ESB NIE acquisition the biggest loan market deal in 2010
ESB’s acquisition of Northern Ireland Electricity has resulted in the consolidation of the entire electricity transmission and distribution network on the island of Ireland into a single entity. It was also the largest Irish loan market deal during 2010
ESB's acquisition of Northern Ireland Electricity from the Viridian Group, the largest corporate public sector acquisition in 2010, is the winner of the Mergers & Acquisitions Deal of the Year. The deal was significant in that it resulted in the consolidation of the entire electricity transmission and distribution network on the island of Ireland into a single entity serving the all-island Single Electricity Market established in November 2007. As a consequence this gave rise to many complex regulatory and competition issues. The timing of the deal is also another significant achievement with the financing for the deal being secured only weeks before the State received the EU/ECB/IMF financing package.
Padraig McManus, chief executive of ESB said: "The acquisition of NIE demonstrates ESB's continued ambition to grow our business in the rapidly changing energy sector. NIE is a well-run, efficient and profitable business and will continue to operate on that basis. ESB is fully committed to delivering the investment in Ireland's transmission and distribution networks that will be required to deliver our common energy sustainability policy objectives over the coming years."
William Fry advised the ESB on the transaction and Bryan Bourke, partner at William Fry said: "The ESB acquisition of NIE, which saw ESB acquire the Northern Ireland electricity transmission and distribution grid, was a hugely significant and strategic transaction for ESB...(it) is probably the ESB’s largest acquisition, as well as being the biggest acquisition in the semi-state sector in 2010."
McCann FitzGerald advised the ESB on its €2.5 billion credit facilities agreement in September, €970 million of which was used to part fund the acquisition. Fergus Gillen, partner at McCann FitzGerald said that one of the most noteworthy aspects of the financing was that the 'ESB, an Irish State-owned entity, was able to raise a term loan facility of €970 million from the markets just weeks before the State itself had to accept the ECB/EU/IMF financing package.'
'ESB's acquisition financing was the largest Irish loan market deal during 2010. BNP Paribas, acting as facility coordinator, bookrunner and mandated lead arranger was delighted to support ESB on the strategic acquisition of Northern Ireland Electricity,' said Kieran Fahy, Head of Corporate & Transaction Banking for BNP Paribas in Ireland.
Eddie Cullen, Head of Corporate & Institutional Banking, Ulster Bank, who also acted as a bookrunner and mandated lead arranger on the deal said, 'The ability of ESB to complete such a transaction in the current environment proves the high regard the company is held in the financial markets.'
Arthur Cox, led by Belfast partner Alan Taylor and Dublin partner Alex McLean, advised Viridian on Northern Irish and Republic of Ireland aspects of the deal.
State Street’s acquisition of BIAM a vote of confidence in an Irish financial services sector brand by US powerhouse
State Street’s €57 million acquisition of Bank of Ireland Asset Management from Bank of Ireland reflects the M&A activity that is being created by the restructuring and consolidation of Ireland’s domestic financial institutions. The deal is a positive endorsement of the Irish financial services sector by a major global player
The Mergers & Acquisitions (Plc) Deal of the Year has been won by State Street for its acquisition of Bank of Ireland Asset Management (BIAM). State Street Corporation's investment advisory services subsidiary State Street Global Advisors (SSgA) acquired Bank of Ireland's asset manager for €57 million, including the estimated net assets of the business, which stood at approximately €14 million. As of 30th September 2010 BIAM had assets under management of €26 billion. Agreement on the deal was reached in October 2010. The transaction allows SSgA to further expand and strengthen its range of investment capabilities to include active fundamental management and represents a major investment in Ireland by State Street, further strengthening its presence in Ireland.
Speaking on the acquisition Greg Ehret, head of EMEA at State Street Global Advisors said: 'State Street has had a presence in Ireland since 1996 and has grown to be one of the country’s largest fund administrators and custodians... We believe the acquisition of BIAM aligns with SSgA’s strategy to expand its asset management business through organic growth and acquisitions that are complementary and additive to our core capabilities. The acquisition enables SSgA to provide its clients with an expanded range of investment capabilities to include fundamental active equity management. BIAM has built a successful 3-year fundamental active equity track record. Its investment philosophy, which is rooted in a disciplined, team-based approach, aligns with SSgA’s own investment philosophy and existing product set and platform. We are committed to maintaining the same level of client service to BIAM’s Irish clients and to broadening and deepening the solutions available for Irish clients over time. BIAM’s Irish clients will have the opportunity to access SSgA’s entire global investment solution set.'
