Good fortunes return

Unsurprisingly, there are numerous examples of Chinese outbound investments in commodity countries among the shortlist. And because of the increase in outbound investment and financing work, Chinese banks and energy corporates are now among the most coveted clients in the world.

Finally, on the projects front, law firms claim to have enjoyed a highly successful 12 months in terms of the quality of deals undertaken. And many of these have involved a number of major Chinese banks in the lender groups.

In addition to CLP's traditionally strong focus on transactional achievements, this year's Awards will also celebrate nine Firm categories, nine City Firm categories and four In-House categories.

Tables are already selling fast, so in order not to miss out please contact:

Bryce Leung on +852 2842 6937 or at
[email protected]

Deals of the Year

Mergers & Acquisitions

BeijingWest Industries – Delphi

Why: Chinese state-owned steel company Capital Iron & Steel Company (Shougang) and subsequently its joint venture company BeijingWest Industries successfully acquired the global suspension and brakes business of former General Motors' automobile parts subsidiary Delphi Corporation, which has been under Chapter 11 bankruptcy protection since 2005. Delphi's assets were located in multiple jurisdictions necessitating the involvement of local counsel from no fewer than nine other jurisdictions. This distressed acquisition had an extremely tight schedule for due diligence and negotiation of sale and purchase documentation. It is also the first deal involving a Chinese SOE's acquisition of US assets under the Obama administration that was granted CFIUS approval.

Chengde Xinxin Vanadium & Titanium – Handan/ Tangshan

Why: Hebei Iron & Steel Group Company was the controlling shareholder of the three listed companies, Tangshan Iron & Steel, Chengde Xinxin Vanadium & Titanium and Handan Iron & Steel. As the three companies were listed on the Shenzhen and Shanghai stock exchanges respectively, the transaction involved unprecedented share swaps on companies listed on two different stock exchanges. In addition to being one the few merger transactions involving three listed companies, it was also the largest merger of Chinese listed companies in 2009 in terms of deal value as well as being one of the first such deals where the parties offered cash compensation to dissenting shareholders.

GCL Poly – Jiangsu Zhongneng

Why: GCL-Poly Energy Holdings acquired Jiangsu Zhongneng PV Technology Development, making it one of the largest diversified solar energy industry companies in the world. At the time the largest M&A deal in China for the year, the transaction involved more than 30 parties and took more than two months to negotiate, process, and complete. Given the large number of pre-IPO investors in GCL Solar, including preferred shares, convertible notes issued by Jiangsu Zhongneng and exchangeable notes issued by the controlling shareholder, this deal required careful coordination and cooperation. It included two conditional sale and purchase agreements, a specific mandate for the issue of new shares, a whitewash application to the SFC as well as various submissions to the SFC in connection with the application of Rule 25 of the Code on Takeovers and Mergers.

Deals of the Year cont.

Sinochem – Emerald Energy

Why: Sinochem's recommended City Code governed all-cash acquisition of UK-based Emerald, a FTSE-250 oil and gas explorer and producer in South America and the Middle East, was effected by way of a scheme of arrangement under Isle of Man law. The deal was Sinochem's first takeover of a publicly quoted company and the first City Code governed offer by a Chinese SOE for an LSE main market listed company. Many of the provisions of the City Code were completely alien not only to Sinochem but to the Chinese state regulatory authorities. Counsel had to carefully balance the requisite Chinese state regulatory approvals with the requirements of the City Code. Additional complexity came with the bespoke arrangements for Emerald's convertible bonds as well as the Isle of Man scheme.

Sinopec – Addax Petroleum

Why: Sinopec Group wholly owned subsidiary Sinopec International Petroleum Exploration & Production Corporation (SIPC) acquired Toronto and LSE-listed Addax Petroleum in what was the largest overseas energy acquisition completed by a Chinese company to date. The deal involved a public tender offer for Addax shares listed on two stock exchanges, redemption of Addax bonds listed in the UK and negotiations regarding two large outstanding credit facilities. It covered 26 different oil and gas assets spanning five countries across Africa and the Middle East, as well as multiple companies in China, Hong Kong, Canada, Switzerland and the asset countries. The deal was also completed within an extremely short timeframe, with just four months from the commencement of due diligence, to negotiation of the key documents, to completion of the takeover.

