Magazine - 1 January 2010

In publication since 1982, IFLR has become the trusted source for in-house counsel and law firms specialising in financial law.

Features

• Americas awards 2010: shortlist revealed

  The nominations for this year’s IFLR Americas awards have been announced. Here are the deal and team of the year shortlists

• India could use derivatives to fund acquisitions

  Derivatives could be used to fund acquisitions of strategic stakes in India, which is planning to switch to physical settlement of equity derivatives. But RBI rules would mean only hedge funds could participate

• DOJ clears Ticketmaster/Live Nation

  The US Department of Justice (DOJ) has cleared Ticketmaster and Live Nation’s merger after almost a year of investigation

• Europe awards 2010: shortlist revealed

  The nominations for this year’s IFLR Europe awards have been announced. Here are the deal and team of the year shortlists

• US lawyers react to Obama’s banking reforms

  Obama’s proposal to ban banks from housing private equity or hedge fund functions has created confusion among US lawyers. Read their reactions here

• Case study: The lying Chinese issuer

  A lesson from a Hong Kong-based in-house lawyer on what sponsors should do when they suspect a listing company could be falsifying information

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  Price disclosure would drain dark pools

  EU proposals to introduce price disclosure for dark pool trades destroy their purpose and would put an end to anonymous block trades

• Focus more on pre-merger integration

  Indian corporates should think more about how to integrate businesses they plan to acquire before going ahead with mergers

• India overseas investment rules worry counsel

  India’s regulations on overseas investment are the rules that lawyers would most like changed or abolished

• Key quotes from the India Outbound Investment Forum

  On January 20, in-house and private practice lawyers gathered in Mumbai for a series of colourful discussions on outbound investment. Here are some of their insights

• Paris bond platform justifies regulator’s stance

  Proposals for a new bond platform will bring corporate bonds back to Paris, and justify the AMF's commitment to liberalising its listing rules

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  Prospectus Directive reaction: summary still too simple

  An updated draft report on changes to the PD rules has removed the worrying liability clause

• Tata reveals outbound M&A strategy

  Tata’s general counsel has some advice for Indian companies looking outbound: have a long term plan and ensure that your investments fit with that strategy

• Why buyers shouldn’t worry about US litigation

  Indian companies are often deterred from investing in the US by the country's litigious culture. They shouldn't be

• Dubai World update: creditors debate offloading

  Creditors of the Dubai World debt will try to offload their exposure by offering their bonds for sale at below-par prices

• Regulatory capital drives derivatives investments

  Increased regulatory capital requirements will spur banks to use derivatives to fund acquisitions of strategic stakes this year

• Asia awards 2010: shortlist revealed

  The nominations for this year’s IFLR Asia awards have been announced

• How Japan will keep out cov-lites

  Mark-to-market regulations and concern over non-performing loans means cov-lites are unlikely to succeed in Japan

• SFC proposes applying takeovers code to Reits

  The SFC has begun a two-month consultation on proposals to extend Hong Kong’s Takeovers Code to include real estate investment trusts

• Antitrust investigations to slow M&A

  Enquiries from the Federal Trade Commission and the Department of Justice are slowing deals. Sellers are beginning to counter this risk with extra provisions

• Close-out netting for China

  Despite establishing an independent derivatives market that supports its unique economic model, China could follow international best practice in 2010 by introducing close-out netting

• Counterparty risk will dominate deals and regulation

  Investors are already demanding new structures on deals to mitigate counterparty default risk. Regulatory initiatives in 2010 will follow that lead

• Covered bonds will take-off in Asia

  Following Kookmin's covered bond last year, the market will take off in 2010. But lessons regarding collateral need to be learnt

• ESMA: the biggest regulatory reform

  The creation of a European Securities and Markets Authority will be “the single biggest regulatory reform for 25 years,” says one lawyer in London. And worries centre on how far its enforcement powers will stretch

• Expect relative fairness testing

  Novartis/Alcon is set to ask whether minority shareholders can expect a fairness opinion that considers higher bids for majority shareholdings

• Flipper clauses will prevail in securitisation deals

  Flipper clauses will continue to gain popularity as a means of forcing bondholders into new agreements

• Greater regulation of HK structured finance

  The SFC is set to implement changes to the way in which products are sold, but also the way they are structured

• How private equity will use alternative financing

  With valuations mismatched and bank lending still slow, US private equity purchasers will turn to earn-outs and seller financing to bridge the gap in 2010

• Merger regulation comes to India

  India is finally set to implement its merger regulations this year. Companies will hope that the Competition Commission of India reconsiders its filing thresholds and timeframe

• Stock exchange competition will intensify

  Competition between stock exchanges in Asia is set to increase in 2010 as Shanghai seeks to assert itself, attracting Chinese and regional listings

• Stock-for-stock deals focus on collars

  Floating rate collars will be an essential tool in the negotiation of the growing number of stock-for-stock acquisitions

• Tighter refinancing clauses on PE deals

  Private equity sponsors are seeking watertight agreements on new deals that their acquisition lenders will allow refinancing to go ahead

• US legislature boosts covered bonds

  Covered bonds will become popular in the US this year. New accounting rules mean that issuers are looking for alternative financing and legislation for the structures appears imminent

• US regulation is unpredictable and damaging

  The biggest predictions are always the hardest to make. This is epitomised by lawyers’ reaction to wide scale financial regulations in the US this year

• Why cov-lites won’t migrate

  Cov-lite loans were criticised during the financial crisis. But cov-lite elements to deals are being used again in the US, with their popularity set to rise throughout 2010

• First German IPO overcomes HK listing rules

  How Schramm Holding became the first German company to list on the Hong Kong Stock Exchange

• The disclosure dangers of dual-track offerings

  New interest in dual-track offerings for private equity exits means owners must be careful whom they disclose key financial information to

• Rusal will encourage HK professionals market

  Rusal’s Hong Kong IPO to institutional investors may lead to more IPOs with restrictions and could result in a professionals-only market

• Senate to ignore OTC regulatory arbitrage

  Despite recent fears that the US and Europe are diverging on OTC derivatives regulation, the US Senate is unlikely to consider the prospect of regulatory arbitrage when legislating

• Basel could force derivatives onto exchanges

  New Basel proposals apply large haircuts to securitisations exposures used as collateral to hedge counterparty risk. They could ramp up charges and force derivatives trades based on that risk onto exchanges

• ECB rules will restore confidence in ABS

  New ECB rules designed to increase transparency on asset-backed transactions will give investors more access to information about the underlying assets behind deals

• Listing rules attract US private equity exits

  US private equity houses will favour IPOs to realise investments this year, partly because listing rules are not as restrictive as those in other jurisdictions

• China derivatives settlement could encourage counterparties

  Morgan Stanley and China Haisheng Juice's out of court settlement could embolden Chinese companies to cease derivatives payments in the future, aware of international banks’ fear of court battles

• Why private equity is shunning Asia’s capital markets

  Although Asia’s capital markets are bubbling, private equity investors in Hong Kong are shunning the prescriptive listing requirements and longer lock-in periods of IPOs