Deal Maker of the Year Awards 2012 WINNER - CZECH REPUBLIC
DEAL: Telekom Srbija receives EUR 470m term loan facility from UniCredit
NAME: Mark Segall COMPANY: CMS POSITION: Partner in the CEE Banking Group at CMS TEL: +420 296 798 702 MOB: +420 725 085 654 EMAIL:
mark.segall@
cms-cmck.com
BIO:
Mark Segall is a partner in the CEE Banking Group at CMS. Before joining CMS Mark was a Director in UniCredit’s acquisition finance team in London with a particular focus on the CEE region. Prior to that Mark was at Ashurst in London. He has more than 12 years of professional experience.
His primary areas of expertise are corporate lending, leveraged and acquisition finance, advising lenders such as UniCredit, ING, Raiffeisen and Erste Bank on cross-border and multi-jurisdictional transactions. Mark has been involved in some of the largest transactions in CEE across a broad group of industry sectors.
Most recently Mark has been active in the CEE/CIS market. Among others, he has advised UniCredit as the leader of a syndicate of 19 banks including Société Générale, Crédit Agricole, Erste Group and Raiffeisen on a EUR 470 million loan to Serbian state-owned telecom provider Telekom Srbija (January 2012); a syndicate consisting of ING, Sberbank, Gazprombank and UniCredit, on a EUR 416 million loan to DTEK (October 2012); and ING and Ukrsotsbank on a USD 100 million corporate and acquisition financing to listed agribusiness Kernel Holding (April 2012).
Mark is a member of the Loan Market Association's Emerging Markets Working Group and is regularly involved in developing LMA standard documentation tailored to the CEE and CIS markets. He is recognised by Chambers and Partners as a Foreign Expert based in the Czech Republic.
DEAL OVERVIEW:
CMS advised UniCredit as the lead bank of a 19 bank syndicate on a EUR 470 million loan to the Serbian state-owned telecom provider Telekom Srbija.
The EUR 470 million 3 year senior term loan comprises of a EUR 320 million acquisition facility (to pay for a share buy back of the 20% stake owned by the Greek telecom company OTE) and a EUR 150 million refinancing facility. The loan consisted of three tranches: a euro-denominated refinancing tranche and two acquisition financing tranches, one in euro and one in Serbian dinars.
Despite the challenging market conditions, the transaction received strong support from the market in syndication and raised a healthy oversubscription at the early-bird stage, i.e. before utilisation of the facilities. The initial group of Mandated Lead Arrangers, Crédit Agricole Serbia, Erste Group, Eurobank EFG Group, Komercijalna banka Beograd Group, Raiffeisen Group, Société Générale Bank Srbija and UniCredit Group grew into a 19 bank syndicate. The loan was partially underwritten by Erste Group and UniCredit, who were joined by Raiffeisen Group and Societe Generale Bank Srbija as Bookrunners. UniCredit also acted as the Coordinator, the Documentation Agent, the Facility and Payment Agent for the transaction.
As we commented at the time: This was nothing short of a unique deal in terms of public interest, volume, structure and size of the syndicate. Amid stories of dwindling liquidity in the banking sector, banks were eager to be part of this deal and the syndicate kept growing as the transaction evolved. CMS could not have wished for a better first corporate finance instruction in CEE from
UniCredit and the firm is pleased to have supported such a significant deal for the region. Due to our strong coverage of the region in combination with locally available English law capacity CMS is perfectly positioned to advise clients on transactions like this.
Despite the facility being signed under English law (following the Loan Market Association standard) it also needed to be registered with the National Bank of Serbia in order to be legally binding. Thus domestic lenders, international lenders and the National Bank of Serbia all had to be satisfied with the structure on which CMS had advised. The Serbian legal framework introduces numerous challenges and requires domestic banks to contribute between 10% and 49% of the cross-border facilities for the agreement to be registered as a cross-border transaction. Given that part of the facilities needed to be disbursed in Serbian dinars and could only therefore be provided by Serbian banks, calculating the allocations and maintaining the structure while staying within the cross-border eligibility requirements was a complicated process and required innovative legal solutions. By using the three tranche structure CMS ensured the facility could qualify as a cross-border loan yet also access local liquidity to lower Telekom Srbija’s currency risk. This was the first occasion on which the National Bank of Serbia registered a loan which included both local and international facilities in the same agreement and has paved the way for future combined structures to be used in Serbia.
The CMS team that has advised UniCredit was led by Prague-based partner Mark Segall, while partner Stojan Semiz of CMS in Belgrade oversaw the Serbian law elements.
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