John Given, partner, A&L Goodbody said:"We advised Bank of Ireland in the sale of Bank of Ireland Asset Management (BIAM) to State Street Corporation for €57m. This involved us acting as lead legal advisers to the Bank across all aspects of a major strategic disposal and resulted in a highly satisfactory result for all parties and a welcome contribution to the bank's core tier 1 capital. An added bonus was that the deal represented a significant vote of confidence in a leading Irish financial services sector brand by a North American powerhouse, one of very few such deals in the past few years."
Tim Scanlon, partner and head of the financial institutions group at Matheson Ormsby Prentice, said "This deal is one of a series of transactions which are a consequence of the terms upon which certain Irish financial institutions have been recapitalised, a process set to continue for at least the next two years. Ultimately, these deals will significantly alter the Irish landscape in financial services. The presence of large global players such as State Street in the Irish market and the continued investment by them in their Irish businesses is nevertheless a very positive thing for the Irish economy in the current climate."
Success of bond offering a testament to CRH
The success of CRH’s $750 milllion bond offering shows how well regarded CRH is in the capital markets.
Winning deal in the Debt Securities Bonds category, CRH’s $750 million bond offering, is a perfect example of CRH's strong position and regard in the capital markets. On the 30th November 2010 CRH America Inc. announced a $500 million 5- and 10-year transaction, guaranteed by CRH plc. Due to strong investor demand, the total offering was increased from US$ 500 million to US$ 750 million. Over 80 institutional investors from North America and Europe participated in the transaction.
'CRH's previous four US$ global bond offerings raised a total of US$ 4.4 billion with maturities ranging from 2011 to 2033. We are delighted with the strong investor response to this fifth offering of US$ 0.75 billion which enables CRH to extend its debt maturity profile and to expand its investor base,' said Maeve Carton finance director at CRH.
The use of proceeds for this transaction included the repurchase of existing US$ debt and the prospectus supplement announced CRH's intention to launch a tender offer. Shortly after the bonds were priced, CRH announced a tender offer for a portion of its outstanding bonds which resulted in CRH acquiring US$ 657.1 million of its 6.95 per cent notes due 2012, US$ 92.9 million of its 5.625% notes due 2011 and US$ 36.1 million of its 6.4 per cent notes due 2033.
'The financial volatility in markets regarding Ireland experienced in November 2010 may have seemed a difficult backdrop for any borrower connected with Ireland.
Despite this CRH, a small element of whose operations are in Ireland, were able to access the US dollar market in November 2010 with intraday execution. Order books reached nearly US$ 1.5bn and the company priced US$ 750m of bonds.
This was CRH's first visit to the US$ bond market since 2008. Executing a transaction of this nature against such a volatile backdrop demonstrates the strength of the CRH credit and great teamwork from the execution banks,' said Charlotte Weir, director in debt capital markets at Barclays Capital.
'By raising significant funds on the capital markets during very difficult market conditions, this transaction yet again displayed CRH's strong position in the capital markets,. US tender offers are more complex than euro style deals due to US securities laws implications.
The firm is very proud to be associated with CRH and of its relationship with CRH over the years in particular on such sophisticated finance transactions,' said Cormac Kissane a partner in Arthur Cox.
$2 billion note sale enabled Ardagh’s acquisition of Impress Cooperative UA
A high level of complexity in the issuance of over $2 billion notes enabled Ardagh’s acquisition of Impress Cooperative UA. The transaction was completed in a short window and will mean that Ardagh now serves markets across 24 countries
Ardagh's sale of US$2,352m of notes in September 2010 has won the Debt Securities - Notes award. The proceeds of the deal were used to fund the acquisition of metal packaging group Impress Cooperatieve U.A from private equity firm Doughty Hanson & Co, along with the refinancing of Ardagh's Anglo Irish facilities and Impress Cooperatieve indebtedness. The enlarged Ardagh Group will operate 81 facilities and serve markets across 24 countries.
William Fry advised Ardagh Glass Group plc on the Irish corporate law aspects of the transaction and reviewed and contributed to the drafting of the Offering Memoranda for the offering of notes. Shearman & Sterling LLP, De Braun Blackstone Westbroek and Freshfields Bruckhaus Deringer also advised Ardagh while Skadden Arps advised the seller.
