The team led by banking and finance expert Markus Fellner and fwp partner Andreas Jank worked out a strategy for the comprehensive restructuring of Constantia Privatbank AG. “Our goal was to develop a structure which, to the extent possible under the law, protects the buyer against risks arising from possible liabilities on the part of Constantia Privatbank,” fwp partner Markus Fellner explains.
In order to minimise risks, Fellner resorted to the bad bank principle. To make restructuring possible, this bad bank – the first of its kind in Austria – held all risks and nonperforming loans on the part of Constantia Privatbank. The banking business, which was thus free from legal risks, was spun off and could finally be sold. The whole transaction is expected to be completed in the first half of 2010.
Two-step sales process
For the transaction, fwp’s team, with the participation of fwp partner Florian L. Kranebitter, developed a two-step sales process. In a first step, Constantia Privatbank, by way of an asset deal, transferred the most important parts of its banking business as well as shares in investment firms and participations to its newly founded wholly-owned subsidiary Aviso Epsilon Bank AG. Based on a share deal between Constantia Privatbank and the buyer, which was concluded at the same time, all shares in Aviso Epsilon were sold to the buyer.
In order to exclude existing and potential liability resulting from the former business activities of Constantia Privatbank as far as legally possible, the sales price will be deposited on an escrow account. The buyer will be entitled to draw on this escrow account in order to satisfy any warranty claims on the part of the buyer and to settle any company-related liabilities.
In 2008, fwp’s team had already played a key role in saving Constantia Privatbank, which had experienced liquidity problems in the wake of the crisis on the financial markets and the problems encountered by Immofinanz and Immoeast. fwp represented the five major banks UniCredit Bank Austria, Erste Group, BAWAG P.S.K., Raiffeisen Zentralbank and Volksbanken AG, which took over all shares of Constantia Privatbank in Aviso Gamma GmbH, which had been founded for this very purpose, and provided 400 million euro to ensure the business continuation of the bank. Aviso Gamma GmbH is a wholly-owned subsidiary of Constantia Privatbank AG.