Gyalou Emporiki Kai Touristiki Monoprosopi’s Bond Issuance

The loan was used for the refinancing of the issuer’s debt related to the operation of the Smart Park, the largest outdoor shopping mall in Greece, and the purchase by Reds of the former US base in Gournes, Heraklion Crete, via an e-auction conducted by the Hellenic Republic Asset Development Fund.

Reds emerged as the highest bidder with an offer of €42 million and acquired the property, which comprises a seaside area of 345,567 sq.m., is located 13km from the Nikos Kazantzakis International Airport and 16 km from the city of Heraklion. The company has stated its intention to use the land for tourism and commercial development.

Koutalidis advised the National Bank of Greece with a team led by partner Effie Papoutsi.

Lawyer Monthly had the pleasure to speak with Effie Papoutsi at Koutalidis to give us some further insight into this transaction:

Can you please tell us more about the role that Koutalidis played in the successful commencement of the bond issuance?

Our firm advised NBG as subscriber, bondholder agent and hedging provider for this issuance. In addition to drafting all loan and security documentation and supporting the bank during the negotiation process, our role involved working closely with the borrower’s and the bank’s teams to ensure conditions were met and closing achieved on time, while also assuming a project management role.

What are the most important facets to take into account when advising on a loan such as this?

Lenders, and especially systemic banks, place great importance on obtaining all necessary and appropriate protections when making such an investment and ensuring that the finance agreements and security package protect their interests to the highest degree. This has always served as the basis for our work in all the deals we are involved in.

It is important, however, to never lose track of the purpose served by a loan and the business needs and concerns of all parties involved directly and indirectly in the project, as they may affect timing, documentation and virtually all aspects of our work.

Lawyers tend to focus on the legal points and underestimate how the needs of third parties, such as lenders being refinanced or the seller of an asset, may impact the process or how drafting may impact the business aspects of a deal. Experienced lawyers would also agree that in long-term project financings it is important to help parties strike the right balance between their respective needs so that the project runs efficiently and without unnecessary friction and delays post-closing.

Ultimately, our work is to help parties bring their project to life in the way they intended, while ensuring that our clients’ interests are safeguarded.

Please tell us about the work undertaken by yourself and the team. Did you encounter any significant obstacles during the process?

Our firm supported NBG for all aspects of the issuance, including drafting of documentation, customary due diligence and supporting the bank throughout a staged closing process. The dual purpose of the loan, namely the refinancing of existing project financing  provided for the issuer’s operation of the Smart Park mall and financing the acquisition by Reds of a landmark real estate asset from the HRADF, meant that the documentation and structure planning had to combine all necessary covenants for essentially two financings. This required a lot of careful drafting, negotiation and coordination on multiple fronts.

Ultimately, our work is to help parties bring their project to life in the way they intended.

Furthermore, everyone was conscious that the issue marked the successful completion of a long awaited privatisation process with special significance for the Greek economy. With this in mind, our team worked hard to ensure essentially two smooth closings in a continuously evolving process.

How did you overcome these challenges?

In my view, this was one of those complicated financings where the value of a big and experienced team is evident. This applies to commercial and legal teams alike. It would have been impossible to achieve such a smooth result without the professionalism and positive attitude of everyone involved. Another important factor was that we have been advising National Bank of Greece for decades for various types of financings and other deals, which made possible the close and efficient cooperation necessary for this deal to close successfully.

In what way would you say that your work on this bond issuance is indicative of Koutalidis’s professionalism as a firm?

Over the last decades, our firm has advised on most of the high-profile and groundbreaking transactions in Greece and has the privilege to serve a great variety of clients including leading Greek and foreign corporations, multinational enterprises, major investment and commercial banks and financial institutions.

I firmly believe that lawyers must always remember their clients’ bottom line and our firm is well-known for its business approach. When engaging a tier 1 firm, clients take legal expertise for granted, as they should, but our firm (and our Banking and Finance Department in particular) offers clients the added value of decades of experience in complex and landmark transactions involving privatisations and project financing. I am happy to have headed a committed team that succeeded in delivering within very ambitious time and other constraints.

What do you expect will be the long-term impact of this bond issuance on the Greek economy and the local area?

The main focus is naturally on the acquisition of the Gournes land area by a private company that has ambitious plans for its development. Crete is already a top tourist destination but there is still a lot of room for investment and a more diverse exploitation of what it offers. The plots acquired are by the seaside and the plans made public by REDS so far provide for the construction theme and retail park as well as a mixed tourist resort with hotels, branded freehold villas and a casino. It is everyone’s hope and expectation that this will lead to further economic development and the creation of new jobs in the area.