Baker & McKenzie Advises on Restructuring of Europe's First CMBS Default
27 July 2012
Global, July 27, 2012 – Baker & McKenzie's London and Amsterdam offices have advised the Note Trustee, Stichting Note Trustee Opera Finance (Uni-Invest) in connection with the restructuring of the €1,008,900,000 Commercial Mortgage Backed Floating Rate Notes issued by Opera Finance (Uni-Invest) B.V.
Today's decision by the Amsterdam District Court approves the Note Trustee's application for the private pledge enforcement sale of the Senior Loan underlying the Notes issued by Opera Finance (Uni-Invest) on the basis of Article 3:251 Section 1 of the Dutch Civil Code. This marks a further significant step to the successful restructuring of Europe's first CMBS default and endorses the "credit bid" as a template for future restructurings.
Following default at note maturity in February 2012, on April 17 this year, Noteholders were invited to vote on two alternative restructuring proposals.
The first, a "consensual restructuring", required the approval of all Classes of Noteholders and would have seen all Classes of the Notes extended for 4 years with an accelerated disposal of the portfolio by Valad Investment Management Services.
The second, a "credit bid" put forward by private equity firms Patron and TPG, required only the approval of the holders of the Class A Notes, and involved the acquisition of the Senior Loan by an entity established by Patron and TPG at an upfront price of 40% of the Class A Notes. The existing Class A Noteholders were also given the opportunity to either take up 4 year notes issued by the new purchasing entity of an amount equal to 60% of the existing notes, or opt for an additional cash payment of 35%.
In the event, the Class A Noteholders voted against the consensual restructuring of the transaction, voting instead in favour of the credit bid. Completion of the sale to the Patron/TPG vehicle has been conditional on approval by the Dutch court.
Today's court decision approving the credit bid and associated valuation represents a significant milestone in the transaction as it removes one to the last elements of conditionality and allows the sale to proceed.
Amsterdam Securitisation partner Philippe Steffens commented, "This has been a long and complicated process which we have been working on with the Trustee for some time. We are delighted that the Court has approved the sale as it frees noteholders from a long period of uncertainty and paves the way for other CMBS restructurings."
Amsterdam Litigation partner Robert van Agteren added, "This is the first time that a European CMBS transaction has defaulted at maturity and the process has raised a number of technically challenging issues both for the Court and the Note Trustee. A lot of work went into the court submission, but the result is that we now have a very clear direction from the court."
London partner Simon Porter commented, "This sets a significant precedent in the market. Junior noteholders will inevitably now be encouraged to seek an early consensual restructuring prior to any note default, while senior noteholders may now see an advantage in a default scenario which allows them effectively to control the enforcement process."
Baker & McKenzie London Partners Simon Porter and Rebecca Ford, assisted by Senior Associate Sarah Porter, Amsterdam Partners Philippe Steffens and Robert van Agteren, assisted by Associates René Koopman and Esther Croonen, advised the Note Trustee (Stichting Note Trustee Opera Finance (Uni-Invest) - with directors provided by ANT Trust & Corporate Services N.V.).
Sidley Austin LLP and NautaDutilh advised the Special Servicer, Norton Rose advised the Issuer and Berwin Leighton Paisner and Houthoff Buruma advised Patron/TPG.