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Global Ambitions for the FCA’s Sandbox

Posted in Finance and Capital Markets

The FCA seeks industry feedback to capitalise on global regulatory sandbox trend.

By Stuart Davis and Charlotte Collins

The regulatory sandbox was pioneered by the Financial Conduct Authority (FCA) back in November 2015 — a “safe space” in which businesses can test innovative products, services, business models, and delivery mechanisms without immediately incurring all the normal regulatory consequences of engaging in the activity in question.

The sandbox has been a success to date, helping both existing and new businesses to develop and launch innovative products and business models (see Latham’s previous blog post on the success of the first round of sandbox participants, and Client Alert that tracks the use of the sandbox model across the globe). Continue Reading

UK Restructuring Scheme Case Study: Guiding Bibby Offshore Into Safe Waters

Posted in Finance and Capital Markets

UK-based offshore and subsea oil & gas services company solidifies its position and completes ownership transfer to noteholders in major company milestone.

By John Houghton and Marc Hecht

The recent Bibby Offshore recapitalisation[1] is as fair and equitable a restructuring as the media has seen, offering creditors an example of what an effective restructuring requires. This case study exemplifies the key points that companies facing unpredictable market conditions must consider:

  • The correct restructuring solution
  • Deft management of shareholder dynamics
  • Careful handling of stakeholder expectations Continue Reading

Bilta v. RBS: When Will Litigation Privilege Apply to Information Gathering in Internal Investigations

Posted in Dispute Resolution

High Court decision provides practical lessons for companies conducting investigations.

By Stuart Alford QCDaniel Smith and Clare Nida

The English High Court has reconfirmed that litigation privilege can apply to information gathering in internal investigations. Specifically, lawyers must have engaged in the information gathering for the dominant purpose of conducting litigation, and this can include prospective claims by tax authorities.

Case Background and previous decisions

Bilta UK Ltd. is an English company that was compulsorily wound up in November 2009 pursuant to a petition presented by HM Revenue and Customs (HMRC). In Bilta (UK) Ltd v Royal Bank Of Scotland Plc & Anor [2017] EWHC 3535 (Ch), the liquidators of Bilta sought disclosure and inspection of documents, including interview transcripts that the Royal Bank of Scotland (RBS) had created during an HMRC tax investigation. Continue Reading

The Recent Resurgence of Special Purpose Acquisition Companies

Posted in M&A and Private Equity

By James Inness and Anna Ngo

Special purpose acquisition companies, or SPACs, are companies that are incorporated for the purpose of making one or more strategic acquisitions. SPACs are also referred to as “blank check” companies or “cash shells”, which seek to raise capital by listing shares on a stock exchange. Each SPAC has its own investment criteria and focus, such as a specific industry. Alternatively, it may operate under the banner of a more generic acquisition mandate, which guides its potential acquisition strategy.

At the time of IPO, the SPAC is empty – it has no business operations or tangible assets. However, it will have an experienced management team, which usually includes the sponsors or founders, and an investment criteria, which the management team will seek to meet by identifying attractive targets for acquisition by, or merger with, the SPAC within 18-24 months from IPO. A failure to execute an acquisition within the timeframe will generally lead to the liquidation of the SPAC and a return of investment to the public shareholders.

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Gas to Power Innovation Drives Global Opportunities

Posted in Finance and Capital Markets

By John Balsdon and Matthew Brown

By Way of Background

Gas to power (G2P) projects provide an effective solution to power shortages around the globe. As the global demand for power continues to rise, outstripping supply in many nations across the world, existing power generation facilities cannot meet the needs of fast-growing economies and available domestic fuel sources are in many of those economies declining.  G2P has the potential to deliver cleaner, more accessible energy to power the engine of global growth, and the next generation of G2P projects will likely underpin a new era in energy production.

G2P projects span the full energy value chain — covering gas production, treatment, transport and power generation. More than 50 G2P projects have been announced across the globe, and countries continue to announce new innovative programmes. Ghana and Chile are among the countries that have recently implemented G2P projects. And the Philippines, Indonesia, and Vietnam are among those likely to turn to G2P to satisfy their future energy needs. Continue Reading

FCA to Take a Closer Look at ICOs

Posted in Emerging Companies and Technology, Finance and Capital Markets

By Stuart Davis and Charlotte Collins

Following on from the Financial Conduct Authority’s (FCA’s) consumer warning on Initial Coin Offerings (ICOs) in September, the FCA has announced a deeper examination of this area in its Feedback Statement on Distributed Ledger Technology (DLT) and related press release. The FCA stated that it will consider whether regulatory action beyond the consumer warning is required.

