PORTFOLIO ASSET SALES

www.dlapiper.com
DLA Piper is a global law firm operating through various separate and distinct legal entities.
Further details of these entities can be found at www.dlapiper.com
Copyright © 2013 DLA Piper. All rights reserved. | JUL13 | 2574935
PORTFOLIO ASSET SALES
WHY DLA PIPER?
ABOUT DLA PIPER
DLA Piper has more than 4,200
lawyers and provides a range of legal
services around the world. Lawyers
operating from offices in Asia, Australia,
Europe, the Middle East and the
Americas provide high quality legal
advice to clients in their local market
and internationally.
KEY CONTACTS
Our vision is to be the leading global
business law firm. We draw on
the knowledge of our locally and
internationally trained lawyers advising
on a broad range of matters including
commercial, corporate, bankruptcy
and restructuring, tax, finance, human
resources, litigation, real estate,
regulatory and legislative, technology,
and media and communications in every
major market around the world.
Our global services are grounded
by the strength of our domestic
offices, our sector knowledge and
our commitment to client-driven
services. We support the strategic
and operational needs of our clients,
wherever they do business.
Martin Bartlam
Partner & Practice Group Head
T +44 (0)207 796 6309
[email protected]
Robert Mower
Partner
T +44 (0)207 796 6419
[email protected]
Véronique Collin
Partner – France
T +33 (0)1 40 15 24 93
[email protected]
DLA PIPER
RELATIONSHIP FIRMS
AUSTRALIA
BRAZIL
GERMANY
KUWAIT
QATAR
SOUTH KOREA
Brisbane
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Perth
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Kuwait City
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AUSTRIA
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Vienna
CZECH
REPUBLIC
BAHRAIN
Prague
ITALY
Manama
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BELGIUM
Paris
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Rome
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Brussels
GEORGIA
JAPAN
Tbilisi
Tokyo
02 | Portfolio Asset Sales
Budapest
MEXICO
ROMANIA
SPAIN
Mexico City
Bucharest
Madrid
NETHERLANDS
RUSSIA
THAILAND
Amsterdam
Bangkok
NORWAY
Moscow
St. Petersburg
Oslo
SAUDI ARABIA
OMAN
Riyadh
UKRAINE
Muscat
SINGAPORE
Kyiv
POLAND
Singapore
Warsaw
SLOVAK REPUBLIC
Bratislava
TURKEY
Istanbul
UNITED ARAB
EMIRATES
Abu Dhabi
Dubai
UNITED
KINGDOM
Birmingham
Edinburgh
Leeds
Liverpool
London
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Sheffield
UNITED STATES
Albany
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Atlantic City
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Virginia
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Tampa
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BOSNIAHERZEGOVINA
GHANA
Accra
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INDONESIA
BOTSWANA
Jakarta
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IRELAND
CROATIA
Dublin
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KENYA
DENMARK
Nairobi
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MAURITIUS
EGYPT
Port Louis
Cairo
MONGOLIA
ETHIOPIA
Ulaanbaatar
Addis Ababa
NEW
ZEALAND
TANZANIA
Auckland
Wellington
Dar es
Salaam
Mwanza
PORTUGAL
TURKEY
Lisbon
Ankara
RWANDA
UGANDA
Kigali
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AFRICA
VENEZUELA
Cape Town
Johannesburg
Caracas
ZAMBIA
Lusaka
SWEDEN
Stockholm
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DOCUMENTATION AND
IMPLEMENTATION
Having been deeply involved in a
number of market-leading loan portfolio
sale transactions, we have a welldeveloped set of precedent documents
and a finely tuned sense of market
practice. Our experience in this regard
includes the drafting and negotiation
of sale and purchase agreements with
tested and reliable transfer mechanics,
true-up provisions, limitations on
representations and warranties, any
related indemnities, transitional servicing
agreements and, to the extent any bid
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mitigation of the accounting,
regulatory and other compliance
issues arising from the transaction,
and to the extent of any retained
interests by the Seller, requirements
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is contingent on Seller’s ongoing equity
or debt participation, joint venture
agreements and vehicles and senior and
mezzanine financing documents.
