February 21, 2012 6:17 PM
Trio of Top Firms Take Lead on $173 Billion Greek Debt Deal
Posted by Brian Baxter
UPDATE/CLARIFICATION: 2/22/12, 1:55 p.m. Charles Dallara's law degree is honorary. Greece has also put its privatization program on hold, according to the Daily Deal.
The effort to restructure Greece's crushing debt represents the largest such sovereign workout since the Hague Convention of 1907 barred countries from waging war on one another when debts go unpaid, according to a recent Reuters report. Instead of armies of soldiers, the task of resolving debt disputes these days falls to a battalion of attorneys, restructuring advisers, and other financial professionals.
In the case of the Greek debt bailout approved Tuesday, that battalion included attorneys from Cleary Gottlieb Steen & Hamilton, Allen & Overy, and White & Case—all of whom helped strike a hard-fought deal under which private sector investors holding portions of the country's sovereign debt agreed to take further losses in return for government-imposed austerity measures designed to thwart a default.
The finance ministers of 17 eurozone nation's have now approved the $173 billion economic rescue package, which calls for the Hellenic Republic to reduce its debt to about 120.5 percent of gross domestic product, from its current 160 percent. While Greek citizens have given the deal mixed reviews, the country's finance minister said Tuesday it would help avoid a "nightmare scenario" for the country.
The ramifications of the ongoing sovereign debt crisis on both Greece and the broader eurozone have unnerved the world's capital markets and roiled the country, which has endured paralyzing strikes, protests, and service cuts that threaten to cause a complete social and economic collapse.
Working in the background to reach some sort of resolution—doubts about Greece's ability to meet the obligations of the latest bailout notwithstanding—were attorneys from three global firms and one leading Athens shop.
White & Case and Magic Circle firm Allen & Overy were retained last year to represent a steering committee of the Private Creditor-Investor Committee for Greece composed of private holders of Greek government bonds. The committee is cochaired by two men with law degrees: Charles Dallara, managing director of the bank lobby Institute of International Finance, and Jean Lemierre, a former president of the European Bank for Reconstruction and Development and current senior adviser to French banking giant BNP Paribas, a major holder of Greek debt.
A&O finance partner Yannis Manuelides, global restructuring and insolvency partner Katrina Buckley, international capital markets partner Matthew Hartley, and special global counsel and global law intelligence unit head Philip Wood, all of whom are based in London, led a team from the firm working on the matter. An A&O spokesman says firm lawyers have spent a significant amount of time in Athens over the past few months.
In its capacity as cocounsel to the steering committee, White & Case fielded its own London-based legal team led by financial restructuring and insolvency partner Mark Glengarry, banking and capital markets partners Ian Clark and Michael Doran, and structured finance partner Gavin McLean. A White & Case spokeswoman says that meetings to negotiate the eventual sovereign debt agreement were held in Athens, Brussels, and Paris.
Nikos Salakas, a partner at the Athens-based Koutalidis Law Firm, advised the private sector creditors on Greek law. Salakas previously advised a consortium of banks on a debt restructuring for Neochimiki, a Greek chemicals company acquired by private equity firm The Carlyle Group in 2008.
As previously reported by The Am Law Daily, the Hellenic Republic retained Cleary last summer to advise on sovereign debt issues.
Lee Buchheit, a corporate and international finance partner well-versed in sovereign debt disputes, led a team of roughly 20 Cleary lawyers advising the Greek state. Other Cleary attorneys working on the matter include corporate finance and debt restructuring partners Andrés de la Cruz in Buenos Aires, Andrew Shutter in London, Giuseppe Scassellati-Sforzolini in Rome, and Barthélemy Faye in Paris. (Before being hired by Greece, Buchheit spoke to The Am Law Daily last year about the debt restructuring challenges facing the country.)
Additional lawyers from Cleary's New York and Washington, D.C., offices also assisted on the matter, according to a spokeswoman, who adds that an associate from the firm has been working out of Athens since August. The spokeswoman also notes that Cleary doesn't expect to be "engaging in any activity" that would require the firm to file its employment contract with the U.S. Department of Justice under the Foreign Agents Registration Act.
The Greek government was also advised by an outside banking team from Lazard, the investment bank that former Cleary managing partner—and veteran legal adviser to sovereigns—Mark Walker joined in June 2011. (According to news reports, Lazard will reportedly be paid $33 million for its work, while Cleary stands to reap $8 million in fees for its services through October 2011, and another $2 million per month for each month the crisis is prolonged.)
Last August the two firms took lead roles on a proposed merger between two Athens-based banks, Alpha Bank and Eurobank, which would create Greece's largest lender and the largest bank in southeastern Europe. Those merger plans were frozen last month, pending a resolution of the country's sovereign debt crisis. [UPDATE, 3/14/12, 11:45 a.m. EST. Reuters reports that Alpha Bank and Eurobank have scrapped their proposed merger.]
Linklaters capital markets partners Elaine Keats and Carson Welsh in London also advised Deutsche Bank and HSBC on the restructuring of their holdings in sovereign Greek debt.Make a comment