The earlier Discussion Paper on DLT had asked for feedback on the legal and regulatory risks associated with ICOs (see Latham’s related Client Alert). According to the FCA, many respondents considered ICOs as having the potential to “dynamise innovation”, although others raised concerns about potential risks and possible investor harm.

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Increased Flex Amid Record Liquidity in European Leveraged Loans Requires Careful Navigation by PE Firms

Posted in Finance and Capital Markets, M&A and Private Equity

By Chris Kandel

The European leveraged loan market is going from strength to strength, with a continuing surplus of available credit compared to deal requirements, resulting in very borrower-favourable terms. However, we are seeing signs of a two-tier market emerging, with strong demand and pricing reductions for deals perceived as stronger credits, alongside an increase in flex for some other credits. We are also seeing an increase in volatility. In our view, PE deal teams need to be aware of the recent market developments, which are impacting financing terms.

Developments in the Financing Market

The growth of the European institutional market is influencing credit availability for deals. 2017 European CLO issuances are at a new record, and alternative lenders continue to raise significant amounts. On the demand side, while refinancing volume has picked up, this does not offset the relative slowdown in the number of European leveraged acquisitions. Because the imbalance is most pronounced in Europe, Europeanleveraged loan pricing is cheaper than in the US, reaching a differential of 120 bps in October — the widest at any time in 2017 according to S&P Leveraged Commentary & Data (S&P).

Click here for a larger image.

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CJEU Offers Improved Protection for Luxury Goods in Coty Ruling

Posted in EU and Competition

By Jonathan Parker and Calum Warren

Summary

The Court of Justice of the European Union (CJEU) has handed down its much-anticipated judgment in Case C-230/16 Coty Germany GmbH v Parfümerie Akzente GmbH (Coty). The case concerns the legality of a prohibition of sales on third-party platforms discernible to the public within Coty Germany’s selective distribution system. The CJEU stated that selective distribution for luxury goods is compatible with Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) provided that both:

  • Distributors are chosen on the basis of objective criteria of a qualitative nature applied uniformly to all potential distributors in a non-discriminatory fashion
  • The criteria do not go beyond what is necessary

The CJEU addressed the specific issue of the prohibition on discernible third-party platform sales within Coty Germany’s selective distribution system. The court stated that this type of restriction is a justified and proportionate means of protecting the brand image of luxury goods and does not amount to a “hardcore” restriction within the meaning of the EU Vertical Restraints Block Exemption Regulation (VBER). The CJEU’s judgment provides important clarifications on the use of selective distribution for luxury goods and the EU courts’ assessment of such distribution. Continue Reading

Group Liability for Data Protection Failure – A New Threat for Private Equity Firms?

Posted in Data Protection, M&A and Private Equity

By Gail Crawford, Hayley Pizzey, Mark Sun, and Calum Warren

Click for larger image.

As European data protection regulators prepare to enforce the General Data Protection Regulation (GDPR) from May 2018, private equity firms must act to minimise the risk of becoming financially liable for the data protection failings of portfolio companies. After a recent spate of high-profile data breaches, the risks for financial sponsors are high.

Why is a Data Protection Failing at Portfolio Company Level a Serious Concern for a Buyout Firm?

The GDPR sets out defined obligations and extends EU data protection law’s territorial reach, catching any business that operates in the EU, or offers goods and services to — or monitors the behaviour of — EU data subjects (whether in the EU or not). Fines for noncompliance can be substantial — up to the higher of €20 million or 4% of an undertaking’s global annual turnover. The regime defers to the EU antitrust concept of “undertaking”, which in our view means fines may be calculated by reference to the combined revenue of an offending portfolio company and the buyout firm (including the firm and all other portfolio companies within its group). This leaves open the possibility of data protection regulators directly fining buyout firms for the failures of portfolio companies. Continue Reading

Parties Must Take Care to Avoid Risk of Defective Service in Arbitration

Posted in Dispute Resolution

By Robert Price and Eleanor Scogings

Two recent English court decisions provide useful reminders that parties to arbitration agreements must take care to properly serve arbitration proceedings on the other party. In doing so, parties will avoid the risk of the court setting aside an award on the grounds that service was defective and that the tribunal did not have jurisdiction.

In Sino Channel, the Court of Appeal confirmed that only in rare cases will an agent have anything other than express actual authority to accept service of a notice of arbitration.[1] However, in the unusual circumstances in Sino Channel, the Court of Appeal held that the agent had both implied actual and ostensible authority to accept service. In Glencore Agriculture, the High Court confirmed that a notice of arbitration sent by email to a junior employee is unlikely to amount to effective service, unless the nature of that individual’s role implies that they possessed authority to accept service on their employer’s behalf. Continue Reading

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