Private Equity

Bain Capital – Gome Electrical Appliances

Why: US private equity group Bain Capital Partners invested in Chinese retailer Gome Electrical Appliances Holding by way of subscription of convertible bonds. Hong Kong-listed Gome issued bonds to Bain Capital convertible into approximately 10% of the enlarged issued share capital of the company and then launched an open offer to existing holders of which Bain Capital was the underwriter. Challenges for counsel included the concurrent detention for bribery and other crimes of founder, chairman and controlling shareholder of Gome Huang Guangyu and issues with the Hong Kong Stock Exchange and other stakeholders arising from Gome's seven-month suspension of trading.

Blackstone – Dili Group Holdings

Why: Blackstone acted as lead investor of a consortium making a US$600 million pre-IPO investment in China Shougang Agricultural Products Logistics Park (also known as Dili Group Holdings). The deal involved a complex restructuring of Dili Group's onshore assets as a condition to completion in order to prepare the company for a potential listing in the short to medium term. A series of measures were taken to secure Blackstone's interests and ensure performance by the company and its controlling shareholders of their obligations under the transaction agreements. This was challenging given that the investment was being made into an offshore company, which has most of its assets in the PRC, making enforcement potentially challenging. The deal is Blackstone's first pre-IPO investment in a PRC business.

Deals of the Year cont.

Carlyle – Natural Beauty

Why: One of the high profile deal failures of early 2009 was CVC's attempt to privatise Natural Beauty Bio-Technology. When Carlyle set its sights on the company later in the year, it was keen to learn from CVC's mistakes. CVC tried to take Natural Beauty private through a scheme of arrangement, which requires shareholder approval. The deal was voted down by minority shareholders. Carlyle instead elected to conduct a general offer after its BidCo acquired 65.53% of the target having done a
deal in advance with the controlling shareholder. As a result, minority shareholders could not vote down the deal. This US$102 million deal was the private equity house's first public-to-private transaction in Hong Kong.

COFCO/ Hopu – Mengniu

Why: State-owned food manufacturer COFCO and private equity fund Hopu Investment Management jointly purchased a 20% stake in Inner Mongolia-based dairy producer China Mengniu Dairy using a special purpose vehicle. The deal was structured to ensure that the new share and existing share transactions would not together be deemed as a connected transaction under the Hong Kong Listing Rules – and thus be subject to independent shareholders' approval. Consideration was also given to the PRC tax residency status of the SPV (and the relevant tax implications) to be set up by COFCO and HOPU under the new PRC tax law. The deal, which counsel completed within one month of engagement, was the largest equity investment in China's food industry and a sign of SOE's expanding investment into successful private companies.

Ping An – Shenzhen Development Bank

Why: The sale by TPG/ Newbridge of its 16.76% stake in Shenzhen Development Bank to Ping An Insurance enabled the private equity firm to exit its 2004 investment (which was the first time a foreign investor had bought shares in a Chinese bank) at a significant premium. Consideration was to be paid, at TPG/ Newbridge's election, either in cash or in the form of new shares in Ping An, which contemporaneously agreed to subscribe for new shares in Shenzhen Development Bank for a subscription price of up to US$1.5 billion. Following completion of the deal and share subscription, which is the first example of an insurance company combining with a banking company, Ping An owns not more than 30% of Shenzhen Development Bank.

Wumart Stores

Why: TPG, Hony and Legend invested approximately US$213 million in return for an aggregate 10.9% of the total enlarged issued share capital of Wumart Stores, a leading retail-chain store operator in Beijing, Tianjin and the Zhejiang Province. The transaction is the first significant investment by a foreign company into Wumart since it emerged from problems associated with its former controlling shareholder and CEO, who was indicted by the PRC authorities. It involved both an H share issue in Hong Kong and the subscription for unlisted domestic shares in the PRC, providing the backdrop for parallel and intertwined discussions and negotiations onshore and offshore balancing Hong Kong and PRC legal and regulatory issues.

