22 September 2004 LAWFUEL – Best tax news, law, legal, attorney, law firm news & legal researchAllen & Overy advised Citigroup’s Alternative Investments group on the establishment of an innovative new Structured Investment Vehicle (‘SIV’), Sedna Finance Corporation.
Sedna is a Cayman Islands incorporated company that issues capital in the form of subordinated notes under a U.S.$100,000,000 Subordinated Note Programme. An annual interest coupon is paid on the subordinated notes depending on Sedna’s financial performance. Sedna has also established four senior debt programmes enabling it to borrow up to U.S.$20 billion by accessing both the euromarkets and the US domestic markets. The proceeds are used to purchase a portfolio of assets, which is managed by Citigroup’s Alternative Investments group.
The structure involves a number of innovative features, including a second priority tranche of senior debt. SIVs traditionally only involve one layer of senior debt, but Sedna’s programmes cater for the issuance of second priority senior notes, allowing Sedna to raise finance from a wider range of markets than is typical for a SIV. Sedna also has a reversible “restricted funding” state, differing from the irreversible defeasance state typically seen in SIVs.
Capital markets partner Geoff Fuller led the large multi-jurisdictional Allen & Overy team, which included associates Franz Ranero and Russell Willings advising on English law and partner Daniel Epstein and associates Ann Bradley and Ryan Lowther advising on US law matters. Associates Negin Minakaran and Jonathan Chapper advised on UK tax aspects, and partner Stephen Fiamma and associate John Taylor advised on US tax issues. Advice on insolvency aspects was provided by associate Jennifer Marshall, and partner Catriona Smith and associate Sarah Purcell advised on IP issues. In addition, partner Morgan Krone advised the security trustee.
Geoff Fuller commented:
“SIVs are an increasingly important and complex area of capital markets structured finance. Allen & Overy is regarded by many as the leading legal practice in relation to SIVs, having now advised on the establishment or restructuring of 7 of the 17 SIVs currently in existence.”
He continues: “This was a novel and complex transaction, requiring a wide spread of finance-related expertise, including structured finance, derivatives, mainstream capital markets and banking (in both the UK and the US), as well as specialist input in a number of related areas, including tax, intellectual property and regulatory advice. We are delighted to be involved so closely with Citigroup in the continuing development of this rapidly expanding area of structured finance.”