Middle East - Watson, Farley & Williams

Middle EastJuly 2009Watson, Farley & Williams

ContentsOur approach.......................................................................................................................3Middle East ..........................................................................................................................4Middle East experience ......................................................................................................5CORPORATE/COMMERCIAL .........................................................................................5FINANCE ..........................................................................................................................7DISPUTE RESOLUTION................................................................................................13Our offices .........................................................................................................................152

Our approachWatson, Farley & Williams is a leading international law firm with a presence inmajor financial centres in Europe, Asia and the USA.Quality is at the centre of everything we do. Our highly involved partners work with clientsto meet their objectives as efficiently as possible. We use our commercial acumen toprovide integrated services across legal disciplines and jurisdictions.We offer clients services of the highest quality by developing our expertise in the sectorswe know best: these are principally Finance & Investment, Maritime, Energy, NaturalResources, Transport, Real Estate and ICT. In these areas we use our specialist skillsand experience to provide effective, commercially focused advice across a broad range ofcorporate, finance, dispute resolution and tax matters as well as employment andregulatory issues.We establish candid, open relationships with our clients and take the time to understandtheir business in order to meet their objectives and help their businesses thrive.We focus on the strengths that provide our clients with real value: in depth expertise, ahigh ratio of partners, and talented, proactive people able to work with major clients at thehighest level. Our lawyers demonstrate qualities such as creativity and dedication to thehighest standards. It is these strengths that allow us to offer practical yet innovative legalsolutions.3

Middle EastWatson, Farley & Williams has a long-standing historical connections with the Middle East.Our lawyers are well versed in acting for and providing legal advice to a wide range ofclients, including state government entities, international financial institutions and foreignand local corporations. We have established close relationships with local law firms andthrough this arrangement we are able to offer clients a unified international and regionallegal service.One of our partners is also a member of the Joint Steering Committee for Libya’sLegislative Framework Review Project which is helping Libya to revise its legislative codein the areas of banking law, commercial law and dispute resolution.On the following pages you will find a selection of transactions undertaken by our lawyersin this region.4

Middle East experienceCORPORATE/COMMERCIAL• Advising Gas Plus Erbil Limited and Gas Plus Khalakan on the acquisition andacquisition finance of upstream assets in the Kursdistan Region of Iraq• Advising Pacific Basin on their joint venture with the Government of Fujairah.Named Fujairah Bulk Shipping on subscription and shareholders’ documentationin relation to the formation of the new joint venture entity, corporate structure andshareholder financing arrangements. The newly established joint venture operatestwo chartered-in 32,000-dwt semi-box bulkers, carrying cargo between the MiddleEast and Australasia• Advising Hong Kong listed Pacific Basin on the taking of security from its UAEjoint venture entity in connection with the provision by Pacific Basin of a guaranteeto HSBC Middle East as security for a US$3.3m overdraft facility granted to thejoint venture• Advising PetroMal LLC on its bid for a package of non-operated North Seaexploration and production assets located in the UK, Dutch and Danish sectors.The deal was structured as a cross border package deal including company andasset acquisitions• Acting for BP on the sale of a group of companies holding exploration andproduction assets in the Middle East• Acting for Kuwait Foreign Petroleum Exploration Company (subsidiary of KuwaitPetroleum Company) and MOL Hungarian Oil & Gas Company Plc on their jointbid for four German GmbH companies holding assets in Syria• Acting for Kuwait Foreign Petroleum Exploration Company and MOL HungarianOil & Gas Company Plc on their bid for a controlling stake in a publicly listednational oil company5

• Acting for Edgo Management Group, a Jordanian company, in relation to variouscorporate and commercial matters in the Middle East• Acting for a Middle Eastern Company on a negotiated acquisition of an upstreamasset in Libya• Advising a Middle Eastern conglomerate on the private equity structure,investment and shareholder agreement and all related corporate issues anddocumentation for the establishment of an upstream exploration and productioncompany• Acting for Edgo Management SA on the acquisition of oil and gas assets in theMiddle East• Advice to Middle Eastern LNG sellers on sale to FOB buyer for delivery to SpanishLNG terminals, including advice on Spanish TPA conditions• Advising Petro-Canada on the negotiation of a major gas exploration anddevelopment production sharing agreement in Syria• Advised an international oil company on its bid for Edison’s Egyptian LNG assets,including acquisition of the concession agreement, freezone companies andproject financing• Advising a consortium comprising Malaysia International Shipping InternationalBerhad, Essar Shipping Limited in respect of a tender bid to Petronet for two138,000m 3 LNG vessels to be employed on long term charter to transport LNGbetween Qatar and the Indian ports of Dahej and Kochi• Advising Pacific Basin on their joint venture with the Government of Fujairah.Named Fujairah Bulk Shipping, the newly established joint venture operates twochartered-in 32,000-dwt semi-box bulkers, carrying cargo between the MiddleEast and Australasia6