David Fitzgibbon, partner at William Fry said: ‘In a difficult marketplace, this transaction had to be effected in a short window to ensure that Ardagh was in a position to proceed with the Impress Packaging acquisition and effect any related refinancing. The issue of the notes and the related escrow arrangements involved a series of interlinked steps which had to work alongside the corporate transaction. The issue of secured notes as part of the offering increased the level of complexity involved in the offering and required the input of counsel from almost every jurisdiction in Europe. We were proud to have the opportunity to work with Ardagh on such a complex and novel offering.’
Bank of Ireland 2010 fundraising the largest ever public equity issue in the country’s history
Bank of Ireland’s €3.4 billion equity fund raising, the largest of its kind in Irish history, was a highly innovative transaction involving multi-disciplinary skills and cross jurisdictional knowledge
The winner of the Equity Capital Markets Deal of the Year is Bank of Ireland's €3.4 billion fundraising. The bank conducted the largest public equity fundraising ever undertaken by any company in the State, raising in aggregate €3.4 billion in May 2010.
The transaction comprised an underwritten rights issue of €1.9 billion, an underwritten placing of €500 million to institutional investors and a placing to the Irish State of €1billion. The Irish State’s consideration for participation in the placing and rights issue was by means of a conversion of previously held preference stock in the bank. The transaction also included a debt-for-equity exchange whereby almost €1.5bn of outstanding debt was converted to equity over various stages of the transaction.
€1.2 bn of the rights issue was jointly underwritten by Davy, UBS, Citi, Deutsche Bank and Credit Suisse. The rights issue was subsequently re-sized to €1.1bn following the conclusion of certain aspects of the debt-for-equity exchange. The rights issue was taken up by in excess of 90 per cent of the company’s shareholders, a positive result given the prevailing market backdrop in May 2010.
John Given partner at A&L Goodbody said, "We advised Credit Suisse, Deutsche Bank, UBS, CitiGroup and Davy on Bank of Ireland's €3.4bn fully underwritten capital raising project. This transaction involved working around the clock as part of a multi-disciplinary and cross-jurisdictional team on this complex and highly innovative deal."
Padraig O Riordain, managing partner of Arthur Cox who led the Arthur Cox team acting for the State on the transaction said: ‘This was a very challenging and innovative transaction executed within a particularly tight timeframe with significant public interest ramifications."
‘Given the political and economic context, the number of stakeholders involved and the sheer size of the fundraising itself, this was an extremely challenging and complex transaction but one for which a successful outcome was critical to the bank’ said Davy.
Avolon: the launch of new Irish global air finance player
The Avolon launch was the most significant corporate and financing deal in the global aviation leasing industry in 2010
The launch of Avolon has won the IFSC Deal of the Year. Avolon launched in May 2010 with the simultaneous closing of US$750m (c. €535m) of equity commitments from three leading private equity firms: Oak Hill, Cinven and CVC, and $615m (c. €440m) of debt capital raised from a number of international banks. Included within this financing was an aircraft warehouse facility. Concurrently with closing the initial equity and debt raise Avolon signed agreements to acquire 26 aircraft. Subsequently the company raised in excess of $300m (c. €215m) incremental equity and $1bn (c. €710m) of incremental debt capacity, bringing the total capital raise in its first year of operation to over $2.75bn (c. €2bn). Avolon's total capital raise in its first year of operation was over $2.75 billion.
Avolon was established with Domhnall Slattery as CEO, founder of RBS Aviation Capital, and attracted 7 senior managers from RBS Aviation Capital. Headquartered in Dublin, the company employs 28 people and has offices in New York, Hong Kong and Shanghai.
‘Raising US$3 billion worth of capital last year proved that capital markets are open to prudent, well-managed Irish businesses. Since launch in May 2010 we have built an aircraft leasing business with a fleet of 80 aircraft and a team of 28 people working in four offices across three continents. We are encouraged with the progress to date and we look forward to expanding our business further - here in Dublin and internationally,’ said Domhnall Slattery, Avolon's CEO.
‘We are delighted to win the ‘IFSC Deal of the Year’ award for our launch capital raise. Our initial capital raise has been our most important milestone to date and has allowed us to transition from start-up company to a firmly established global aircraft lessor in under a year. The equity raise of US$ 750 million was one of the largest ever completed for a start-up business globally at a time when access to capital markets was restricted. The execution of the warehouse debt facility was also significant as it was the first of its kind to be executed in the world for several years,’ said Andy Cronin, Avolon's chief financial officer.
