AUTO LOAN SECURITISATION - DLA Piperfiles.dlapiper.com/.../Uploads/Documents/auto-loan-securitisation.pdf · AUTO LOAN SECURITISATION. Portfolio Asset Sales | 15 ... Advising a Japanese

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Copyright © 2013 DLA Piper. All rights reserved. | JUL13 | 2574935

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AUTO LOAN SECURITISATION

Portfolio Asset Sales | 15

KEY CONTACTS

Martin BartlamPartner & Practice Group Head

T +44 (0)207 796 6309

[email protected]

Nina-Luisa Siedler Partner – Germany

T +49 (0)30 300 13 14 11

[email protected]

Véronique Collin Partner – France

T +33 (0)1 40 15 24 93

[email protected]

Attila K. Csongrady Partner – CEE

T +43 1 531 78 1750

[email protected]

14 | Portfolio Asset Sales

■ Advising a Korean automotive manufacturer on proposed arrangements for manufacturing in Poland;

■ Advising for several Japanese vehicle manufacturers providing lobbying and strategic advice on trade issues, transport legislation, safety matters, competition law and environmental issues;

■ Advising Norwegian automotive parts manufacturers;

■ Advising a global automotive corporation on EU legislation relating to end-of-life vehicles, and electrical and electronic equipment (including WEEE and RoHS Directives);

■ Advising an aftermarket supplier in relation to the recall and refi t of private and commercial vehicles in the UK following the use of a faulty batch of windscreen adhesive;

■ Advising an automotive industry client concerning a redundancy exercise in the UK and introduction of shorter working hours with subsequent contract modifi cations;

■ Advising a parts supplier of automotive equipment on all of its legal matters in Spain;

■ Advising a UK-based global automotive parts manufacturer with respect to competition law issues and product recalls;

■ Advising a competition law analysis of supply agreements with various car manufacturers on behalf of a leading UK-based global car parts supplier;

■ Advising a Japanese spare parts manufacturer with respect to corporate and product distribution issues in Russia;

■ Advising a US vehicle component manufacturer with respect to its UK real estate matters;

■ Advising a US vehicle component manufacturer on a range of joint ventures and strategic alliances with vehicle manufacturers across Europe, Middle East and Africa;

■ Advising a US-based car parts supplier on a sub-contract or manufacturing joint venture with a UK company and associated companies in the Czech Republic and Germany;

■ Advising a major automotive engineering designer/manufacturer in business critical patent invalidity and non-infringement litigation in the UK;

■ Advising a major automotive multi-national in respect of its European IPR ownership structures and group licensing arrangements;

■ Advising a leading glass producer for vehicles on the creation and revision of standard contracts concerning glass products for the building and automotive industry;

■ Advising a US manufacturer of special-engineered products in the aviation and automotive industry on a long-term supply contract;

■ Advising on all aspects of issues affecting motor dealers, and in particular with regards to consumer disputes and claims arising out of quality issues/rejection of vehicles;

■ Advising the UK’s largest dealer of prestige motor vehicles, which involves individual liaison with a large number of separate dealerships subject to a client approved protocol on all matters involving disputes, whether as claimant or defendant;

■ Advising an independent motor dealer on a substantial fraud committed by an employee, as part of which a freezing injunction against the employee was obtained;

■ Advising a major global consultancy fi rm as the administrators of an engineering group, advising on and implementing a disposal plan which involved extensive negotiations with German car manufacturers regarding the continued supply of car parts; and

■ Advising the joint receivers of a car dealer fi nder. The dealership operated over a number of sites and various customer deposit and funding issues are being addressed.


WHY DLA PIPER?

ABOUT DLA PIPER

DLA Piper has more than 4,200 lawyers and provides a range of legal services around the world. Lawyers operating from offi ces in Asia, Australia, Europe, the Middle East and the Americas provide high quality legal advice to clients in their local market and internationally.

Our vision is to be the leading global business law fi rm. We draw on the knowledge of our locally and internationally trained lawyers advising on a broad range of matters including commercial, corporate, bankruptcy and restructuring, tax, fi nance, human resources, litigation, real estate, regulatory and legislative, technology, and media and communications in every major market around the world.

Our global services are grounded by the strength of our domestic offi ces, our sector knowledge and our commitment to client-driven services. We support the strategic and operational needs of our clients, wherever they do business.