• Advising worldwide seismic specialist Petroleum Geo-Services ASA on theUS$105m sale of its Atlantis Group and its oil exploration and production interestsin the Middle East to China National Chemicals Import and Export Corporation(Sinochem)• Preparing and reviewing agreements for the supply of telecommunicationsequipment, software and know-how for systems and infrastructure projects inEuropean, East European and Middle Eastern countriesFINANCE• Acting for a Middle Eastern owned bank on the preparation of security over cashdeposits made by an Iranian based financial institution• Advising a Middle Eastern bank in respect of a €95m letter of credit and loanfacility to an oil trader to finance trading in oil and petroleum products• Acting for a Lebanese bank providing finance for the acquisition of UK propertythrough Murabaha and Tawwaruq structures• Advising ING Bank N.V. on a syndicated loan of US$500m provided by 11 banksto joint venture companies owned by Euronav NV of Belgium and OverseasShipholding Group, Inc. of Delaware. This facility will finance the acquisition,conversion and operation of two floating storage offloading vessels, TI ASIA andTI AFRICA, which will be operated by Maersk Oil Qatar on the Al Shaheenoffshore field• Advising a syndicate of banks led by Nordea Bank Finland plc, Singapore branchand Fortis Bank, Oslo Branch on a US$52.5m syndicated loan to finance theconstruction of two 6,500 cbm LPG tanker vessels at STX Shipbuilding Co., Ltd,Korea. The vessels are being purchased by two Marshall Islands subsidiaries ofEmirates Ship Investment Company LLC based in Abu Dhabi. The deal alsoinvolved swap facilities from the Rotterdam branch of Fortis and the Finlandbranch of Nordea7

• Advising Persia International Bank plc on a €5m loan to finance propertydevelopment work for a hotel complex in Iran• Advising United Arab Chemical Carrier in connection with the acquisition of eight45,000 dwt chemical tankers to be built in South Korea• Acting for Fortress Investment Group in relation to the purchase and lease back of4 bulk carriers to Emirates Trading Agency a Dubai based operator and the raisingof limited recourse debt finance from DVB• Advising Bhatia International Limited/Ishhar Overseas FZE/Fleetmar ShippingCompany Limited in relation to the satisfaction of conditions precedent and thenegotiation of the loan and security documentation for Fleetmar's US$36.4mfacility with Standard Chartered Bank to finance 80% of the purchase price of them.v. "FLORA" (tbr "HARKRIPA"); advice in relation to the purchase of the m.v.FLORA from Segesta Shipping Company Limited• Acting for a US hedge fund in relation to the sale and lease back of a handymaxbulk carrier to a Dubai based operator and the raising of limited recourse debtfinance• Advising Nordea Oslo on a US$34.6m to a loan to Emirates Tankers (E Ships) ofUAE• Advising a Middle Eastern bank in its participation in the US$1bn pre-exportfinance loan to Eurasian Natural Resources Corporation, secured on receivablesfrom the sales of ferro-alloys produced by JSC Transnational CompanyKazchrome in Kazakhstan• Advising a Middle Eastern Bank on documenting and restructuring a €160mfacility to finance the export of petroleum products• Advising a Middle Eastern Bank on a €200m working capital facility to state ownedoil company8

