Category: Uncategorized

Glimstedt has advised GreenGas Energy OU on its entrance into a long-term purchase and sale agreement with the aspen pulp mill Estonian Cell AS for biogas to be turned into biomethane. Raidla Ellex advised Estonian Cell.

“Up till now we have used this biogas in our own manufacturing process,” explained Siiri Lahe, a member of the management board of Estonian Cell. “But during standstills this valuable by-product goes to waste by being burnt without any benefits. A biomethane production plant will allow the full exploitation of the biogas generated.” 

GreenGas Energy is planning to produce 6-7 million cubic meters of biomethane a year at a new plant which will be built later this year in Kunda, Estonia, with the biomethane expected to reach the gas grid in 2017.  According to Glimstedt, “biomethane is the cleanest renewable natural fuel, the use of which in transportation will significantly reduce environmental pollution. GreenGas Energy, established in 2015 as a result of collaboration between Glimstedt Energia OU and GreenGas OU, is the company producing bio-fuels.” 

Marko Tiiman, Managing Partner of Glimstedt Estonia, is a member of the board of GreenGas Energy.  According to Tiiman the investment will help to meet the objectives of the deployment of renewable energy in the transport sector in Estonia.  

Imbi Jurgen, energy law specialist at Glimstedt, was responsible for the preparation of all the legal documents and continues to contribute to the creation of transnational trade system of biogas certificate of origins in Estonia. 

The Raidla Ellex team was led by Counsel Triin Frosch.

Kinstellar has successfully advised the shareholders of the Czech company Quinta-Analytica, an established provider of R&D and regulatory services for the pharmaceutical, biotechnology, and generic drug industries, on the sale of their 75% share in the company to Genesis Private Equity Fund III (GPEF III). Havel, Holasek & Partners advised GPEF III on the transaction.

The transaction represents the first investment for GPEF III, which has approximately EUR 80 million available for investments in small and medium-sized enterprises in the Czech Republic and Slovakia.

Kinstellar describes Quinta-Analytica as “one of the largest companies in CEE providing commercial services for pharmaceutical companies specializing in analytical services that support the development and manufacture of new medicines,” and says that “its services are utilized in the clinical studies and laboratory analyses required by national authorities for drug approval before a new product launch.” In 2015, the company achieved revenues of EUR 256 million.

Kinstellar advised the shareholders on all aspects of the transaction, including preparation and negotiation of the transaction documentation, which consisted of a framework agreement, shareholders agreement, and management and consultancy agreement. The firm’s team was led by Partner Jan Juroska, supported by Associate Michal Kniz and Ivana Frantesova.

Havel, Holasek & Partners did not reply to our inquiries on the matter.

Editor’s Note: After this story was published, Havel, Holasek & Partners announced that its team advising Genesis Private Equity Fund III consisted of Partner Vaclav Audes, Managing Associate Jan Frey, and Associate Veronika Filipova.

The distressed debt front is an interesting area for lawyers in Slovenia, according to Vid Kobe, Partner at Schoenherr in Ljubljana, who says, “apart from privatization- and restructuring-driven M&A, it is the main type of work dominating our schedules.”

Kobe adds: “There are two main elements that follow as a natural progression to the restructuring boom of the recent past: (1) The large restructured corporates who have achieved stability and returned to growth of which we will likely see many looking to refinance their capital structures (one recent example is the ACH Group’s recent refinancing of its senior debt by VTB); and (2) Perhaps an area generating even more buzz is that of large corporates for which restructuring has not resulted in a turnaround – there you see repeated instances of buy-ups of senior debt by a new type of player (especially in restructuring corporates holding interesting assets).” This year is critical for NPL portfolios in Slovenia as well, according to the Schoenherr Partner, who points to the recent placement of a huge portfolio by the largest Slovenian bank, with other big players likely to follow.

“Much of the big ticket stuff has already been wrapped up and the first round of large deals is behind us,” Kobe comments about the equity side. He adds: “By far the largest ongoing deal is the privatization of NLB — the largest Slovenian bank — which looks like it will be sold via an IPO.” Kobe also notes that the market is waiting to see the State’s updated plans for disposing of large corporates in which it has a stake, with everyone “curious to see what amendments will be made to the list of companies to be sold with rumors in the market being floated that other companies will be up for sale in the near future.” Kobe also points to an increasing number of assets being sold by debt holders: “a new breed of sellers, if you will, who were not holding an asset as a strategic investor nor as a private equity investor.” This, he argues, “is a slightly different type of work, but it’s still M&A-type of work that keeps us busy.”