Maples and Calder advised Avolon on the deal including the $400 million warehouse facility. Nollaig Murphy, partner at Maples and Calder said, ‘There were specific requirements for the financing, including zero bankruptcy risk. Avolon wanted a structure allowing tax treaty and Cape Town Convention access. Maples and Calder, representing Avolon in Ireland and Cayman, created a Cayman-incorporated, Irish tax-resident structure which minimised bankruptcy risk within the structure and achieved such access.’ Ed Miller, partner, Maples and Calder said: ‘We worked closely with Avolon's management team throughout the transaction. The investment by Cinven, CVC and Oak Hill in Avolon was one of the most significant private equity fundings in the Irish market.’
Richard Demaux, director at BNP Paribas Aviation Finance who worked on setting up of the warehouse facility said, ‘The 'Blind Warehouse was the first transaction of this type closed in the market in 2010 after a couple of years where such market was shut.’
Former in-house lawyer at GPA, and now a partner at Freshfields Bruckhaus Deringer (who advised Avolon), Robert Murphy said, 'The Avolon launch was the most significant corporate and financing deal in the aviation leasing industry last year and is a success story for the Irish economy providing new jobs in a high profile international industry. Despite the background of a stop-start recovery in the world economy Avolon's management team gained significant backing from highly regarded private equity sponsors and leading banks in the aviation sector to launch. One of the innovative features of the Avolon transaction is that the capital structuring needed to cater for the fact that funding would be required on a staggered basis as the company expands. We also needed to maintain flexibility for additional funding commitments in the future. The initial debt raising comprised negotiations with two sets of lenders to structure highly robust secured facilities. In particular, the warehouse debt facility gives Avolon flexibility to finance and refinance aircraft acquisitions and hence complement the equity structuring.'
Credit Institutions (Stabilisation) Act 2010 enabled transfer of deposits and assets in bank restructuring
The transfer of deposits and assets from Anglo Irish Bank to AIB and from INBS to IL&P has been awarded the Most Innovative Deal of the year given the historic and unique nature of the transfer and the complexities involved in the deal
With a value of approximately €14 billion, the transfer of deposits and corresponding assets from Anglo Irish Bank to Allied Irish Banks and from Irish Nationwide Building Society to Irish Life Permanent plc has been awarded the Most Innovative Deal of the Year. The National Treasury Management Agency was ordered by the Minister for Finance to organise a tender for the deposit books of Anglo Irish Bank and Irish Nationwide with AIB and IL&P being selected following the tender process.The transfer of the deposits is seen as a major element in the Government's plans to stabilise the Irish financial system. The transaction used powers in the Credit Institutions (Stabilisation) Act 2010 and involved obtaining court orders to effect the transfers, the first of their type.
Eithne FitzGerald, partner at A&L Goodbody who advised AIB on the transaction said "this was a highly innovative business acquisition effected by Court order at the direction of the Irish Minister for Finance under the far reaching recently enacted Credit Institutions (Stabilisation ) Act. The transaction was achieved following a competitive tender process within a very tight timeframe."
McCann FitzGerald led by partners Julian Conlon; Roy Parker; Hugh Beattie and Adrian Farrell were the sole legal advisers to Anglo Irish Bank and Irish Nationwide Building Society on the transaction.
Ciaran Bolger, partner at Arthur Cox advised the NTMA and the Department of Finance said, "This was the first ever transfer of deposits using the transfer order procedure in the Credit Institutions (Stabilisation) Act 2010 and the first use of the transfer order procedure for any category of asset. It involved complex employment and transitional services issues also as the deposit taking businesses in both institutions were closely integrated with their other operations. The transaction also required a direction order under the 2010 Act in respect of the sale process which was conducted as an auction. It was also unique in that the consideration for the transfer comprised mostly bonds issued by the State and the National Asset Management Agency and held by the relevant institutions. The recognition of the measures in jurisdictions outside Ireland under the Credit Institutions Winding-up Directive was crucial.’
Eirgrid East West Interconnector first of its kind project
For the Eirgrid deal, securing finance was a significant challenge. Particularly given the size of the project relative to the EirGrid balance sheet and the level of available equity. Eirgrid has a relatively small balance sheet and given no Exchequer funds were available all other funding was required from third party sources
The EirGrid East West Interconnector Project, with a total capital cost of €601million, has won the Loans and Financing Deal of the Year. The project involves the construction of an interconnector to link the Irish Transmission System to the British Transmission System, enabling two way transmission of electricity, running from County Meath in Ireland to the Dee Estuary in Wales. The interconnector will be owned and operated by EirGrid Interconnector Ltd (EIL), a subsidiary of EirGrid Plc. EirGrid is the semi-state company responsible for operating the Irish Transmission System.