Restructuring

Asia Aluminum

Why: If investors needed a reminder of the dangers of channelling money into China through offshore structures, Asia Aluminum provided it. Its highly publicised difficulties in the first half of 2009 were resolved in such a way that many investors walked away with next to nothing. The complexity of the deal stemmed from the company's many different levels of debt. While material operations and some debt were accrued onshore, debt was also acquired through offshore trading entities, two layers of bonds, and a series of Pik (payment-in-kind) notes. When the company offered to buy back the senior and Pik notes in February, investors rejected the deal. The management, as threatened, put the company into provisional liquidation and, despite efforts to find a white knight, Asia Aluminum's assets were sold to a company associated with the management and sanctioned by the PRC government.

Evergrande

Why: Following the financial crisis's arrival in Asia, Evergrande became distressed, defaulting on its core financing. Under the terms, this meant the company could be forced to repay up to US$1 billion of that debt early. The company decided to do an IPO to raise capital. With the capital markets closed for much of 2009, the company made the most of a window to list in November. To do so, Evergrande had to obtain waivers for the defaults from its creditors. This was complicated by the number of creditors with different levels of security over Evergrande. For example, strategic investors also had equal security on some parts of the deal as senior secured investors. And convertible bondholders had first rank security over some of the group's subsidiaries. Consent from 100% of creditors was however obtained and the company completed a US$725 million IPO.

Deals of the Year cont.

FerroChina

Why: FerroChina's problems provided the first major test for China's new bankruptcy law when it entered formal procedures at the end of 2008. The company, which had debtors onshore and offshore, set a precedent for how foreign creditors would be treated in future insolvencies. In the end, foreign creditors were treated the same as Chinese creditors. But those that invested through offshore structures received nothing. Secured onshore creditors could expect to receive 60% of their debt, while unsecured onshore creditors could expect 20%. Five of FerroChina's subsidiaries were sold to China Minmetals to recoup the money. The deal highlighted problems with China's insolvency law, namely the appointment of a local administrator, difficulties arranging a rescue sale without management cooperation, and the necessity of local government support.

Mandra Forestry

Why: Sino-Forest Corporation's acquisition of Mandra Forestry involved a privately negotiated exchange of new Sino-Forest senior notes for a majority in aggregate principal amount of Mandra's outstanding high yield notes, which had been in payment default for an extended period of time. Sino-Forest conducted this exchange concurrently with its acquisition of 100% of Mandra's equity. This resulted in a successful out-of-court restructuring of Mandra's outstanding debt and equity. By issuing new notes as a reopening of its outstanding notes, Sino-Forest was able to provide Mandra noteholders with a security with substantial liquidity. This is one of the very few exchanges where an existing issuance has been successfully tapped. Reopening the existing series of notes involved significant technical issues, including US federal tax considerations and closing mechanics.

SVA Group

Why: This deal included two parts. Firstly, Shanghai Yidian acquired SVA Group A-share market listed companies SVA Information Industry and SVA Electron (with the latter also the first B-share market listed company in China). Secondly, the two listed companies were restructured, involving the equity transfers of both the SOEs and the Sino-foreign JV companies and asset purchases. The takeover and restructurings were mutually conditional and executed at the same time. Therefore, the deal was very complicated and involved dozens of parties and the approvals of several administrative departments including the SASAC, the Shanghai Municipal Commission of Commerce and the CSRC. After procedures were completed, Shanghai Yidian became the shareholder of SVA Information Industry and SVA Electron.

Zhu Kuan debt restructuring

Why: Originating from the economic turmoil in Asia in 1997, this long running restructuring has taken many years to successfully complete. Zhuhai municipal government creation, the Zhu Kuan Group, had defaulted on the debt it had accrued to raise funds for ambitious infrastructure projects and, by 2001, had defaulted on its debt. Counsel could only take steps to confirm creditor support for the restructuring plan following court procedures in Macau, where the case was adjudicated and managed by the court and not by designated liquidators as in Hong Kong. The debt restructuring plan then only received final approval in 2009 following execution of the creditor agreement and all remaining compliance issues in relation to the plan. The RMB3.11 billion (US$455 million) debt restructuring was the first ever three-way restructuring involving the PRC, Hong Kong and Macau, and the first corporate debt-restructuring approved by the Macau Court in Macau.