Finally, Kobe points to activity on the real estate market: “We’re seeing new players buying up real estate (backed) assets from distressed corporate groups who, for one reason or another, are exiting the leisure sector as one of their core activities.” Kobe reports that a lot of auction sales to private individuals are being completed, with many apartment building projects that ended up in the hands of the Slovanian bad banks or private bad banks now being placed on the market.

The new Czech Civil Code effective 1 January 2014 introduced new rules for determining the moment of legal effectiveness of the transfer of an enterprise.

For transferees registered in a Commercial Register, the ownership right to the enterprise will now transfer only upon publication of the information that the transferee has lodged an enterprise transfer deed in the Collection of Deeds of the transferee maintained by the Commercial Register.

For all intents and purposes, the moment of publication will be the moment when the information becomes available on the website of the Ministry of Justice (www.justice.cz), which also comprises the Collection of Deeds of persons listed in the Commercial Register.

New challenges

While the new rules aim to establish a “joint transfer principle” to ensure that all components of the enterprise are transferred simultaneously, it also creates new challenges.

Notably, the moment of ownership right acquisition now lies entirely in the hands of the officials of the commercial court whose job it is to file the enterprise transfer deed in the transferee’s Collection of Deeds. The challenge is all the greater, as there is no fixed statutory deadline for filing such documents. The law only states that they must be filed “without undue delay”, which can, however, result in diametrically different approaches by the various commercial courts operating the Commercial Register.

Since transaction timetables are typically predicated on precisely timed steps (in order to precisely define the moment when the ownership right is transferred, risk of damage passes or further post-transaction steps occur, eg termination of existing supply agreements), the above-outlined uncertainty over transaction timing may pose problems and requires the development of alternative procedures to eliminate the negative features of the newly introduced rule.

Proposed solutions

There are two simple ways to mitigate or eliminate the outlined risks entirely.

The first is to liaise with the competent official of the commercial court prior to the submission of the enterprise transfer deed in the transferee’s Collection of Deeds. This would still mean that publication would occur as soon as the servers operating the Ministry of Justice’s website (www.justice.cz) are updated, which would still take some time (servers are usually updated at midnight). Naturally, this would require close cooperation with the competent officials of the commercial court, which may also prove to be a challenge.

The second way entirely eliminates the timing uncertainty by involving a notary public in the registration process. Enterprise transfer deeds are lodged in the Collection of Deeds of the transferee by the notary using a special online application for real-time access to the Commercial Register allowing direct registration. In this scenario, the following steps would typically occur:

1. The notary executes an enterprise transfer deed in the form of a notarial deed (being an underlying notarial deed), confirming, among other things, that the conditions for the enterprise transfer were fulfilled (eg required corporate approvals were obtained); 
2. The notary then proceeds with the registration of general information on enterprise transfer in the transferee’s listing in the Commercial Register – relying on the transferee’s statutory right to request registration of facts important to it (eg information that an enterprise transfer agreement has been signed) – and within this registration process the notary would also submit the enterprise transfer deed in the Collection of Deeds of the transferee. This step is practically included since the notary cannot submit a document into the Collection of Deeds without registering new information in the person’s listing in the Commercial Register.
3. Since the notary has real-time direct access to the Commercial Register, he or she would immediately verify that the enterprise transfer deed has indeed been submitted into the Collection of Deeds of the transferee, and can proceed with the registration of other general information stating that the enterprise was transferred on a certain date. 

Such registration would only require that another notarial deed (being a verifying notarial deed) is executed to verify that the registration made on the underlying notarial deed (see 1. above) was successful.

All steps in the second solution could be performed at one meeting within a relatively short period of time.

Conclusions

These ways of submitting the enterprise transfer deed in the Collection of Deeds of the transferee, maintained by a Commercial Register, should eliminate or mitigate the negative consequences of the new rule for determining the moment of acquisition of an ownership right to an enterprise, without any substantial additional costs for the parties.

As the efficacy of dealing with an official of the commercial court depends to a great extent on the official’s alacrity (or lack thereof), we tend to prefer the option of using a notary public with direct access to the Commercial Register.

By Vladimír Cízek, Partner, Schoenherr

Sorainen Estonia has assisted Betoonimeister, an Estonian company involved in manufacturing articles from concrete, cement and plaster, in its acquisition of TM Betoon, a ready-mix concrete provider based in Tartu, Estonia, as a going concern asset transaction.

In Estonian, “betoon” means “concrete.” 

According to Sorainen, the firm “is advising [Betoonimeister] throughout the process, from drafting transaction documents, conducting negotiations, obtaining merger clearance to assisting with closing.” The firm describes the transaction as involving “a challenging new approach to defining the market to competition authorities.”

The Sorainen team is led by Partner Toomas Prangli, and included Senior Associate Paul Kunnap and Associate Britta Park.