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CROSS PRACTICE AUTOMOTIVE EXPERTISE

■ Advising a UK consortium contracting with major car manufacturers in respect of disposal of cars pursuant to the End-of-Life Vehicle Directive;

■ Advising Renault España in competition matters concerning their dealer network, in litigation initiated by dealers and in administrative cases;

■ Advising the European branch of a multinational automotive corporation on a range of legal issues including industry recalls, warranty claims, contractual arrangements and litigation before Norwegian courts;

■ Advising a German manufacturer of automobiles and a British manufacturer of vans in pan-European product recalls;

■ Advising a tier-one car parts supplier on standard contract terms in the UK;

■ Advising an American automotive equipment manufacturer on product safety regulatory provisions in relation to consumer protection and product liability rules in Hungary;

■ Advising a leading Japanese manufacturer of automobiles on all contractual, intellectual property, information technology, competition and employment issues in the UK;

■ Advising a UK automotive manufacturer in a dispute with a specialist racing car company relating to intellectual property;

■ Advising a Japanese spare parts manufacturer in litigation in Belgium against a Belgian spare parts distributor;

■ Advising a Belgian spare parts manufacturer in connection with an automotive recall in Germany, Spain, Italy and Hungary;

■ Advising a US-based component manufacturer on the restructuring of its logistics operations in France;

■ Advising a major automotive engineering designer/manufacturer in a series of disputes involving counterfeit and/or non-original spare parts in the UK;

■ Advising a motor vehicle manufacturer in relation to faulty dashboards causing fi res and the resulting recall and customer claims in the UK;

■ Advising a motor vehicle manufacturer in respect of the recall of vehicles that due to design faults were the subject of personal injury claims in the UK;

■ Advising AIG Investment, Rohm and Haas, ON Semiconductor, PPG, Kelly Services, S. Kumars, Techinc, Doosan Infracore and other multinationals and investment funds on PRC antitrust issues with respect to their onshore and offshore M&As and daily operations, covering sectors including chemicals, electronics, infrastructure, automotive, transportation and fi nancial services;

■ Advising on corporate transactions such as the acquisition of the Velo Group lease hire business (which included due diligence in relation to the underlying lease hire contracts), due diligence on behalf of Daimler Chrysler in connection with an acquisition and due diligence in connection with the acquisition of a specialist automotive accessory supplier, Demon Tweaks;

■ Advising a Japanese automotive manufacturer in respect of warranty and consumer claims in Thailand;


VEHICLE FUNDING SOLUTIONS

We advise on a variety of structures and products in funding fl eet management companies, contract service providers and rental companies including tax driven operating lease facilities, fi nance lease and hire purchase as well as agency and residual value structures.

We also advise providers of fl eet management and contract hire services on their funding arrangements, their supply agreements with manufacturers and dealers (including buyback arrangements and volume rated discounts), outsourcing arrangements and securitisations of contract hire receivables.

We draft and advise on standard documentation for contract hire, contract purchase, fi nance lease, sale-and-lease-back and bespoke employee car ownership scheme (ECOS) structures.

Our aim is always to provide the legal advice that fully supports our clients’ commercial objectives.

WORKING WITH LEADING ORIGINATORS AND ARRANGERS

We have worked with many of the leading auto manufacturers in supporting their day to day operations as well as helping to put together securitisations and other complex funding structures on their behalf.

Members of our team also regularly work with leading arranger banks in providing deal structures and acting

as deal counsel in signifi cant fi nancing transactions. An example transaction includes acting for Unicredit as arranger in respect of FGA, the in-house credit institution of Fiat, with regard to the securitisation of its UK receivables.

RELEVANT EXPERTISE

■ Advising the UK asset fi nance arm of a leading European bank on the outsourcing of vehicle funding solutions for its SME customer base to a large Dutch provider of fl eet management services and the funding by the bank of all vehicle acquisition costs over the lifetime of the outsourcing contract;

■ Advising a UK clearing bank on the purchase and semi-securitisation of up to £500m of vehicles and related contract hire receivables from the fi nancing arm of a major US motor manufacturer;

■ Advising the consumer fi nance arm of a UK bank on its JV arrangements with an Asian manufacturer to establish a captive fi nance company to fund its UK dealer network and retail business;