Debt and Equity-Linked

Bank of East Asia core capital

Why: In November, Bank of East Asia (BEA) became the first Hong Kong bank to do a hybrid tier-one capital raising, with the US$500 million deal approved as Category One core capital by HKMA. While many Asian banks have emerged well capitalised from the credit crunch, this was not the public perception of BEA, which suffered a bank run in September 2008. November's offering allowed the bank to boost its regulatory capital, while the instrument was treated as debt by the tax authorities. One deeply subordinated note was issued by the bank on which payments of interest would be tax deductible, alongside a preference share issued by a special purpose vehicle owned by BEA. These were contractually stapled together. If a particular event occurred, the two would be unstapled and the note would be assigned (the rights having already been purchased) to the SPV with the preference share becoming dividend paying.

Country Garden high yield bond

Why: In September, leading domestic property developer Country Garden Holdings Company closed an offering of US$300 million 11.75% senior notes due 2014, followed by a further issuance of US$75 million 11.75% senior notes also due 2014. The deal was arranged by JP Morgan and marks Asia's first true high yield bond in 14 months since the start of the financial crisis and the first PRC high yield deal since 2007.

HSBC RMB Hong Kong bond issue

Why: HSBC was one of the first foreign banks, along with Bank of East Asia, to be given permission by China's State Council at the end of May 2009 to issue RMB bonds in Hong Kong through their Mainland subsidiaries. This transaction saw RMB1 billion (HK$1.13 billion) of RMB-denominated bonds issued, and was the first time that a foreign wholly-owned PRC bank had issued RMB bonds in Hong Kong. This was also the first floating rate RMB bonds to reference to the Shanghai Interbank Offered Rate (SHIBOR). The deal represents a significant step in the development of Hong Kong as the offshore RMB settlement centre for the PRC.

PRC Government renminbi bond

Why: In October, Hong Kong was chosen as the venue for the PRC's first offshore sovereign renminbi bond. The Rmb6 billion (US$878 million) deal was the first bond issue by China since 2004 and was three times oversubscribed. Under Hong Kong regulations, the PRC government cannot issue debt without a full prospectus. As this is unsuitable for a sovereign bond, China used a dealer exemption that had not been used for almost 20 years. The offering documents were issued by the bookrunners under their licences, thereby bypassing the need for regulatory approval of a prospectus. To meet the high demand for this product, the regulators agreed to relax the rules governing the sale of debt products to the retail market. For the first time, bonds could be bought through phone and internet banking.

Sino-Forest exchange offer

Why: As redemption dates approached for many bonds in late 2008 and early 2009, companies rushed to head off a default and exchange their obligations. But for some companies, particularly those with bonds held by US investors, this was not simple. Bonds that had traded into the US secondary market could not simply be exchanged; new bonds could only be offered to Qualified Institutional Buyers (QIBs), not all bondholders. To address this, Sino-Forest turned away from the typical model of exchange offers, where consent and exchange are sought and documented simultaneously, and created a dual-track process where consent was required from all bondholders but new bonds were only offered to those that were eligible. As a result, the documentation of some new high yield bonds is being revised so that consent doesn't have to be gained from all bondholders to do an exchange offer.

Equity

China Merchants Bank rights offering

Why: Shenzhen-headquartered retail bank China Merchants Bank closed its US$3.2 billion global rights offering in April. It consisted of a public offering of A shares, a public offering of H shares and private placements of H shares to institutional investors outside the PRC and Hong Kong, including within the US. The offering was structured to allow placement of H-shares to qualified institutional investors (QIBs) in the US, which involved significant analysis and planning in respect of US securities laws and related exemptions. This was the first global rights offering by a Chinese bank and the first rights offering by a Chinese company made available to US investors.

China Minsheng Bank IPO

Why: China Minsheng Banking Corporation's US$3.86 billion Hong Kong IPO was the largest IPO in Asia in 2009 and the first by a financial institution since the global financial crisis. As a result, the transaction faced many highly complex regulatory and disclosure issues. The deal took just over five and a half months from kick-off to listing and just over three months from A1 filing to listing, reflecting the sophisticated execution skills and seamless coordination displayed by the legal teams. The issuer is the first and largest joint stock commercial bank in the PRC primarily founded by non-state-owned enterprises.