Sorainen did not reply to our inquiries about the identity of the sellers or their counsel.

Dentons has advised German asset manager KGAL Group on its acquisition of Eiffel Square, a major office development in central Budapest, from Europa Capital. Lakatos, Koves & Partners advised Europa Capital on the deal.

Eiffel Square is a 23,500 square meter prime office development next to Budapest’s Nyugati Station (which was designed by Gustav Eiffel), with 18,500 square meters of offices, 2,100 square meters of retail premises and 1,700 square meters of restaurants.

“In purchasing the Eiffel Square, KGAL is consistently expanding its pan-European real estate portfolio,” said Gert Waltenbauer, CEO of KGAL Group. “The prime property in Budapest is a perfect fit for our targeted investments in prosperous locations in Central Europe.” 

The Dentons team on the deal was led by Partner Judit Kovari, supported by Of Counsel Marcell Szonyi and Adam Kaplonyi with Associates Anna Gerendas and Zsofia Lascsik.

The LKT team consisted of Partner Attila Ungar and Lawyer Agnes Hegyi.

Image Source: eiffelter.hu

Clifford Chance has represented a syndicate of banks consisting of PKO BP S.A. (agent), Bank Handlowy w Warszawie S.A., Bank BGZ BNP Paribas S.A., Bank Zachodni WBK S.A., HSBC, and ING bank Slaski S.A., in connection with the conclusion of a credit facility agreement with Synthos S.A. White & Case represented the Synthos S.A. Group.

Clifford Chance describes the Synthos S.A. Capital Group as “one of the largest producers of chemical raw materials in Poland,” and reports it to be “the leading European producer of emulsion rubbers and a leading European producer of expandable polystyrene.”

According to a Clifford Chance press release, “the transaction involving the financing for Synthos S.A. is interesting in many respects: it is of a revolving nature, with security established on inventories and commercial contracts, and the amount of the credit facilities is dependent on, inter alia, the amount of the so-called borrowing base, i.e.  the value of the assets provided as security. The financing does not envisage the testing of financial indicators (the so-called maintenance covenants) at all, however, the indicators will be tested, for example: (1) if specific transactions are entered into (in order to check whether a given transaction would not cause an indicator to be exceeded) (the so-called incurrence covenants); (2) for the purpose of determining the margin level; or (3) the available amount of the facility. Such financing continues to be very rare in Poland (although it is relatively frequent in the U.S.A. and recently in Western Europe). It is based on mechanisms incorporated in high-yield bonds. Despite the fact that it is governed by Polish law, the facility agreement prepared by Clifford Chance draws on the set of notions incorporated in the high-yield bonds that were issued by the Synthos S.A. Group, which made the preparation of this agreement an interesting challenge.”

The Clifford Chance Warsaw team was managed by Partner Andrzej Stosio and directly supervised by Counsel Irena Floras-Goode. The team also included: Senior Associate Katarzyna Jakubiak and Associates Aleksandra Rudzinska, Mateusz Chmura, Piotr Weclawowicz, and Monika Adamin, with Warsaw-based Counsel Rafal Zakrzewski supervising English law aspects. Clifford Chance’s Prague office advised on Czech aspects of the transaction.

Editor’s Note: After this article was published White & Case reported that its team advising the Synthos S.A. Group was led by Warsaw-based Partner Tomasz Ostrowski, and included Prague-based Local Partner Petr Hudec and Associates Michal Oles (Warsaw) and Ondrej Barton (Prague).

Lakatos Koves & Partners (LKT) has announced that senior banking and finance lawyer John Fenemore has returned to Budapest to join the firm as Partner.

Fenemore joins LKT from Clifford Chance’s London office, where he has been since 2010. He began his legal career in 2000 in Budapest with Koves Clifford Chance (LKT’s predecessor in the market, before Clifford Chance withdrew from Hungary), then spent from 2002 to 2005 with Clifford Chance in London. From December 2005 to January 2010 he worked as a Solicitor with Badea Clifford Chance in Bucharest. 

Fenemore advises lenders and borrowers on trade finance and growth market transactions. At LKT he will work alongside Partner and banking and finance practice head Szabolcs Mestyan. 

“We are very pleased to welcome John back to Budapest,” said Managing Partner Peter Lakatos. “With our predominantly international client-base it is important for us to have lawyers in our team with extensive experience in the London market. With John’s arrival we also maintain and develop our English law resource. In addition, John has the further advantage of fluent Hungarian and Romanian. We have always seen ourselves as innovators – with this step, raising our combined international and Hungarian Banking and Finance capability beyond anything currently available in Budapest, we are again leading the way. We are confident that banks, the finance community generally and the law firms who refer work to us will appreciate the benefits offered by this additional capability.”