Our recent comparable transactions
have involved the transfers of very
complex portfolios, involving diverse
loan assets in many jurisdictions. We are
very well versed in the management of
complex closing mechanics and pride
ourselves on an efficient and orderly
closing process.
OTHER ISSUES
Other issues that we anticipate may
arise in relation to a transaction, all of
which we have addressed in previous
transactions, include:
■
10 WORKING OUT THE
ASSETS ONCE OWNED
to achieve off-balance sheet/true
sale treatment for the transaction;
■
tax concerns (including withholding
tax, VAT and real estate transfer
tax);
■
the timely resolution of any
applicable merger clearances; and
■
data transfer and privacy issues in
the UK.
With over 200
dedicated lawyers,
we have one of the
largest restructuring
practices in the world,
enabling us to develop
intelligent work-out
solutions for the assets
once they are acquired,
ranging from debt and
equity restructurings
to tender offers to
insolvency proceedings,
administration,
receivership and similar
arrangements in each
of the world’s global
financial centres and
beyond.
DEPTH AND QUALITY OF
EXPERIENCE
We have structured and implemented
many of the largest and most complex
distressed debt sale transactions in
recent years, placing us at the forefront
of crafting the solutions that intelligently
address the challenges presented by
today’s global economy.
To provide our clients with a
comprehensive, multi-disciplinary
approach, we have tightly integrated
a specialist team of dedicated
lawyers from our structured finance,
restructuring, debt capital markets,
corporate, real estate, tax, and funds
practices. The collective expertise
of this team offers our clients a
“cradle-to-grave” solution that includes
the structuring of tax-efficient and
regulatory compliant investment
vehicles, the implementation of
sophisticated debt and equity financing,
and unparalleled knowledge of the
difficult markets in which these
transactions operate.
With teams of highly experienced
lawyers working from every corner
of the globe, we draw upon not
only a highly sophisticated finance,
restructuring and regulatory practice,
but also an unparalleled knowledge of
local markets across the globe and the
associated challenges our clients face.
OUR UNDERSTANDING OF
THE MARKET
The global financial crisis, as well as
the varied political and regulatory
responses to it, have had a profound
effect on the world’s banks and the
environment in which they operate.
Yet from every crisis emerges
opportunity. Hedge funds and
private equity firms that specialise in
distressed situations are presented
with a constantly shifting array of
unparalleled buying opportunities and
are expanding their global reach.
Having safely navigated our clients
through the purchase and sale of
billions of dollars worth of distressed
assets since the onset of the financial
crisis, DLA Piper is uniquely qualified
to guide both purchasers and sellers
through the difficult challenges and
promising opportunities presented by
this unprecedented global deleveraging.
In response to balance sheet
problems, increased capital adequacy
requirements and other regulatory
pressures, banks across the globe are
facing intense pressure to deleverage
their troubled loan portfolios.
Analysts estimate that, in Europe alone,
banks are faced with deleveraging as
much as $2 trillion to $3 trillion of loan
assets from their balance sheets.
MARKETING
Our prior experience in the structured disposal of troubled loan portfolios has been
very much as a partner with the client, so we have considerable market knowledge
and contacts that we expect will be valuable to you in your objectives.
10 | Portfolio Asset Sales
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OUR BANKING AND STRUCTURED
FINANCE CAPABILITIES
“The interaction and quality at partner level is outstanding. They know how to judge and
manage a negotiation.” Sources add that the team’s advice is “absolutely concise and straight
to the point.” – Chambers 2012 DLA Piper’s International Banking
& Finance practice consists of over
450 advisers providing services within
78 DLA Piper offices all over the world.
DLA Piper’s specialists from our
offices in Europe, Asia, North America,
South America and Australia cooperate
with our UK lawyers on a daily basis.
As a result, we provide comprehensive
legal and tax advisory services related
to domestic and international projects.
Our cohesive organisational structure
ensures the constant exchange of
know-how as well as fluid and effective
internal communication.
DLA Piper’s Banking & Finance Team in
the UK consists of advisers with wide
experience gained in numerous projects
performed for all types of entities
including foreign banks, global and local
corporations, international financial
institutions, investment funds and private
investors.