China Pacific Insurance IPO

Why: China Pacific Insurance Corporation (CPIC) is a leading composite insurance group in the PRC and the fourth major PRC insurance company to list on the main board of the HKSE. The issuer's A shares had already been listed on the Shanghai Stock Exchange in 2007. The transaction therefore involved a substantial amount of work to ensure that the Hong Kong listing also complied with the relevant PRC listing requirements. The insurance industry is a highly regulated industry. There was therefore a significant amount of work to ensure that the listing complied not just with the relevant listing rules, but also with the relevant insurance industry requirements. CPIC's IPO was the third largest in Hong Kong in 2009, the fourth largest in Asia and the seventh largest in the world.

China Real Estate Information Corp ADS offering

Why: China Real Estate Information Corporation (CRIC)'s US$248m IPO and listing on the NASDAQ Global Select Market was structured as a carve-out IPO from its parent company, E-House, a leading real estate services company in China listed on the NYSE. The IPO was executed concurrently with CRIC's merger with the online real estate business of SINA, a leading online media company and mobile value-added service provider in China listed on the NASDAQ. One of the conditions for the M&A closure was the successful launch of the IPO. As a result, the prospectus was prepared on the assumption that the IPO would close, and therefore, the M&A deal would happen. This had implications for the due diligence and disclosure. The execution of the two transactions required careful management of timing, workload and all parties involved to ensure the deal closed successfully.

Metallurgical Corporation of China IPO

Why: Metallurgical Corporation of China is one of the largest and most diverse industrials. The transaction involved a very complex restructuring of the group prior to the IPO and presented significant challenges in ensuring compliance with the relevant disclosure, internal corporate governance and connected transaction requirements. The deal was one of only a few concurrent offerings of A shares and H shares completed by PRC state-owned enterprises in 2009. The working group had to coordinate with the A share drafting team more often than in other similar deals to ensure consistency between the A share prospectus and the H share prospectus. Given that the issuer had mining operations across the world, including in Afghanistan, Pakistan and Papua New Guinea, the due diligence process and the HKSE review process was also more complicated and burdensome than the IPOs of other PRC state-owned enterprises.

Sands China IPO

Why: Listing casino operators is always tricky thanks to the highly regulated environment in which they operate, but Sands China's US$2.5 billion offering in Hong Kong at the end of November was more complicated than most. Sands China was spun off from its US parent, Las Vegas Sands, prompting a number of carve-out issues about separating the businesses and timing disclosure to potential investors in Hong Kong and shareholders in the company's NYSE-listed parent. Sands China's IPO was also part of a wider fundraising effort, including US$1.75 billion in project financing and pre-IPO obligations, some of which converted into equity at the point of listing. This again required regularly updated disclosure on the company's capitalisation.

Shanda Games IPO

Why: The Shanda Games IPO was one of the first carve-out IPOs by a PRC-based, Nasdaq-listed issuer, and was the result of a near two-year process of consultation, planning and execution. The business separation that preceded it and made it possible (the separation of Shanda Interactive's online games business) involved complex analysis of the laws of various jurisdictions, a deep understanding of Shanda Interactive's corporate structure and business goals, and careful documentation of the various steps of asset and equity transfers and reverse transfers between the online games business and Shanda Interactive's other businesses. Meanwhile, the carve-out IPO included significant complexities relating to disclosure and accounting as well as equity research and publicity issues. This is because Shanda Interactive was well-covered by equity analysts, exposing the new issuer and its underwriters to significant risk of liability under US securities law restrictions on publicity and promotion.

Project Finance

China COSCO Piraeus Container Terminal

Why: This deal involved Piraeus Container Terminal (PCT), as borrower, and COSCO Pacific Limited (CPL), as project sponsor and parent of PCT, in a €339.4 million project financing of a marine container terminal facility located at the Port of Piraeus in Piraeus, Greece. Financing was provided by CDB and involved loan facilities for the construction and development of the Piers and letters of guarantee issued by CDB in favour of the port authority under the concession. Most complicated, however, was the design of a collateral security package that both protected the lenders for the full term of the loan and guarantee facilities (up to 30 years) while permitting PCT/CPL the practical ability to refinance the loan portion separate from the guarantee facility. The parties had to create a set of covenants that was flexible enough to permit PCT to comply with the concession, yet designed to protect the lending banks. PCT also sought to gain greater flexibility as certain milestones were met, thereby resulting in a highly complex matrix of covenants and conditions.

