Legal Business Blogs

Deal Watch: Magic Circle advises on headline debt deals as re-financing work keep advisers busy

In a dire market for new money M&A, debt restructuring continues to be a lifeline for major advisers with Freshfields Bruckhaus Deringer, Linklaters and Kirkland & Ellis securing major mandates in recent days.

The standout mandate of May was the €4.2bn debt restructuring of German real estate group IVG Immobilien, which has generated lead roles for Freshfields and Linklaters alongside US duo Kirkland and Kaye Scholer.

Freshfields advised the company, led by Hamburg-based partner Lars Westpfahl and Frankfurt finance partner Jochen Wilkens. IVG had amassed debts of €4.2bn by the end of March, which it is now pushing to restructure with lenders and bondholders. Once Germany’s largest real estate company, IVB has lost 98% of its market value since 2008 following property write-downs and a heavy debt burden.

The holders of €400m in unsecured notes issued by IVG are being advised by Kaye Scholer, with the firm fielding a team under restructuring partner David von Saucken, who works out of London and Frankfurt, and City-based partner Paul Atherton.

The company took an unsecured syndicated loan in 2007 and a secured syndicated loan in 2009, both for around €1.3bn. Creditors including Cerberus, Marathon and Varde Partners are being advised by Kirkland restructuring partners Leo Planck and Sacha Lurken.

Senior debt holders are being advised by Linklaters banking and restructuring partner Kolja von Bismarck.

Restructurings that pit different classes of creditors against each other are notoriously complex, as such proving rich pickings for legal advisers.

The company is trying to arrange differing groups of creditors into organised classes to push through the restructuring, according to a conference call with creditors this week.

It is understood that German independent Luther and US law firm Paul Hastings Janofsky & Walker are advising some junior creditors. The German company, which owns a stake in the Gherkin, is expected to present a debt restructuring proposal over the summer.

A smaller but equally high-profile finance deal saw Allen & Overy (A&O) act for Manchester United on the redemption of £177.78m of sterling bonds and a further $22m in US dollar bonds. The deal sees the famous football club swap out expensive junk bonds for cheaper debt, slashing its interest rate bill.

A&O, which has a long-standing relationship with Manchester United, fielded a team under Greg Brown, the head of its microfinance and social investment group. US law firm McGuireWoods acted for debt provider Bank of America with a team led by banking partner Marc Isaacs in London and partner Kevin McGinnis.

Meanwhile, a debt deal of a different order saw Skadden Arps Slate Meagher & Flom advise the Republic of Egypt on the creation of a $12bn medium term note programme, with an initial issuance of $2.7bn in short-dated bonds. Skadden’s team was headed by capital markets partner James Healy. Clifford Chance advised arrangers QNB Capital and HSBC bank led by capital markets partner Debashis Dey.