Banking & Finance head Szabolcs Mestyan said, “I have worked with John over many years and I am very pleased he has agreed to join our team here. With his London based emerging markets experience, and long track record of working with banks focussed on Central Europe, he will be a great addition to our Banking & Finance practice, which serves banks operating mainly out of London, Frankfurt and Vienna.”

“It is great to be going back to Budapest,” said Fenemore. “I began my legal career in Budapest, and have spent much of my time since then working in Central Europe, both on the ground in Budapest and Bucharest but also managing transactions across the CEE region from London. I know the LKT team well, having worked with them both while they were part of Clifford Chance and as an independent firm since 2009. They impressed me by their integrity, responsiveness and by the quality of their work. The LKT Partners have built one of the leading independent firms in Hungary and I am excited by the challenge of helping the LKT team to offer first class advice to investors and institutions in Hungary and across the region.”

Various media outlets have recently been reporting on the economic relationship between Turkey and the Balkan countries, as well as the growing interest of Turkish companies to do business in this region through acquiring or cooperating with local companies – many of which are state-owned and in the process of being put up for sale by their respective governments.

If we look closer into specific examples, the numbers are supportive of this positive trend, i.e. in Serbia, three years ago only 25 Turkish companies were present in the country’s market, with that number rising up to 90 in 2016.

Furthermore, at a recent meeting in the Serbian Chamber of Commerce, the activity between Serbia and Turkey in the banking sector, or more precisely, the acquisition of Cacanska Bank by the Turkish Halk Bank – a transaction that Karanovic & Nikolic  advised on, was emphasised as a particularly positive signal for potential future investors.

The above meeting was attended by the Association of Young Businessmen from Ankara (ANGIAD), a group that encompasses around 1000 companies from Turkey, some of which have shown interest for investing in Serbia and cooperating with local companies across a diverse range of industries including building materials, wood processing, tourism, healthcare, coffee processing, and others. ANGIAD representatives were then introduced to the improving business climate in Serbia, through a presentation that included the local investment conditions and the ongoing reform process in the Serbian economy. Some features of doing business in Serbia that are considered of special relevance to Turkish investors have been highlighted, especially those related to the possibility of navigating across third markets due to Serbia’s free trade agreements with a wide range of countries including – but not limited to – Russia, Belarus, Kazakhstan, EU, and CEFTA & EFTA member countries. Veljko Jovanovic, Advisor to the President of the Serbian Chamber of Commerce, remarked that Turkey is one of his country’s already most important trade partners and announced the Chamber’s openness to all Turkish companies interested to do business with Serbia.

Another – more significant example of activity on this front – was seen last month at the third Croatian-Turkish Business Forum, held in Zagreb, which featured a number of prominent attendees, including the Presidents of the two countries. A positive attitude towards future commercial relations between Croatia and Turkey was showcased throughout the event, with many encouraging statements coming from President Erdogan himself, who proclaimed hope for the bilateral trade figures to rise up to 1 EUR billion over the next five years, so as to equate the state of the economic relationship between the two countries with the already highly positive state of political affairs. It should be noted that, when compared to those benefits previously mentioned in the case of Serbia and Turkey, the potential for such cooperation between the Croatian and Turkish economies has a somewhat different set of perks, mainly since Croatia, as an EU member, can make it significantly easier for Turkish products to reach the European Single Market. Turkey however, is in the position to offer equally valuable benefits to all its business partners, with a fast growing economy and a strong backbone of investors, as well as through functioning as a trade bridge to the Black Sea and the countries of the Middle East. Finally, a good example of potential large-scale cooperation can be found in the recent rumours surrounding the potential Turkish Airlines’ acquisition of Croatia Airlines.

Most of the above  developments give us an encouraging perspective on how countries from our region can shape their commercial relations with Turkey, and in doing so, build on the cultural heritage that’s hundreds of years old, en route to a future in which new history – at least in a business sense – waits to be written. We will watch this space with interest.

By Patricia Gannon, Senior Partner, Karanovic & Nikolic

Primus has acted for LPKS LATRAPS, Latvia’s largest farmers’ cooperative, in the increase of its shareholding in dairy producer Latvijas Piens SIA. The firm is also representing LPKS LATRAPS in the application for merger clearance from the Latvian competition authority.

LPKS LATRAPS has 894 members and an annual turnover in excess of EUR 163 million. Latvijas Piens started business in 2012 and focuses on the production of cheese for export.

According to Primus, “the transaction is expected to create favorable conditions for the development and stability of the dairy producer in an industry adversely affected by unfavourable geopolitical and market circumstances. The acquisition secures that the dairy production by Latvijas Piens SIA stays in the hands of local farmers.”

Primus did not identify counsel for sellers.