Datang wind farm financing

Why: Sumitomo Corporation and Kyushu Electric Power Company were the Japanese sponsors of a 12,000 sqm, 49.5MW wind farm project in China's Inner Mongolia Autonomous Region. The deal was novel in being structured as a multi-tranche RMB and US dollar financing under parallel facilities provided by the Asian Development Bank (ADB) and the Industrial and Commercial Bank of China (ICBC), supported by limited shareholder guarantees. ADB's RMB164 million (US$24 million) facility and ICBC's RMB170 million (US$24.9 million) facility were provided to Datang Sino-Japan (Chifeng) Renewable Power, a joint venture between the Japanese sponsors and China's Datang Corporation.

GNPower Mariveles Project

Why: The GNPower Mariveles Project involved the development and financing of a 2 x 300 MW coal-fired power project, including a private port and associated facilities in Barangay Alas-asin, Municipality of Mariveles, Province of Bataan, the Philippines. The project is being designed and constructed by PRC power plant contractor CNEEC on a turnkey basis and is receiving buyer credit financing from CDB with political and commercial risk cover provided by Sinosure. The largest Philippine Greenfield power project financing in over a decade was also the first non-recourse overseas power project financing by CDB and Sinosure. And unlike most Philippine deals, there is no government support or guarantees for this private sector project. The first large-scale power project undertaken under the Electric Power Industry Reform Act of 2001 also involved highly complex simultaneous same day project and land debt and equity closings and the issuance of NTP for offshore and onshore EPC contracts involving over 90 funds transfers. The deal has a unique 'hybrid merchant power' structure with no single power purchaser but numerous offtakers under multiple long-term power purchase agreements.

Karara iron ore project financing

Why: CDB and BOC became the first Chinese banks to exclusively arrange a project financing in Australia when they acted as mandated lead arrangers on a US$1.2 billion syndicated financing to Karara Mining for the construction and development of the Karara Iron Ore Project in WA. This deal was also the first in Australia where a Chinese bank was acting as facility agent, security trustee and account bank. The sponsors, SOE Anshan Iron & Steel Group and ASX-listed Gindalbie Metals, supported the financing facility with a construction period guarantee. At 12 years, the tenor of the facility was unusually long for a project financing and the margin was highly competitive. This was the first time that FIRB had granted approval for foreign state-owned banks to participate in a financing and, if necessary, enforce their security over the borrower's Australian assets. The deal was structured to take advantage of the interest withholding tax exemptions under Australia's Income Tax Act.

Noble Group carbon credits contract

Why: Calyon acted as lender, agent and security trustee with respect to a €19 million prepayment facility agreement with Noble Group for funding the prepayment of a carbon credits contract between Noble and a Chinese construction company. The facility was backed by a bank guarantee and the assignment of Noble's rights under commercial contracts between Noble and the PRC seller. The proceeds were advanced by a Noble subsidiary to a PRC coal supplier to enable completion of the construction of various coal plants in the PRC. Such structures – where Calyon takes security over Noble's offtake rights to receive carbon credits as they are delivered post construction under a carbon credit purchase agreement – are highly unusual for carbon credits. To mitigate the construction risk, ICBC has also agreed to provide Noble with a performance guarantee which is assigned to Calyon. Noble agreed to provide to Calyon an amount of loan facility recourse for certain default events that are deemed to be within its control.

Project Baha Mar

Why: On March 31 2010, a US$2.45 billion financing facility between Bahamas-incorporated Baha Mar and China Exim was signed (with Citi acting as facility agent and offshore security agent). The loan will be used to fund the construction of a multi-branded hotel and casino resort on approximately 1000 acres of ocean front land in the Bahamas. This is one of the first truly limited recourse project financings wholly provided by PRC lenders. There was no sponsor guarantee (beyond an equity shortfall guarantee) and no ECA or multilateral agency support. China State Construction Engineering Corporation has been appointed as the main contractor for the project and will also take a minority stake in the project company. Scheduled for completion in late 2013, this deal is another example of Chinese financing being brought to the table by a Chinese contractor.