At DLA Piper, we offer comprehensive
support to our clients at all stages of
projects, starting from planning the
structure of financing (term-sheet),
through negotiations of transaction
documents, establishment of security,
preparation of offer documents, to the
disbursement of funding.
We have experience in the financing of various types of investments:
If requested, we are prepared to
undertake a review of the direct
security for the portfolio, identifying any
issues as soon as practicable. The full
report would be prepared on an
exceptions basis.
In our view, the diligence undertaken
should yield information that is useful,
rather than undertaking the diligence for
the sake of it. The scope of the security
review would be pre-agreed.
5
acquisition of debt portfolios;
property acquisition and development;
infrastructure projects; and
issuance of bonds;
acquisition of assets.
TUPE compliance;
6
energy sector projects;
We also advise banks and financial institutions in the areas of:
derivatives;
standardisation of loan documentation; and
structured banking products;
regulatory aspects and bank supervision.
04 | Portfolio Asset Sales
We would expect any security review,
at a minimum, to involve a review of
the relevant mortgages and security
deeds to ensure that they are properly
recorded, with the anticipated priority. It
may also involve a review of the priorranking security on the same collateral.
Any security review team will utilise our
form of security checklist developed
on previous transactions to ensure a
consistent approach.
TRANSFER OF EMPLOYEES
It may be that certain staff who are
dedicated to the portfolio will transfer
to the purchaser. Our employment and
M&A teams are highly experienced in
the issues that arise in connection with
any transfer of employees from one
employer to another, including:
■
mergers and acquisitions;
SECURITY REVIEWS
■
drafting social plans;
■
transfer arrangements;
■
works council and union
negotiations;
■
reorganisations; and
■
pensions advice.
PPI CLAIMS MANAGEMENT
We understand portfolios may be subject to PPI claims and that the parties may be
expected to manage these claims after closing. We would expect the sale and purchase
agreement specifically to address the management of liabilities, and responsibility for
ongoing claims management and reporting.
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HOW WE CAN ASSIST
1
Loan level strategy
identification
2
Document gathering
and data tape population
3
Due dili
D
diligence iissues
4
Security reviews
5
Transfer of employees
6
PPI claims management
7
Documentation and
implementation
8
Other iissues
Oth
9
Marketing
M
k ti
1
LOAN LEVEL STRATEGY
IDENTIFICATION
We believe that we are uniquely
qualified to provide advice on
potential structures for portfolio sales
transactions having gone through this
same process for numerous clients from
both the “sell-side” and the “buy-side”.
Our experience is that whilst there
are various common themes, often the
structure is heavily influenced by specific
requirements of the parties. While we
2
can craft a proposed structure with
you to address specific issues, it is likely
that the potential purchaser will have
strong views that will also need to be
accommodated.
We are well-prepared to respond to
any proposed structures and the tax,
accounting and regulatory concerns
related hereto.
DOCUMENT GATHERING
AND DATA TAPE
POPULATION
We have extensive experience in the
creation and auditing of data rooms.
We have very clear ideas as to how we
can interact wth the Seller’s data supply
team to ensure a consistent and usable
resource is created that will permit fluid
access to information and the ability to
respond to any bidder’s or the ultimate
purchaser’s concerns regarding any
aspect of the portfolio. If you require
our assistance, any further work
collating and uploading and/or updating
data would be carried out by a team
dedicated to the project.
STRUCTURED FINANCE
Understanding your requirements
We have more than 200 finance
lawyers practising in this important
sector of the market on a global basis.
The team is supported by our leading
corporate, regulatory and tax teams and,
as required, works together with our
enforcement, litigation and restructuring
teams, enabling us to call on over
2,000 lawyers within these areas to
complete large and/or complex and
multi-disciplinary transactions.
The credit market meltdown not only
put a virtual halt to most new issuance
in the CMBS and ABS markets, but also
had a debilitating impact on most law
firms with any significant commitment
of resources to structured finance.
DLA Piper was fortunate in that it was
not forced into a downsizing mode by
the meltdown but has instead been
able to take a contrarian view and use
the down market as an opportunity to
expand and upgrade its securitisation
capabilities.
