On March 13, 2017, CEELM reported that Arcus Infrastructure Partners, an independent fund manager specializing in European infrastructure, had acquired an 85% stake in Gdansk Transport Company S.A., established to work on AmberOne A1 motorway concession in Poland. We invited Toby Smith, the General Counsel for Arcus Infrastructure Partners, to share his thoughts on the company’s first transaction in Poland.
CEELM: The acquisition was performed in multiple steps, involving Arcus's acquisition of NDI Autostrada sp. z o.o., from Grupa NDI and Transport Infrastructure Investment Company, and NDIA's exercise of its right of first refusal on A1 Invest AB Skanska’s 30% stake and on John Laing Infrastructure Limited's 29.7% interest in GTC. That sounds especially challenging. Was any one part of that process more complicated than others, or was the entire transaction relatively straight-forward?
T.S: There was significant complexity in the early stages of the transaction in the analysis of the existing agreements, particularly the Shareholders’ Agreement governing GTC, to determine the rights available to the various shareholders in connection with a proposed sale process. The analysis of the concession agreement for the A1 and the finance documents was also quite complex in determining the required third party consent thresholds and applicable transfer restrictions. Finally, the process of negotiating and documenting the arrangements with the sellers of NDI Autostrada, while conducted in a very constructive manner by all parties, involved significant complexity, particularly in structuring the conditions to procure the exercise by NDI Autostrada of its applicable rights with regard to the other two sale processes. Having completed the acquisition of NDI Autostrada and served the applicable acceptance notices on Skanska and John Laing, the other two acquisitions were conducted in accordance with the Shareholders’ Agreement and were relatively straightforward.
Arcus has significant experience and expertise in the origination, evaluation, and execution of complex transactions and was therefore well-equipped to address the complex issues as they arose.
CEELM: The transaction was Arcus's first in Poland. Did conducting the transaction in Poland involve any unique challenges or conveniences over previous deals in other markets? Was there anything specific to the jurisdiction that caught your attention?
T.S: There is always complexity arising from the interpretation of complex legal documents that are governed by the laws of an unfamiliar jurisdiction. To that extent, there were certain unique challenges, however, Hogan Lovells (principally, Tomasz Zak, Marek Wroniak, and Mateusz Mazurkiewicz) did a very good job of guiding us through the process. One specific feature that was slightly unfamiliar on the legal side was the level of administration associated with the execution of documents (including the extensive notarization requirements) but, as noted, this is an administrative rather than substantive point. On the commercial side, Arcus is very experienced in executing infrastructure transactions in different European jurisdictions (and with counter-parties from across Europe) and I wouldn’t say there were unique challenges in this regard that were specific to doing a deal in Poland.
CEELM: Hogan Lovells reported that it led and coordinated all three transactions. In what capacity were you and your legal team involved? In other words, what parts of the process did you outsource and what parts did you retain in-house?
T.S: We were involved at a very early stage in the transaction, prior to the appointment of Hogan Lovells. At the outset, we negotiated a non-disclosure agreement with the sellers of NDI Autostrada and, subsequently, an exclusivity agreement. We also prepared (in-house) a draft SPA term sheet. We instructed Hogan Lovells at term sheet stage and they assumed the lead role in the legal due diligence, drafting of all key transaction documents and the legal coordination of the three transactions. We worked very closely with them in reviewing and negotiating the terms of the transaction documents and coordinating matters at our end. We also took the lead role (with the assistance of separate external counsel) in putting in place the arrangements with our underlying investor, APG.
CEELM: What is your general take-away from this deal — from the process of working on it?
T.S: As noted above, the transaction was conducted in a very constructive manner by all parties and their respective advisers, with everyone working together to resolve complex issues as they arose. We believe that the transaction represents a very good outcome, that will enable us to use our transportation asset management expertise for the benefit of the A1 motorway stakeholders. We are very pleased to have completed our first transaction in Poland and are interested in pursuing further opportunities in the region.
CEELM: What metrics did you apply in selecting Hogan Lovells as external counsel for this deal? Why did you ultimately choose to work with them?
T.S: We have worked extensively with Hogan Lovells in London (principally Steven Bryan) and have a strong relationship with the firm. We were aware from our own research of their expertise in Poland and their familiarity with the A1 from previous transactions. We were keen to work with an international firm as the transaction involved both Polish and English law aspects. We ran a process obtaining quotes from two firms and, in our view, Hogan Lovells had the most relevant experience, a clear capability to advise on the transaction and provided a competitive fee quote. We enjoyed working with the Hogan Lovells team on the transaction and were very pleased with the work undertaken.