Senoko Power project refinancing

Why: Senoko Power is owned by a consortium of sponsors comprising Marubeni Corporation, GDF Suez, Kansai Electric, Kyushu Electric and JBIC. There were several branches to this financing, which included senior and mezzanine debt comprising a S$2.2 billion five-year senior term facility, a S$150 million five-year senior working capital facility and a US$220 million eight and a half-year mezzanine facility. An intercreditor agreement covered the sponsors, the borrowers and subs, the senior lenders, the senior hedge counterparties, the mezzanine lenders, the repowering lenders and the mezzanine hedge counterparty. OCBC played a significant role among the lenders. Counsel faced numerous multi-jurisdictional issues due to the presence of Belgian and Japanese sponsors, Dutch and Singapore borrowers, and a Japanese governmental entity as mezzanine lender. The financing will be used to refinance the bridge loan facility used by shareholders to acquire Senoko Power from Temasek Holdings in 2008.

Energy & Natural Resources

China Yangtze Power – China Three Gorges Corporation

Why: China Yangtze Power (CYPC) acquired the hydro power assets of parent company China Three Gorges Corporation, which included 18 generator sets and support facilities of the Three Gorges Project, in the largest merger of A-share listed companies by dollar value. With a deal value of RMB140.3 billion (US$20.5 billion), counsel assisted CYPC in developing a payment scheme integrating a succession of debts, a non-public offering and payment in cash. With the former as the major payment means, CYPC was able to not only relieve the pressure on its cash flow, but also avoid dilution of the EPS by too much share issuance. And in order to transfer the enterprise bonds legally, counsel assisted CYPC in determining legal procedures for the transfer under the current legal framework as well as advising on arrangements for rights and obligations, governmental approvals and information disclosure.

CIC – Nobel Oil Group

Why: Together with Hong Kong's Oriental Patron Group, CIC agreed to invest US$300 million in Russian oil group Nobel Oil Group. Phase I of the investment settled in September 2009, with CIC taking a 45% equity stake, Oriental Patron taking 5%, and the original Russian shareholders maintaining a 50% stake. The US$150 million in the Phase I investment included US$100 million for the purchase of the equity stake from the existing Russian shareholders and US$50 million for Nobel's operating expenses. Counsel had to work through applicable Russian and Chinese regulatory approvals to ensure successful closing. The investment, which involves oil and gas exploration and production rights and operations in Russia's Komi Republic, marks the first time that CIC has made an active investment in Russia and a direct foreign investment in Russia.

Fortune Liulin Gas Co

Why: This project consisted of two parts. Firstly, UK-listed Fortune Oil completed a buyout of shares in Hong Kong member Fortune Liulin Gas Co from existing shareholder Australian coalbed methane producer Molopo Energy. Secondly, Fortune Oil sold the purchased shares together with the allotment of new shares and the granting of options to the new investor, Asia-Pacific coalbed methane producer Arrow Energy. The subject production sharing contract (PSG) signed – for the exploitation of coalbed methane resources in the Liulin area of China – was one of the earliest forms of such a PSG in China. The project was especially challenging in light of the short timeframe, as well as the fact that the buyout of the existing shareholder and the investment of the new investor were negotiated at the same time. While transaction documents were mainly governed by Hong Kong law, other legal challenges included PRC law on the exploitation of natural resources and listing rule requirements in the UK and Australia.

ICBC – The Republic of Angola

Why: ICBC acted as arranger, with ICBC (London) Ltd as agent, of a US$2.5 billion term loan facility for the Republic of Angola's Ministry of Finance. With the Angola government acting as national concessionaire of Angola's crude oil reserves, the purpose of the loan was to finance its purchase of construction materials and equipment from CITIC Group under various commercial contracts. The loan would be repaid from oil sale proceeds arising under an oil purchase agreement (or any replacement oil contract) between the government-owned company Sonangol and Chinese oil trading company UNIPEC. This deal involved complex structuring around political risk and required the financing to dovetail both with the requirements of the construction contracts and the offtake arrangements. It is also another example of Chinese banks providing financial support to their Chinese clients overseas.