It is the first of its kind project in Ireland. Securing finance was a significant challenge - in particular given the size of the project relative to the EirGrid balance sheet and the level of available equity. Eirgrid has a relatively small balance sheet (c. €80m) and could only fund €31m of the €601m project from internal resources. No Exchequer funds were available and so all other funding was required from third party sources, against the background of considerable turmoil in debt markets; a first of its kind project in Ireland and a developing regulatory regime.
The project with a total capital cost of c. €601m was funded through two separate phases of financing. The Phase 1 funding round, with commercial debt totaling c. €125m closed successfully in December 2008. The Phase 2 fundraising round which required funding of c. €601m included the refinancing of Phase 1. The funding on Phase 2 was secured from a combination of sources, including: EirGrid equity of €31 million; European Energy Programme for Recovery (EEPR) grant of €110million; European Investment Bank (EIB) Funding of €300 million, (closed in September 2009) ; Commercial debt of circa €160 million (closed in May 2010), and a commercial short term debt and bond of €50 million, (closed in May 2010).
The debt (EIB and commercial) is to be repaid by EirGrid from revenue received from Transmission Use of System (TUoS) charges which are the charges levied on generators and suppliers of electricity for use of the transmission network.
Michael Flynn, partner at Deloitte Corporate Finance who acted as lead financial adviser on the deal said, "We are delighted to be involved in this strategically important project, the first of its kind developed in Ireland. The team at Deloitte successfully advised EirGrid during its negotiations on three separate tranches of funding, totaling €635 million, during difficult financial market conditions. Not only this, the funding needed to be secured against the backdrop of an emerging regulatory regime. There were a number of requirements for the deal. Firstly, a robust structure was needed which maximised flexibility for EirGrid for future fundraisings. Secondly, the resulting two tier structure of the deal, involving EIB funds and commercial debt, required careful management in respect of fund flows and security over funds.’
‘We are very proud of this transaction which we successfully closed in the midst of turbulent times for the Eurozone. This reflects the long-term view that we take based on the compelling rationale for building such inter-connectors which enhance the value of renewable energy assets,‘ Emmanuel de Blanc, director of BNP Paribas Infrastructure Financing said.
One of Ireland’s largest financial services outsourcings
The decision by Lloyds Banking Group to withdraw from the Irish market resulted in one of the largest financial services outsourcing transactions as Certus were engaged to administer BOSI’s Irish loan books worth several billion euro
Restructuring Deal of the Year goes to Certus, the company established by the former management team of Bank of Scotland (Ireland) (BOSI) to administer its loan book. The decision by BOSI's parent, Lloyds Banking Group, to withdraw from the Irish market resulted in one of the largest financial services outsourcing transactions in Ireland as Certus were engaged to provide administrative support to Lloyds in the day to day management of its Irish loan books.
The complexity of the deal - which at its centre involved the financial outsourcing of the loan books (worth several billion Euro), also included features akin to a management buy out, the putting in place of a major IT solution between Lloyds Banking Group and Certus (which involved a parallel IT outsourcing with IBM), the transfer of over 800 staff to Certus, the approval from, and resolution of any regulatory issues, from both the UK and Irish financial regulators and the transfer/leasing of numerous major properties in Ireland from BOSI to Certus.
'The deal was highly innovative as we had to create a completely new company with a new structure, agree the processes and service level agreements between Certus and Lloyds Banking Group, while at the same time effectively manage a substantial lending book and customers through the transition,' said Joe Higgins, chief executive of Certus. ‘It was a deal done in an incredibly short space of time, but was ultimately a success for both parties, the formation of Certus has created one of the largest independent financial services outsource companies of its kind in Ireland and Britain. Retaining the wealth of knowledge Certus has in our 800 colleagues is of paramount importance both to delivering for Lloyds Banking Group and building a future for Certus, including adding further clients,’
Kevin Feeney, A&L Goodbody said: 'The transaction was done at break neck speed, from heads of terms stage in August through to signing in early November 2010. An all island A&L Goodbody legal team was involved, which, at its peak, had over 15 lawyers engaged on different aspects of the deal... This is the probably the largest or one of the largest financial services outsourcing transactions in Ireland to date. We are proud to have been part of it.’