2015 was another active year for the Conyers Bermuda corporate practice. Our workflow paralleled trends in the global markets, which were characterised by a buoyant M&A sector and a skittish capital markets environment. Our continued ability to win mandates on the highest profile transactions in the jurisdiction has resulted in our maintenance of top tier rankings in leading legal directories. We are proud to have been described by our clients as having "unrivalled experience and expertise in Bermuda" – IFLR 1000, 2016.
Against the backdrop of slowed capital markets to which higher interest rates, low commodity prices and declines in China and Europe all contributed, Bermuda companies on the NYSE and Nasdaq still managed to raise approximately US$10 billion of capital in 2015 - more than twice the amount of any other offshore jurisdiction. Conyers advised issuers (including Axovant Sciences Ltd., the only new Bermuda company issuer to list on these exchanges) and underwriters on the majority of these transactions.
Global economic pressures contributed to an increase in M&A activity, as companies sought ways to take advantage of a low-inflation environment and to boost growth in an otherwise sluggish economy. Global deal volume reached a record US$5 trillion in 2015, up 37% from the previous year. M&A activity in the global insurance sector surged during 2015 with over US$143 billion worth of deals – three times the deal value recorded during 2014. This trend was evident in the Bermuda insurance market, where 21 M&A transactions were completed. Conyers advised on the majority of these transactions, including AXIS on its proposed amalgamation with PartnerRe.
In addition to the M&A activity in the insurance sector, Bermuda achieved full Solvency II equivalence, a status critical to conduct¬ing business within the European Union. Another notable development was the continued strength of Insurance-Linked Securities ("ILS"), as the number of ILS listed on the Bermuda Stock Exchange grew by 28% in 2015, valued at over US$19 billion. Conyers, again, was Bermuda counsel on the vast majority of these transactions.
Bermuda will host the America's Cup in 2017. Our corporate practice has assisted the regatta officials and participating teams with the establishment of local companies in support of the campaign to challenge Oracle for the "Auld Mug" in 2017.
This Year in Review highlights these trends and other notable transactions completed by our Bermuda corporate practice in 2015. We are grateful to our clients and the international legal advisors we work with and we look forward to building our relationships with you in the coming year.
GENERAL CORPORATE PRACTICE HIGHLIGHTS
We have set out below details of some of our most significant transactions of 2015.
US$1.78 billion sale of Milestone Aviation Group Limited
The sale of The Milestone Aviation Group Limited ("Milestone") completed in January. Milestone is the world's largest specialist helicopter leasing company and was sold to GECAS for US$1.78 billion. Conyers has advised Milestone since its formation in 2010 by co-founder Richard Santulli, a veteran of the aviation industry. With an initial capitalisation of US$500 million, Milestone's fleet had grown to 143 helicopters valued at US$2.2 billion at the time of the sale, with more than 145 helicopters on order worth US$3.4 billion. Conyers provided Bermuda legal advice on the proposed IPO of the company and subsequent sale to GECAS.
Actavis, Inc. Acquires Allergan Inc. for US$66 billion
We provided advice to Actavis, Inc. on its US$66 billion acquisition of Allergan Inc. which closed in March. The combination created one of the world's top 10 pharmaceutical companies by sales revenue, with combined annual pro forma revenues of more than US$23 billion anticipated in 2015. The deal is expected to generate more than US$8 billion in cash flow in 2016, enabling Actavis, Inc. to reduce debt. The company also anticipates approximately US$1.8 billion in operating and financial synergies to be achieved within one year of the closing.
Anheuser-Busch InBev SA/NV makes Formal Offer to Acquire SABMiller plc
In November, Anheuser-Busch InBev SA/NV. ("AB InBev") made a formal offer to acquire all of the shares of SABMiller plc ("SABM"), valuing SABM at approximately £71 billion in the aggregate (the "Potential Acquisition"). Conyers was involved as part of a global team advising one of the largest shareholders of SABM, BEVCO Ltd. on its participation in the transaction.
The Potential Acquisition, which is subject to regulatory approvals, is the largest ever offer for a UK company. If completed, it will be the world's third largest takeover ever, creating a global brewer that will become one of the world's leading consumer products companies. Dubbed "Megabrew" by analysts, the new company will be the world's largest consumer-staples maker by earnings, according to Exane BNP Paribas, generating profits of about US$25 billion. The enlarged brewer will have the No. 1 or No. 2 position in 24 of the world's 30 biggest beer markets.
AB InBev will finance the cash part of the Potential Acquisition from existing resources and third-party debt. It has lined up banks to raise US$75 billion in financing, a record commercial loan.
LARGEST BIOTECH IPO IN HISTORY
The US Biotech sector experienced a booming year in 2015. Conyers' Bermuda corporate practice advised on a number of high-profile deals in this sector including the most notable - the IPO of New York-based Axovant Sciences Ltd. (NYSE: AXON) that raised US$315 million in June and gave the newly-listed company an immediate post-IPO valuation of US$3 billion.