This effective combination of practice
skills and geographical reach is essential
in an increasingly complex and global
economic environment. Our ability to
deliver an efficient integrated service
allows us to offer quick and high quality
solutions with significant savings for
clients in terms of administration,
management time and bureaucracy.
Our solutions are both legally effective
and economically attractive.
The structured finance practice of
DLA Piper now encompasses a deep
bench with significant substantive
experience in a broad range of
structured debt transactions, running
the gamut from CMBS and RMBS
through CDOs and CLOs, auto loan
securitisations and other consumer
ABS and esoteric assets such as
ships, aircraft and project finance
securitisations, tobacco fee securitisation,
IP securitisation and whole business
securitisation. The structured finance
group of DLA Piper comprises not only
practitioners with years of hands-on
experience with these diverse types of
transactions, but also thought leaders
who are known in the industry for
their creative problem-solving and
their entrepreneurial track record in
designing and executing new structured
finance programs. In addition, the
DLA Structured Finance lawyers have
ready access to the Firm’s diverse mix
of other global specialty practices to
provide substantive law and business
coverage for anticipated future
securitisation activity, including real
estate, litigation, bankruptcy, intellectual
property, franchising, insurance and
renewable energy.
TAX EFFICIENCY
assets
ts
10 Working out the asset
once owned
3
DUE DILIGENCE
ISSUES
We can discuss with you the best way
in which to assist with data request
responses to bidders and any necessary
analysis, including co-location of staff.
As a matter of priority, a team separate
from any that assists the Seller’s data
collation team will be available to address
whatever issues are raised by potential
purchasers as they evaluate the diligence
information available in the data room.
Having recently managed the due
diligence processes for complex loan
portfolios, we have extensive experience
in anticipating, responding to, and
recommending solutions to, the types of
issues that purchasers are likely to raise,
08 | Portfolio Asset Sales
BOND AND
NOTE ISSUANCE
such as transferability, disclosure and
reliance arising from the documentation.
If the Seller’s intention is to undertake
any further vendor due diligence in
preparation for the sale of a portfolio,
our recommendation would be for this
exercise to be subject to a cost benefit
analysis to assess whether additional work
is warranted to address shortcomings.
For example, it may be that the decision
is made not to seek to readdress
valuations undertaken at origination, even
if the reliance wording is unsatisfactory,
given the limited usefulness of those
reports to a purchaser of the loan today.
CROSS BORDER
AND TRANSPARENCY
ISSUES
INTERCREDITOR
AND SECURITY
ISSUES
FINANCIAL
REGULATION AND
EFFICIENT CAPITAL
STRUCTURING
DERIVATIVES
CORPORATE SUPPORT
AND ADVISORY
EQUITY
FINANCE
INSOLVENCY PROTECTIONS
AND ENFORCEMENT ISSUES
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PORTFOLIO ASSET SALES
CAPABILITY
■
We have structured and implemented many of the largest and most complex
distressed debt sale transactions in recent years and have guided our clients, on
both the sell side and the buy side, in connection with the purchase and sale of
billions of dollars worth of distressed assets.
We have extensive experience in all
types of asset disposals, ranging from
simple mortgage and loan portfolio
sales to complex, tax-driven and
structured disposals.
■
■
Advising Blackstone on its
purchase of a large portfolio of
troubled commercial real estate
loans (with a face value in excess
of £1.3 billion) from The Royal
Bank of Scotland. This marketleading transaction involved
a joint venture purchaser,
as well as senior financing
provided by the seller, which
the seller expects to securitise
in the future. The assets in
this portfolio are secured by
properties located throughout
the United Kingdom.
Advising a major Swiss
investment bank in the sale
of two separate portfolios of
loans and loan interests with face
values in excess of €1.3 billion
and £1.2 billion, respectively.
In each case, the sale was a
complex tax-efficient highly
06 | Portfolio Asset Sales
structured transaction involving
special purpose entities jointly
owned by the investment bank
and private equity investors.
The transaction was funded
through multi-currency senior
financing provided by the seller.