Queensland Curtis Gladstone LNG Project

Why: CNOOC's equity investment in BG Group's Queensland Curtis Gladstone LNG Project and its purchase of 3.6 MTPA of LNG from the project had a value of up to US$80 billion and was China's largest ever export transaction with Australia. The deal, which included the negotiation of more than 20 project agreements, was the largest ever volume of LNG sold in a single contract and the first long-term CBM to LNG sale in the world. As well as representing a significant milestone for Queensland's booming LNG industry, the deal was extremely high-profile with the signing ceremony attended by CNOOC president Fu Chengyu, BG Group chief executive Frank Chapman, Australian Minister for Resources and Energy Martin Ferguson, HRH Prince Andrew, and senior members of the Chinese government.

Shanxi Coal – China Petroleum Jilin Chemical

Why: State-owned coal company Shanxi Coal Import & Export Group's takeover of China Petroleum Jilin Chemical Engineering & Construction was divided into four parts including a takeover by agreement, tender offer, assets swap and non-public issuing. The deal creatively designed 'bridge assets' as the consideration not only for the transfer of State-owned shares, but also for the repurchase of assets of the listed company. It enabled the coal mining and trade assets originally owned by Shanxi Coal to be listed on the stock exchange. This helped the company actively participate in a movement initiated by the Shanxi provincial government regarding coal resource consolidation and the M&A of coal-mines.

Sinopec – SABIC

Why: Saudi Basic Industries Corporation (SABIC) completed a US$3.28 billion joint venture with China Petroleum & Chemical Corporation (Sinopec) to acquire and operate a new petrochemical complex adjacent to Sinopec's existing refineries in the coastal municipality of Tianjin. Financing was provided by a consortium that comprised CDB, ICBC, CCB, BOC, Agricultural Bank of China and Sinopec Finance Co. SABIC signed a letter of intent with Sinopec in August 2007 on all aspects of the JV including due diligence, corporate structuring, construction management, technology licensing, land acquisition, environmental matters, feedstock, industrial gas and utilities supply involving multiple affiliates and third parties, and product lifting and marketing. This project is representative of a trend of increased foreign investment activity between Saudi Arabia and China.

Methodology

Celebrating innovation, complexity and market impact, the China Law & Practice Awards employs a rigorous research methodology. The selection of Finalists is based on the extent to which work has influenced the legal market and benefited the quality and development of China's legal landscape. The selection of Winners is based on the extent to which work has blazed a trail: perhaps by incorporating original, progressive legal structures, or by pioneering new legislation.

Law firms were approached earlier this year for submissions covering their work in China over the last 12 months. Only deals that included a significant China element to them and which have closed between July 1 2009 and June 30 2010 were eligible for inclusion. Confidential transactions and those that did not complete were not reviewed.

The subsequent shortlist is the result of four months of independent research, which included many interviews with corporate counsel and lawyers in private practice.

China Law & Practice would like to thank every law firm and client that invested time and effort in this process, either by collating and submitting evidence of their achievements or by sparing time to speak with our researchers. And of course we would like to offer our congratulations to the Finalists of the 2010 China Law & Practice Awards.

Teams of the Year

China M&A

Commerce & Finance Law Offices

Fangda Partners

Grandall Legal Group

Haiwen & Partners

Jun He Law Offices

King & Wood

International M&A

Freshfields Bruckhaus Deringer

Linklaters

Norton Rose

Skadden Arps Slate Meagher & Flom

Vinson & Elkins

China Capital Markets

Commerce & Finance Law Offices

Jingtian & Gongcheng

Jun He Law Offices

King & Wood

International Capital Markets

Clifford Chance

Davis Polk & Wardwell

Freshfields Bruckhaus Deringer

Linklaters

Shearman & Sterling

Sidley Austin

Slaughter and May

China Project Finance

Global Law Office

Jun He Law Offices

King & Wood

Run Ming Law Office

Zhonglun W&D Law Firm

Teams of the Year cont.

International Project Finance