Oct 01, 2008

Cleary Gottlieb is representing Dexia on all aspects of its recapitalization plan. After three days of intense negotiations between Dexia, its shareholders and the Belgian, French and Luxembourg governments, and on the back of heightened crisis in the European banking sector, a €6.4 billion recapitalization plan was put together in record time. Under the plan, the Belgian state and regions as well as the existing core Belgian shareholders of Dexia, on the one hand, and the French government and the CDC on the other, will each inject €3 billion into Dexia SA. In parallel, the Luxembourg government will be subscribing for €376 million in convertible bonds issued by Dexia BIL.

Dexia's recapitalization is the second instance of urgent, large scale support by European governments to Belgian financial institutions in the last few days, after the rescue, over the course of last weekend, of Fortis. A Cleary Gottlieb team is representing BNP Paribas in its announced acquisition of Fortis' operations in Belgium and Luxembourg, as well as the international banking franchises, for a total consideration of €14.5 billion.

Sep 08, 2008

Cleary Gottlieb acted for Morgan Stanley, which was in turn the advisor to the United States Treasury, in connection with the conservatorship of Fannie Mae and Freddie Mac described in the press as “the most dramatic market intervention in years.”

As detailed in an announcement by Treasury Secretary Henry Paulson on September 7, the two companies have been placed into conservatorship. As a result, the Federal Housing Finance Agency, Fannie Mae’s and Freddie Mac’s regulator, has gained management control of the companies. Treasury has also established preferred stock purchase agreements with Fannie Mae and Freddie Mac under which Treasury could be required to provide as much as $100 billion to each of the companies, established a new secured lending credit facility for the companies, and initiated a temporary program to purchase Fannie Mae and Freddie Mac's mortgage backed securities in the open market.

May 20, 2008

Cleary Gottlieb has represented an interested party in the appeal from a first instance judgement relating to the manner in which the receiver of the troubled Whistlejacket SIV should distribute its assets, which have a reported face value of approximately $7 billion. Cleary Gottlieb is also advising interested parties in the receivership, liquidation or restructuring of other SIVs and CDOs, including Cheyne, Rhineland, Rhinebridge and Coltrane. Cleary Gottlieb advised potential liquidity facility providers in the proposed "Super-SIV" known as M-LEC.

Dec 10, 2007

Cleary Gottlieb represented Goldman Sachs in its successful acquisition of Litton Loan Servicing, LP (“Litton”), a wholly owned subsidiary of Credit Based Asset Servicing and Securitization LLC (“C-BASS”), and in an option to purchase a 45 percent stake in C-BASS. C-BASS is a joint venture between Mortgage Guaranty Insurance Corporation and Radian Group Inc., two of the United States’ largest mortgage insurers, and a leading issuer, servicer and investor in credit-sensitive mortgage assets. Litton is a mortgage servicing company specializing in loss mitigation and default management for residential loans, servicing more than 400,000 customers nationwide. The transaction was driven by liquidity difficulties experienced by C-BASS and the current downturn in the subprime market, which caused C-BASS to be in default on many of its debt obligations.

Following an intense auction process, Goldman Sachs was selected as the winning bidder and a purchase agreement was executed in September 2007. C-BASS, Goldman and creditors of C-BASS then negotiated and executed an out-of-court restructuring agreement in November 2007 to give C-BASS additional liquidity and to limit the ability of creditors from exercising enforcement remedies until January 15, 2010. Proceeds from the Litton sale were used to pay a portion of C-BASS’s secured debt. The Litton transaction closed on December 10, 2007.

Nov 29, 2007

On November 29, after nearly three-and-a-half years of work, Cleary Gottlieb client Grupo Iusacell, Mexico’s third-largest mobile telecommunications company, closed the last stage of its debt restructuring. The first ever restructuring involving secured debt widely held by international investors, the operating company debt restructuring was effected through a concurso mercantil proceeding in Mexico, as was the holding company debt restructuring. The total indebtedness restructured was $800 million (not including past due interest).