This was the largest Biotech IPO in history which saw Axovant offer 21 million of its common shares, including exercise in full of a green shoe option. Roivant Sciences Ltd., the Bermuda parent company of Axovant, retained 75% ownership.
Axovant is an innovative drug developer in the Alzheimer's space and draws attention to the depth of funding and expertise available for pharmaceutical development on the East Coast. The Axovant IPO is notable for being the first biopharmaceutical IPO to use a Bermuda company for the listing vehicle. Axovant was advised by Conyers from the inception of the IPO process and became the latest in a growing number of US biopharmaceutical companies which have chosen to domicile in Bermuda.
Bermuda's insurance industry experienced a year of milestones in 2015. In November, Bermuda received full Solvency II equivalence – joining Switzerland as the only jurisdictions to receive such an endorsement. The Island's government and business community worked toward equivalency for over six years. This achievement benefits the (re)insurance sector as it creates a level playing field for commercial insurers to conduct business within the European Union. Further, it was a record year for M&A tie-ups in the insurance industry. In all 21 transactions were completed, with our leading insurance team advising on the majority.
Fidelis Insurance forms in Bermuda – the largest new Class 4 Insurer in a decade
Conyers advised on the formation, licensing and capitalisation (US$1.5 billion) of Fidelis Insurance Holdings Limited and its wholly-owned subsidiary, Fidelis Insurance Bermuda Limited in June. The transaction represents the largest new start-up Bermuda Class 4 commercial reinsurer since 2005, and is the single largest insurance capital raising transaction for 2015.
Issuance of the first Chinese-sponsored cat bond – Panda Re Ltd.
The third quarter of 2015 saw the issuance of the first Chinese-sponsored cat bond, Panda Re, an indication of the ever-broadening acceptance of innovative structures – yet another endorsement of Bermuda as the jurisdiction of choice.
Qatar Reinsurance Company Limited Redomiciles to Bermuda
Qatar Reinsurance Company Limited ("Qatar Re"), the established reinsurance subsidiary of the US$4.3 billion Qatar Insurance Company ("QIC") group, completed its re-domicile to Bermuda, and was licensed by the Bermuda Monetary Authority as a Class 4 reinsurer in December. Qatar Re cited Bermuda's "decades of proven reliability", "uncontested best practices" and its anticipated full Solvency II equivalence as being some of the regulatory drivers for its move to Bermuda.
From a commercial perspective, Qatar Re also noted that the move will allow the company to expand its client base through additional products and underwriting expertise as well as an increased market scope and presence, and that it will support its ability to access and compete throughout the world's markets in a credible manner.
AXIS FOR PARTNERRE
In late 2014 PartnerRe Ltd. ("PartnerRe") identified AXIS Capital Holdings Limited ("AXIS") as an attractive candidate for its strategic goals at that time. The two explored a potential merger of equals, announcing their agreement to amalgamate on 25 January 2015 in a US$11 billion shares-only deal which would have created the world's fifth-largest property-and-casualty reinsurer.
On 14 April 2015 EXOR S.p.A. ("EXOR") announced a US$6.4 billion cash offer for 100% of the common shares of PartnerRe, which it represented as a 16% premium to the AXIS-PartnerRe deal. On 4 May EXOR's offer was rejected on the basis that it undervalued PartnerRe, and on the same day PartnerRe and AXIS reaffirmed their deal which now included a special dividend and termination fees increased by US$30 million to US$280 million. EXOR responded by raising its offer to US$6.8 billion, which it represented as a 10% premium to the revised AXIS-PartnerRe deal. PartnerRe again turned down EXOR's offer on value and terms.
Following a further round of deal enhancements, PartnerRe announced on 3 August that it had agreed to be acquired by EXOR and would pay US$315 million to AXIS to terminate their agreement to amalgamate. During the "go shop" period that followed no alternative offers for PartnerRe were made and at its 19 November special general meeting the merger with EXOR was approved with the deal expected to close in February 2016.
Of interest from the Bermuda corporate law perspective is the fact that the AXIS-PartnerRe agreement featured a "force the vote" deal protection provision. Although that vote was never held, in connection with the proxy contest beforehand EXOR sought an injunction from the Supreme Court of Bermuda to compel PartnerRe to disclose certain non-public information related to its beneficial owners; however that injunction was denied.
Shipping: In 2015, Bermuda's Department of Marine Administration registered 33 vessels, marking a banner year for ship registrations. Our shipping practice handled the majority of these new registrations, including the four vessels registered as part of Stena IMOIIMAX's Newbuilding Project.
Our shipping team also advised Team Tankers International Ltd. on its debt for equity swap and restructuring that resulted in 14 vessels registered in Bermuda and an exchange offer that resulted in a new Bermuda company listing on the Oslo Børs.
The Team Tankers International Ltd. ("TTI") transactions were of historic proportions in both Norway and Bermuda which resulted from the decision of the Eitzen Chemical shipping group to redomesticate to Bermuda. As part of the redomestication, the group undertook a restructuring that involved the transfer of about a third of its fleet from the Singapore ship registry to Bermuda. Simultaneous with the closing of the restructuring, the group launched a debt to equity exchange offer valued at approximately US$840 million that was unanimously accepted by its shareholders.
