Magic Circle firm set to take over.
Those in London legal jobs get to finally live out their fantasies of being in The Sopranos over the coming months, as Magic Circle firm Freshfields Bruckhaus Deringer gets set to take over creditor negotiations on behalf of waste management company Biffa.
The firm - definitely, definitely not run by the Mafia, but hugely in debt - is facing repayments of up to £1.1 billion, but is struggling to make the imminent deadline. With creditors lining up to take control of the company, Freshfields has been drafted in to chomp on cigars and say "fugatz" and oversee high-level negotiations in place of Hogan Lovells.
But why the switch? Well, as a source close to the deal told The Lawyer, it's because of Freshfields' muscle: the firm has close links to a number of banking giants, including the Bank of England, so it's hoped they can negotiate a more lenient debt restructuring deal. It's widely thought that distressed debt funds such as Apollo and Avenue are beadily eyeing the debt-laden firm from afar, which somewhat puts the frighteners on Freshfields to get this deal done quickly.
Other firms get their taste though, too: both Linklaters and Latham & Watkins have won advisory roles for negotiations with mezzanine lenders, in a deal worth up to £280 million. A syndicate of senior lenders - including HSBC, Dexia, GE Capital and Prudential's M&G - are owed £820 million.
Biffa has a long history with restructuring debt, stretching back as far as 2008. Their commercial strategies have been impacted by government taxation and legislation rulings such as 'you cannot just dump all of your garbage in a lake and forget about it', meaning significant pressures on waste management companies to explore other means such as incineration and eco-friendly measures.
To that end, the firm acquired Irish waste management company Greenstar back in 2010 despite ongoing debts, in a deal overseen by Linklaters and Latham. Their work negotiating with banks and Greenstar creditors alike won them mandates on the next round of restructuring, so when it comes to bailing out ailing companies, loyalty clearly pays.