• Advising a Middle Eastern bank on a £45m invoice discounting and letter of creditfacility for the financing of international trade in manufactured household goods• Advising ABC International Bank in relation to the first Islamic shipping bond undera syndicated loan facility provided by ABC and Credit Suisse regarding a largecrude carrier called the Venus Glory• Advising Apicorp (Arab Petroleum Investment Corporation) in relation to financefor a consortium of Middle Eastern oil companies• Advising Cory Towage on the provision of tugs to Oman• Advising GPS of Dubai in relation to the conversion in Dubai and operation of aUS$70m mobile offshore production unit in East Java, Indonesia. This includedadvising on all aspects of the loan documentation, structure and documentation• Acting for Natexis Banques Populaires in connection with a term loan facility tofinance the purchase of a floating crane pontoon vessel, to be Indian flagged, byETA Port Operations & Rapid Transport Systems, an Indian company whoseobligations were guaranteed by ETA Trading Agency LLC, based in the UnitedArab Emirates• Advising a French bank as the lender on a US$100m pre-export financing for anEgyptian State owned oil company, secured on export receivables• Advising in relation to equity investment and offtaker arrangements in relation to arefinery and storage facility in the Middle East and related financing• Advising Arab Banking Corporation as the lender on a US$40m syndicated loan toone of the world’s leading livestock traders, to finance the export of livestock fromAustralia to the Middle East, including security and custody arrangements in Egyptin relation to the livestock• Advising bidders on contracts to provide LNG vessels for the Suez LNG’s Yemenproject and on related commercial and financing arrangements9

• Advising a leading Saudi Arabian bank on structured loan, letter of credit andguarantee facilities provided to a rice importer, involving security in the UK and theUS• Acted for Arab Leasing International Finance (part of the Al-Barraka Group) inrelation to the Islamic financing of a series of Obo vessels for Turkish owners• Acted for Arab Leasing International Finance (part of the Al-Barraka Group) inrelation to the financing of a floating oil production platform off Singapore(subsequently moved to Indonesia) in compliance with applicable Islamic financingprinciples• Advising Abu Dhabi Gas Liquefaction Co. on its LNG sales contract with theDabhol Power Company• Advising Teekay on its successful bid to provide three LNG carriers on long-termto RasGas II, the ExxonMobil/Qatar Petroleum joint venture and thereafteradvising on its US$468m secured facility led by Calyon/Kexim to finance thecontract price of the carriers• Advising a shipbuilding group on the construction and financing arrangements fora series of five LNG newbuildings for Middle Eastern interests• Advising a Dutch bank on a US$120m facility to Eships Tankers Ltd guaranteedby Emirates Ship Investment Company LLC of Abu Dhabi• Advising a Scandinavian bank in relation to the financing of the purchase of threeships, obtained by Eship Tankers Ltd guaranteed by Emirates Ship InvestmentCompany LLC• Advising a Dutch bank on the refinancing of two container ships for IRISL of Iran• Advising German banks on the ship mortgage financing provided to IRISL of Iran10

• Advising the European joint venture partner of NITC of Iran in relation to tankernewbuildings ordered and financed by the joint venture for use in the Caspian Sea• Advising NSCSA of Saudi Arabia on all aspects of a series of container shipnewbuildings including building contract arrangements and international debtfinancing• Advising NCC of Saudi Arabia on a series of chemical tanker newbuildings, bothrelative to building contract arrangements and financing• Advising Brunei Gas Carriers Sendirian Berhad ("BGC") and its sponsors ThePrime Minister’s Corporation, Shell Gas B.V. and Mitsubishi Corporation on afinancing in excess of US$100m of a new LNG carrier commissioned by BGC.The financing, structured as a unique Ijara lease, had been secured from asyndicate of international Islamic and non-Islamic banks led by the Hongkong andShanghai Banking Corporation Limited. The vessel will be managed by ShellInternational Trading and Shipping Company Ltd (STASCO) and will be deliveredunder a long term charter to Brunei LNG primarily for purposes of delivering LNGto customers in Japan and Korea. This transaction was deal of the year in Jane’sTransport Finance• Advising on a financing transaction for VLLCs on long term charter to Vela ofSaudi Arabia• Advising Japanese/Qatari consortium on lease financing arrangements relating toLNG vessels time chartered to RasGas II• Advising Japanese consortium in relation to the commercial proposal, financingand lease financing arrangements in relation to two of the QatarGas II tenders• Advising Japanese consortium on JV, financing and lease financing arrangementsrelating to an LNG vessel employed under arrangements with an Omanicounterparty11