The purchased assets were
secured by properties located
across Europe, with a significant
exposure to Germany and the
Netherlands.
■
■
■
Representing Parella Weinberg
Partners in connection with its
purchase from Banco Popular
de Puerto Rico of a portfolio
of non-performing residential,
construction and commercial
real estate loans and REO assets
having an aggregate face value
of $1.6 billion. The portfolio was
purchased by a joint venture
vehicle owned by Parella
Weinberg and Carribean
Property Group, with the
purchase price funded in part
with senior financing provided by
the seller.
■
Representing Landcap
Partners a joint venture
between Goldman Sachs
and Northstar Finance
Realty Corp. in the acquisition
of a portfolio of land and
construction loans secured by
residential lots in various stages
of development throughout the
Continental United States.
Advising a UK-based private
equity firm in its bid to
purchase from Lloyds Banking
Group a portfolio of 27 senior,
mezzanine and revolving/working
capital facilities with a face value
in excess of £500 million.
Acting for an investor in relation
to the purchase of a participation
in a portfolio of UK real estate
loans with a face value in excess
of £1.1bn. The loan portfolio
consisted of an asset mix of offices,
retail and light industrial units
predominantly based in London.
Providing UK and US advice on the
structure of the transaction and
the due diligence undertaken.
■
■
■
■
Providing strategic structuring
advice to Bradford & Bingley in
connection with the preparation
for sale and ultimate disposal of a
£1.9 billion portfolio of commercial
mortgages to GE Real Estate
Finance and a £2.2 billion portfolio
of social housing loans to Dexia.
■
■
Providing sale-side due diligence
to Dresdner Bank on a nonperforming loan portfolio valued
in excess of €1.2 billion comprising
over 300 borrowers and made up
mainly of commercial loans.
Advising a German bank
consortium on the sale of
a loan portfolio to American
investment company Colony
Capital. The loan portfolio
consisted of non-performing
loans which were combined into
one package and then jointly sold
by the consortium of banks, in
a market-leading transaction in
Germany and Europe.
Advising on the restructure of
debt and equity arrangements
in excess of £1.7 billion with
Lloyds Banking Group,
which included one of the
largest debt for equity swaps in
British corporate history.
Advising Deutsche Bank on a
non-performing loan portfolio
and conducting the buy-side due
diligence (valued in excess of
€700 million).
Represented Blackstone in a
multi-billion dollar bid to acquire
from Allied Irish Bank a portfolio
of over 250 Loans secured by
more than 300 real estate assets
(including residential, office,
condominium, development land
and hospitality assets) located
throughout the United States.
ADDITIONAL SPECIALIST
EXPERTISE THAT MATTERS
■
In addition to those deals
mentioned above, DLA Piper has
the largest real estate practice
of any law firm in the world,
with more than 200 real estate
lawyers in the United Kingdom
and more than 550 real estate
lawyers worldwide.
■
The size and reach of DLA Piper’s
real estate practice make
DLA Piper uniquely positioned
to provide unsurpassed service
for major real estate financing
portfolio transactions. DLA Piper
also has numerous lawyers in
other disciplines to facilitate
these transactions, such as tax,
finance, environmental, litigation,
bankruptcy and derivative
products.
■
DLA Piper’s unique expertise,
utilised in connection with these
other practice areas, permit us to
advise our clients on all aspects
of portfolio transaction work –
real estate diligence, exercise
of remedies and litigation, tax
structuring, lender consents and
loan assumptions and financial
structuring.
We also have experience of
working on many transactions
involving the transfer of banking
or regulatory businesses.
■
■
Banco Santander in the
negotiations with KBC relating
to the proposed merger of Bank
Zachondi WBK S.A and Kredyt
Bank. The merger is subject to
financial regulatory and antitrust
approvals and is expected to
be completed by end 2012. The
combined bank’s total pro forma
value amounts to €5 billion; and
Banco Santander on its
acquisition of Polish entities
Bank Zachodni WBK S.A. and
BZ WBK AIB Asset Management
S.A. from Allied Irish Bank for
€4.3 billion.
Bulk sale projects of
non-performing loans for
Morgan Stanley and
Citibank.
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