Grupo Iusacell faced novel Mexican insolvency law issues, an involuntary U.S. bankruptcy filing by a dissenting creditor group and a multitude of creditors at various levels of the Group’s capital structure. The restructuring included a rights offering; the issuance of equity into a trust for holding company creditors as security for newly-issued holding company debt; two exchange offers and consent solicitations; two separate concurso mercantil proceedings; the issuance of three different tranches of secured debt issued in reliance on the exemption from registration provided by Section 3a-10 of the Securities Act; the restructuring of bank debt (including of a second operating company); and the receipt of exemptive relief from the SEC from certain requirements under the Trust Indenture Act.

Dec 28, 2007

Cleary Gottlieb represented Citibank, N.A. in the restructuring of equity forward contracts held by SLM Corporation (commonly known as Sallie Mae). Sallie Mae’s forward contracts with multiple banks obligated it to purchase its own shares in the future for approximately $1.95 billion, though the shares had since declined in value to a little over $900 million. The forward contracts also had share price triggers that would have accelerated Sallie Mae’s obligations if its shares descended below a certain price. The acquisition of multiple forward contracts by Citibank allowed Sallie Mae to delay the repurchase of its common stock until February 2008, providing flexibility for Sallie Mae to raise capital.

Jul 19, 2007

Cleary Gottlieb advised Doral Financial, a Puerto Rico-based bank holding company, in a recapitalization transaction to refinance the company’s $625 million notes due July 20, 2007. The transaction was completed on July 19, 2007.

The recapitalization transaction entailed an equity investment of $610 million in Doral by a newly formed bank holding company in which, among other investors, Bear Stearns Merchant Banking and funds managed by Marathon Asset Management, Perry Capital, the D. E. Shaw group, Tennenbaum Capital Partners, Eton Park Capital Management, Goldman Sachs, Canyon Capital Advisors and GE Asset Management invested. The transaction, which received significant press coverage as one of the first controlling investments by private equity firms in the U.S. banking sector, was announced on May 15.

Cleary Gottlieb also represented Doral Financial in connection with the various lawsuits and investigations initiated following Doral's announcement of the need to restate the company’s financial statements in April 2005, successfully concluding a settlement with the SEC in September 2006 and an omnibus settlement of securities class action and shareholder derivative litigation that received final court approval on July 17, 2007.

Apr 10, 2006

Cleary Gottlieb recently won an appeal for Argentina’s Mendoza Province before the Second Circuit, which unanimously affirmed the use of exit consents in the Province’s 2004 sovereign debt restructuring. Through these exit consents (which are a critical feature of virtually all recent sovereign debt restructurings), bondholders accepting an exchange or purchase offer for non-performing debt simultaneously agree to specified amendments to the indenture governing the tendered debt. In this case, these modifications included an amendment to the Province’s broad waiver of sovereign immunity to make it inapplicable to payment on the new bonds to be issued in the exchange offer.

In the district court, plaintiff Greylock, a distressed debt fund, tried to enjoin closing of the exchange offer, arguing that the amendments improperly limited its "absolute and unconditional" right to receive payment of principal and interest and to institute suit for enforcement of any such payment. District Judge Harold Baer denied Greylock’s request for a preliminary injunction and, following discovery, granted summary judgment in the Province's favor in February 2005. The court of appeals agreed with Judge Baer's ruling that the indenture did not preclude adoption of the amendments, and rejected Greylock’s other arguments from a related case. Cleary won dismissal of the appeal of the related case last fall.

Cleary has represented Argentina in more than two hundred cases brought around the world arising out of Argentina's 2001 debt crisis, including defeating attempts to block Argentina’s 2005 restructuring of $62.5 billion in principal amount of sovereign debt. For more than 25 years, Cleary has represented sovereigns throughout the world in managing their external debt.