kaleta and Dominika Leszczynska.

Tuca Zbarcea & Asociatii has advised a consortium of buyers in their acquisition of a EUR 1.2 billion (nominal value) NPL portfolio from Banca Comerciala Romana (BCR). The Romanian financial institution (which is part of Erste Group) was assisted by Schoenherr.

The consortium purchasing the portfolio as part of an agreement signed on December 21, 2015, consists of the IFC, APS Holding, and Deutsche Bank. The acquisition at the end of the year represents only a part of the large NPL portfolio that BCR has been in negotiations with multiple potential buyers to sell throughout 2015 — the so-called “Project Neptune,” which some sources value as high as EUR 3.5 billion. 

As further background, IFC and APS Holding announced a strategic partnership in May 2014 “to tackle non-performing loans in Eastern and Southern Europe.” At the time of that agreement, K. Aftab Ahmed, IFC Director for Financial Institutions and Private Equity Group, commented: “This project continues to build on IFC’s crisis response initiative, which has already achieved a significant development impact in a number of countries. Through these investments, IFC will help ensure that banks can continue to provide access to finance for businesses and individuals, which is essential for economic recovery.”

The Tuca Zbarcea & Asociatii team advising the consortium was coordinated by Deputy Managing Partner Stefan Damian and Partner Mihai Dudoiu, and included Managing Associates Patricia Enache and Gabriela Anton.

The Schoenherr team advising BCR was led by Partner and Head of the Banking Practice in Bucharest Matei Florea, and included Partners Markus Piuk and Madeline Neagu, Attorney at Law Adina Damaschin, and Associate Anca Hotaranu.

Image Source: bcr.ro

A pledge of bank accounts is now specifically provided for in Russia. The necessary provisions, together with other pledge-related changes, were introduced into the Civil Code (“CCRF”) with effect from July 2014, as part of the civil law reform in Russia that commenced in 2013. Now the pledge of bank accounts can be used in securitization deals and to secure specific cash flows in finance transactions.

Previously, the pledge of rights to a bank account was not used in Russia. Though there was no direct prohibition, market players did not use such pledges in finance transactions due to uncertainty in legal interpretation and unclear enforcement mechanisms. Instead, banks generally used “prior given acceptance” (in Russian: zaranee danniy aktsept) structures, which allowed creditors to withdraw funds from debtors’ bank accounts. A typical agreement within this structure is usually called a “direct debiting agreement” (“DDA”) – which is not entirely correct, because Russian law requires the debtor to give prior permission/authorization to withdraw funds. Such agreement is usually tripartite, among the creditor, the debtor, and the debtor’s account bank. The prior given acceptance structure is not a strong instrument of financial security, as it does not prevent the debtor from opening new bank accounts, draining an account by multiple withdrawals, and other unfair and fraudulent actions (although these risks can be partially mitigated by using additional measures, such as an irrevocable power of attorney issued by the debtor). The other issue with a debtor’s bank account is that it is not secured from claims of tax authorities and enforcement officers. However, as it is an easy and quick way to withdraw funds, the DDA is still used fairly often in finance transactions.

Now market participants can use the pledge of bank accounts (in addition to or instead of the DDA) as a form of security. In order to create such a pledge, the debtor has to open a special account (a pledge account) with an account bank. As it is unclear whether the debtor can transform an existing bank account into a pledge account, creditors currently insist that debtors open new pledge accounts. The debtor is not required to place any funds in the pledged account (Art. 358.9 CCRF). The pledge is created after notification to the account bank, including a copy of the pledge agreement, although neither the consent nor the approval of the account bank is needed. The law does not contain any requirements for the form of the copy provided to the account bank, and the current practice is to use a notarized copy.

If the account bank is also the pledgee, the pledge is created upon execution of the pledge agreement (Art. 358.11 CCRF). However, it is unclear whether the pledgor or the pledgee must notify the account bank of the pledge in order to create the pledge. In practice it is recommended that the transaction be structured so that notification is sent by the pledgor, because an account bank does not need to run additional identification procedures (such as validity of signatures etc.) for a pledgor who is already a client. It is also recommended that pledge notification be signed by the same authorized officer of the pledgor, as his/her signature is known to the account bank from the specimen signature card already in its possession.

The pledgee is entitled to control the funds on the pledged account by requesting reports from the account bank, and by setting a minimum required balance (i.e., prohibiting the account bank from performing any operations if the account balance falls below the minimum amount). The account bank is jointly and severally liable to the pledgee if the pledgor violates the provisions of the pledge agreement by making an unauthorized withdrawal from the bank account. This liability is limited to the extent of losses incurred by the pledgee as a result of the unauthorized withdrawal, which in practice may be less than the amount of the unauthorized withdrawal – for example, where a withdrawal takes place, but the outstanding amount is sufficient to satisfy the claim of the pledgee.

