Global legal practice Squire Sanders has advised the State of Berlin on a unique agreement with Gewerbesiedlungsgesellschaft Berlin (GSG), a Berlin-based commercial property and project development company, to secure €200 million of state funds (GA-Mittel) and facilitate the refinancing of the business, in a deal announced at the end of 2012.
The Squire Sanders team advising the State of Berlin, Berliner Trägergesellschaft für Infrastrukturmaßnahmen (BTGI), and Investitionsbank Berlin (IBB), the State’s development bank, was led by Dr Kai Mertens, partner in corporate and corporate finance, and Siemer Krümpelmann, from the firm’s Berlin office.
Mertens commented: “Prior to its privatization in 2007 GSG had obtained funding for its office building projects designed to support small and medium enterprises. When the company was sold to private investors ORCO and Morgan Stanley in 2007, the rights of the State were protected by a legal agreement devised by our firm. The agreement involved a land charge, unique in Germany, governing the use of the public funds and the operation of the GSG assets in accordance with the relevant limitations for lease and use of the buildings.”
The current refinancing of GSG could only proceed with the renegotiation of the original contract between the State, GSG and its new consortium of lenders, led by DZ Bank.
Mertens said: “The new financing had to be structured to meet the criteria under the German Pfandbriefgesetz, governing covered bonds. Therefore specific agreements relating to BTGI’s land charge had to be made in accordance with the relevant rules for the continuing public funding, finding adequate protection for both, the state funds and the funds of the new consortium”
“We were delighted to act for the State of Berlin and IBB again and enable the new consortium of lenders to invest in GSG and take the company to the next stage of its development.”