The deal was ambitious and extremely complex in scope. The registration of 14 ships in January 2015 set a record for the highest number of ships registered at one time on the Bermuda ship registry. The US$840 million debt to equity conversion was one of the largest ever debt to equity conversions completed in Norway.
Following the debt to equity conversion, all shareholders of Eitzen Chemical ASA were offered shares in TTI pursuant to the terms of an exchange offer. There were also successful retail and employee share offerings that resulted in the shares of the new Bermuda holding company being approved for listing on the Oslo Børs in March. The successful exchange offer and listing valued the group at approximately US$300 million and resulted in TTI becoming the new holding company for Eitzen Chemical ASA. The listing of TTI brings the current number of Bermuda companies listed on the Oslo Børs to 13.
Aviation: Conyers' Aviation practice is at the forefront of the offshore airfinance industry, and represents many of the world's leading airlines and leasing companies on cross-border transactions.
In December, we advised Castlelake in connection with its US$713 million aircraft securitization. Castlelake Aircraft Securitization Trust 2015-1, is backed by 54 aircraft and six aircraft engines. The portfolio is on lease to 23 airlines in 18 countries. Castlelake will act as the servicer on the deal. Deutsche Bank and Goldman Sachs were the lead bookrunners on the transaction. Conyers also acted for Castlelake in connection with its initial deal in the ABS market in March 2014, a US$515.6 million securitization, which was named Airfinance Journal's Innovative Deal of the Year 2014.
Bermuda's re-emergence in the investment fund industry continued in 2015. The Island's Insurance-Linked Securities ("ILS") sector which includes ILS investment fund structures had a record-setting performance, which resulted in a record number of new ILS issuances. The value of these securities listed on the Bermuda Stock Exchange topped US$19 billion, an increase of 28% over 2014 (see graphics below).
In 2015, our funds team supported new legislative initiatives and lobbying activities, which have effected change and ultimately marketability of Bermuda fund vehicles on a global stage. Working alongside government and business partners in Bermuda, we have advised on revisions to the Limited Partnership Act and the new Contracts (Rights of Third Parties) Bill. In conjunction with the Bermuda Business Development Association, we have supported the Regulatory Compliance Association through speaking engagements and informational sessions.
Advising Investment Managers on their Migrations to Bermuda
Conyers advised a number of investment managers based in the UK, US and Singapore with respect to their migrations to Bermuda and establishment of physical premises on the Island. This new wave of "boots on the ground" further underscores the successful efforts of the Government of Bermuda and industry in attracting global asset management players to domicile their operations in Bermuda, given its business friendly environment, vibrant infrastructure and ease of migration. The Firm has also assisted a significant number of investment managers with respect to including Bermuda entities within their management structures. MENA based investment managers have been particularly interested in the value proposition offered by Bermuda and the ease of set up.
UK Investment Firm Launches Innovative Fund Aimed at Eco-Savvy Investors
Conyers advised a leading UK investment firm on its launch of a Bermuda investment fund innovatively aimed at eco-savvy investors. The fund follows an investment mandate of investing in carbon credits with its investment consideration being the protection, regeneration and restoration of forests, peat lands and natural habitats while generating impressive returns to investors.
OTHER NOTABLE TRANSACTIONS
- Advised on the Bermuda regulatory aspects of the merger of Towers Watson & Co. and Willis Group Holdings plc. (January)
- Assisted Global Container Assets 2014 Limited on its US$473 million Note Offering. (February)
- Advised Valeant Pharmaceuticals International, Inc. on its US$1 billion Bond Offering of 5.50% senior notes due 2023. (February)
- Advised Horizon Pharma plc on its issue of US$400 million 2.50% Exchangeable Senior Notes. (March)
- Advised Tsakos Energy Navigation Limited on its Public Offering of US$85 million 8.75% Series D Preferred Shares listed on the New York Stock Exchange. (April)
- Advised Kosmos Energy Ltd. on its US$225 million Private Offering. (April)
- Advised Platinum Underwriters Holdings, Ltd. on the merger between Platinum, RenaissanceRe Holdings Ltd. and Port Holdings Ltd. (April)
- Advised Tower Group International Ltd. on its acquisition by ACP Re Ltd. (April)
- Advised DaVinciRe Holdings Ltd. on its US$150 million Notes Offering. (June)
- Advised Textainer Group Holdings on an amendment on Textainer Limited's US$700 million five-year revolving credit facility. (July)
- Advised GasLog Ltd. on its 7.5 million public offering of common units. (August)
- Advised Northern Offshore, Ltd. on their acquisition by Shandong Offshore Company Limited. (August)
- Acted for Gener8 Maritime, Inc. in respect of the Bermuda law aspects of an offering of 15 million common shares at a price of US$14.00 per share. (August)
- Advised Kosmos Energy Ltd. on the increase in its Multicurrency Revolving Credit Facility Agreement to US$400 million. (October)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.