• Advising Pacstar (Saudi Arabian shipping company) on the first Islamic shippingbond. The Al Safeena Sukuk is the first time that a ship has been financed usingIslamic bonds. The $26million Sukuk was part of a larger refinancing of the VenusGlory (VLCC)• Acting for fund arrangers in the financing of a series of four ships. The structureinvolved the establishment of a mutual fund based in the Cayman Islands whichissued cumulative preference shares to private (Islamic) investors and to thearranging bank. The bank subscribed for four tranches of the cumulativepreference shares, each equal to a percentage of the vessel purchase price. Onreceipt of each tranche of the subscription monies, the fund made an equityinjection in each of four subsidiary companies, being single purpose ship-owningcompanies, which purchased a vessel. Each company guaranteed the obligationsof its parent to the arranging bank and, in support of its guarantee, grantedconventional mortgage security over the vessel owned by it. The investorsreceived a return on their equity referable to the vessel earnings• Acting for the end user in an aircraft financing funded by finance from an Islamicsource. This was structured as a sale and leaseback with a purchase option (ie:an ijira wa-iqtina): the Islamic financier was to purchase the aircraft and lease itback to the end user on hire purchase terms at a price equal to cost plus theinterest/profit element. The aircraft was to be operated under a conventionaloperating lease, with a collateral call option for the benefit of the end user• Advising an investment and capital provider on structuring a number of financingarrangements combining traditional debt finance with a Sharia’h compliantstructure so as to permit participation by investors based in Kuwait to finance thesale and leaseback of vessels from/to a number of customers including aUK/Singapore group of companies, a Norwegian group of companies and a Dutchgroup of companies• Acting for a leasing company, operating on an Islamic basis, in the provision offinance to an existing aircraft lessor by means of a purchase and leaseback of anaircraft with a purchase option (ie: an ijira wa-iqtina). The structure involved thesale by the original lessor to the Islamic lessor of the aircraft combined with anovation to the Islamic lessor of the lease between the original lessor and the end12

user, with the result that the Islamic lessor would lease the aircraft directly to theend user. The rent under the lease amortised the finance provided, and there wasa separate put and call option for title of the aircraft• Acting for the arranging bank in relation to a commodity financing on a murabahabasis. The structure involved the sale by a broker of refined oil products to Islamicinvestors, with resale of the products at a higher price with deferred payment forsix months. The arranging bank provided documentary credit facilities in supportof the transaction. We provided legal opinions as to English law and as to NewYork law in relation to the transaction, in particular addressing such questions asthe risk of the structure being recharacterised as a loan• Acting for a Middle East bank in relation to a mutual fund based in the BritishVirgin Islands. In effect this was a murabaha structure, whereby the fund enteredinto contracts to purchase goods, which were then on-sold to a buyer. Thepurchases were documented under a master trading agreement between the fundand a supplier; the on-sales were documented by a master agency agreement bywhich the supplier, acting as agent for the fund, sold the goods to the buyer• Acting for a financial institution based in the Middle East providing stock financingby means of buying a soft commodity from the producer and then on-selling it overa period of 12 months to the commodity distributors• Advising a leading Saudi Arabian financial institution in the provision of tradefinance facilities as an Islamic financing transaction to a Mexican sugar producer,structured on a murabaha basisDISPUTE RESOLUTION• Acting for Iran Marine Industrial Company in a US$120m dispute regardingdelayed delivery of 2 offshore gas platforms under construction contract resultingin an ICC arbitration against Eni BV• Acting for an owner of two modern refrigerated cargo vessels with a value of overUS$40m each in a dispute with a substantial reefer pool operator. This is a verycomplex case which has widened to involve two arbitrations before distinguished13

arbitrators (including Lord Millett, Stewart Boyd QC and Michael Beloff QC), HighCourt Litigation and two references to the EU Commission with respect to mergercontrol and alleged competition law violations• Advising a Middle Eastern offshore support vessel operator in connection with aUS$30m claim arising from a shareholders dispute in relation to the ownershipand earnings of an offshore supply vessel and alleged breach of a share sale andpurchase agreement• Advising owners in connection with claims for additional charter payment/storagecosts following bankruptcy of major Middle-East oil storage group including Courtproceedings in London and Athens• Acting for a Dutch Bank in a very substantial letter of credit fraud involving SoloIndustries and Madhev Patel. This was a major fraud involving the trade financingof a large Middle Eastern metal importer. The case involved several hundredfraudulent letters of credit transactions involving several Western banks• Acting for an Iranian marine construction company in an ICC arbitration brought bya European oil company (represented by Herbert Smith in Paris). The claimrelates to an EPC contract for the design, construction, installation andcommissioning of two offshore wellhead platforms• Advising a North American company on the settlement of three disputedproduction sharing agreements in the Middle East and the renegotiation of theterms of the agreements, including the provisions relating to gas• Advising a consortium of international companies on their dispute with thegovernment of a Middle Eastern country in relation to the termination of theirconcession agreement and the settlement terms14

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