Cindy J.K. Davis is an expert in cross-border sleep deprivation.
When the Paul, Hastings, Janofsky & Walker corporate partner closed a $500 million syndicated credit facility for client Rabobank Nederland earlier this month, it was truly a global, round-the-clock deal with a closing that kept lawyers working more than 30 straight hours.
Davis and her team of eight attorneys advised Rabobank as lead arranger and administrative agent in replacing a revolving credit facility for Coral Gables, Fla.-Fresh Del Monte Produce Inc. and some 35 of its subsidiaries around the world, 10 of which were borrowers and another 25 or so that served as guarantors.
The transaction, according to Davis, involved 25 other banks and employed 20 law firms—including Fresh Del Monte’s in-house lawyers and outside counsel at Cleary Gottlieb Steen & Hamilton in New York.
It also tapped into the laws of 15 far-flung jurisdictions, including Panama, Gibraltar, Liberia, Hong Kong, Chile, Japan, Costa Rica, the United States and the United Kingdom.
To secure the deal, Davis said, her team took liens on personal property in five countries and pledges of stock in 15 others.
The biggest challenge of a deal of this type is just dealing with the complexity of the collateral package for the number of countries and companies involved,” Davis said. “You have to have an understanding of the different legal systems involved to … know can we even take a lien of this type.”
As an example, she said, suppose you take a pledge of stock from a Liberian company with a parent company based in Hong Kong that serves as the pledgor. “Which country’s law should govern, or will New York law work?” she said.
Answering that question involved tapping into the expertise of local counsel around the world, as well as lawyers in Paul, Hastings’ Hong Kong, Japan and United Kingdom offices.
“There’s a lot of complexities involved in just the basic legal framework,” she said. “And then you have to make sure you satisfy all the documentation requirements in each jurisdiction, not just what the document provides on its face, but what other ancillary documents are required. Something as simple as how a document should be executed or signed may be different than in the United States.”
Rabobank, assisted by the Paul Hastings team, put together a syndicate of about 25 other lenders, each of which loaned a percentage of the overall amount to Fresh Del Monte. Once Rabobank and Fresh Del Monte had worked out the terms of the credit facility, the lawyers distributed the documents to the different lenders, gave them an opportunity to comment, coordinated collateral around the world and fielded comments and questions from all the different lenders.
Davis said a major factor in inking a deal of this size in this economy is that Fresh Del Monte had a long-term relationship with Rabobank, which specializes in lending to the food and agricultural industry. But, she noted, Fresh Del Monte did not have as much negotiating power in the credit agreement as it might have had in a more robust economy.
“Lenders in syndicated deals these days are looking for tighter restrictions on companies because of today’s credit standards as this relates to events of default and other covenants in the loan documents,” she said.
Despite the transaction’s level of complexity—the closing checklist alone ran to more than 40 pages—Davis said the deal moved fast.
The lawyers started negotiating the term sheet three months before closing, she said, and the bank met with all the lenders about four weeks prior to closing, which is when most of the international work was done.
“We wound up closing the transaction on a Thursday morning in our office here at 9 a.m., and we worked continuously until Friday at about 2:30 p.m. … All night long, no sleep,” she said. “That’s not unexpected with a deal this size, with all the different time zones involved. It was kind of a rolling call of lawyers all night long in order of time zones.”
And that, she said, is after staying up until 3 a.m. for a week previously, working on various aspects of the deal.
Despite the global nature of the deal, Davis didn’t get to travel to the tropical locales where many of the lenders and Fresh Del Monte subsidiaries are located. “I did it all from the U.S.,” she said. “I would love to have gone … to Costa Rica to eat the pineapple right in the field … [but] with e-mail these days, there’s really no need to travel.”