The issue of direct debiting by tax authorities may still arise in relation to the pledge of bank accounts. Enforcement officers may only withdraw funds from a pledged account to satisfy prior claims of other creditors or if the debtor has no other assets. However, the tax authorities may still request that the bank make a wire transfer in the amount of a debtor’s tax arrears. 

It is also unclear whether a subsequent pledge can be created over a bank account and how that would work in terms of cooperation between senior and junior pledgees. Market players are looking forward to court practice or to guidance from the Supreme Court of the Russian Federation. 

By Stefan W. Weber, Partner, and Kirill Lelchitskiy, Senior Associate, Noerr

This Article was originally published in Issue 2.6. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In summer 2015 the Latvian Law on Recovery and Resolution of Credit Institutions and Investment Firms (the “Law”) came into effect, putting Latvia into compliance with the requirements of the European Union regarding establishment of a Bank Union in order to preserve financial stability and increase supervision of the banking sector.

The Law determines the instruments which may be used in case of resolution and governs in detail the procedures for their application, including the sale of the undertakings of a credit institution. The regulation is based on directive 2014/59/EU. In Latvia this instrument has been used since February 2010, when the regulation for transfer of the undertakings of a credit institution (a “Transfer”) was adopted. This regulation was necessitated by the global economic downturn experienced in 2008, which was severely felt in Latvia’s financial sector and which ultimately resulted in the State’s 2009 assistance in stabilizing a leading Latvian bank. The Regulation has been used both with respect to the voluntary transfer of the undertakings of a credit institution and a transfer of the undertakings of a credit institution subject to insolvency proceedings.

A Transfer may be carried out by an operating credit institution, a credit institution under insolvency or liquidation proceedings, or by a credit institution where the Financial and Capital Market Commission (FSA) has appointed its authorized person due to, inter alia, instability or potential insolvency.

In light of the specifics of credit institutions and their role in the public economy, the law provides for regulation that is different from the general regulation for transfer of undertakings. 

The permission of the FSA is required for a Transfer. In evaluating a potential Transfer, the FSA assesses the impact of the Transfer on the development and stability of the financial and capital market as well as on the collective interests of depositors. The FSA has not yet refused a Transfer application. 

Appeal of the administrative deed on the permission for a Transfer issued by the FSA does not suspend the deed’s enforcement. If the Transfer is carried out according to the decision of the authorized person appointed by the FSA, the Transfer may not be declared invalid; thus it is ensured that the Transfer is both as fast as possible and final, and the stability and reliability of the banking sector in the financial market will be increased for the acquirer of the undertaking, while related interests will be protected.

The consent of the creditors or other persons involved in the Transfer is not required, which is an exception from the general regulation for transfer of undertakings and which significantly facilitates the Transfer, since it would be very complicated and even impossible to obtain the consent of all persons interested in the Transfer. In case of the Transfer, disclosure of information to the acquirer of the undertaking of the credit institution shall not be considered to be a breach of the confidentiality obligations of the credit institution.

An essential difference in Transfers is that the joint and several liability of the transferor and the acquirer of the undertaking does not apply. That exception ensures that separating a part of the undertaking of the credit institution and selling it for as high price as possible can be done both simply and quickly. Application of this instrument is especially important when there are measures taken for recovery of the operations of a credit institution. The possibilities provided by the law have already been successfully used in Latvia by division of a credit institution experiencing financial difficulties into its conditionally good-asset and bad-asset parts, and by sale of the good-asset part of its undertaking.

The exceptions from the general regulation for transfer of an undertaking applicable to the Transfer have led to some complaints about the potentially unjustified infringement of the legal interests of the creditors and shareholders of the credit institution – some reaching as far as the Constitutional Court, which concluded that the regulation was proportional and compliant with the Latvian constitution and was reasonably aimed at ensuring the stability of the financial sector and the interests of the entire society.

The banking sector in Latvia has historically had a significant role, and the issue of the Transfer is essential for ensuring stability and successful operation of the financial market. An assessment of the already-completed transfers of undertakings of credit institutions reveals that the regulation of Transfer, which is different from the general regulation for transfer of undertakings, is an efficient legal mechanism for ensuring successful and quick Transfers both during times of financial crisis and times of market stability.

By Andra Rubene, Partner, and Maris Liguts, Senior Associate, Tark Grunte Sutkiene

This Article was originally published in Issue 2.6. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.