■ Advising the funder on a £50m agency facility in favour of a start-up business providing fl eet management and contract hire facilities for LCVs. The funding structure involved complex risk sharing arrangements on fl eet residual values including ‘cap’ and ‘collar’ aggregations;

■ Advising a leading UK contract hire and fl eet management provider on its standard contract hire and contract purchase documentation for use with large corporate end users;

■ Advising a UK funder and specialist ECOS provider on the drafting of its standard, CCA regulated conditional sale and credit sale agreements for employees, establishing a funding and lease structure to mitigate risks on cash in transit and employers’ salary deduction obligations and designing a suite of receivables purchase documentation enabling each ECOS to be discreetly funded on a bank-by-bank basis;

■ Advising the funders on vehicle fi nance facilities for most of the UK’s leading daily rental and accident management companies;

■ Advising various funders on the insolvency of Rover Group including the unwinding of ECOS funding positions, recovery of funded vehicles, buyback arrangements and lease terminations; and

■ Advising a UK lessor on its volume related discount and buyback arrangements with an LCV manufacturer, the subsequent administration of the manufacturer and the renegotiation of new buyback arrangements with the VC-backed NewCo business.


DEPTH AND QUALITY OF EXPERIENCE

Providing the highest quality service requires a deep understanding of the underlying assets, relevant geographic and regulatory issues, extensive experience of the fi nancing techniques that are applied in the ABS sector and a commitment to provide an excellent product.

Our award-winning team can draw from the widest pool of experience and benefi t from our global depth and breadth to provide all of the above. We are viewed as market leaders in the areas of Structured Finance and Securitisations and have advised on numerous highly complex projects. We have more than 200 fi nance lawyers practising in this important sector of the market on a global basis. The team is supported by our leading corporate, regulatory and tax teams and, as required, works together with our enforcement, litigation and restructuring teams, enabling us to call

on over 2,000 lawyers within these areas to complete large and/or complex transactions.

We have an extensive commitment on a global basis to the auto sector and understand issues which face the industry as well as applicable regulatory and consumer law issues across a wide range of jurisdictions. Our work has included advising the full range of industry participants ensuring that we have a good understanding of the needs and motivations of all the key players.

OUR UNDERSTANDING OF THE MARKET

Given the fall out arising from the global fi nancial crisis, and in particular the role of sub-prime mortgage securitisations in that crisis, it is not surprising that the securitisation markets over the past three years has faced signifi cant adverse legislative and regulatory repercussions. These are still being felt, with the result that it is

impossible to predict with any degree of certainty what the new paradigm for structured debt issuance will be as the capital markets recover. In spite of this the auto securitisation market has continued to operate and lawyers at DLA Piper have been actively involved in advising on a signifi cant number of auto loan securitisation transactions in the recent post-crisis period. We fully believe that with the global DLA Piper platform, with its rare combination of multi-specialty expertise, thought leadership and entrepreneurship, the DLA Piper team is uniquely situated to play a vital role in the rebuilding and reshaping of the fi nance market of the future.


DLA Piper’s International Banking & Finance practice consists of over 450 advisers providing services within 78 DLA Piper offi ces all over the world.

DLA Piper’s specialists from our offi ces in Europe, Asia, North America, South America and Australia cooperate with our UK lawyers on a daily basis. As a result, we provide comprehensive legal and tax advisory services related to domestic and international projects. Our cohesive organisational structure

ensures the constant exchange of know-how as well as fl uid and effective internal communication.

DLA Piper’s Banking & Finance Team in the UK consists of advisers with wide experience gained in numerous projects performed for all types of entities including foreign banks, global and local corporations, international fi nancial institutions, investment funds and private investors.

At DLA Piper, we offer comprehensive support to our clients at all stages of projects, starting from planning the structure of fi nancing (term-sheet), through negotiations of transaction documents, establishment of security, preparation of offer documents, to the disbursement of funding.

“The interaction and quality at partner level is outstanding. They know how to judge and manage a negotiation.” Sources add that the team’s advice is “absolutely concise and straight to the point.” – Chambers 2012

OUR BANKING AND STRUCTURED FINANCE CAPABILITIES

We have experience in the fi nancing of various types of investments including:

mergers and acquisitions; acquisition of debt portfolios;

property acquisition and development; infrastructure projects; and

issuance of bonds; acquisition of assets.

energy sector projects;

We also advise banks and fi nancial institutions in the areas of:

derivatives; standardisation of loan documentation; and

structured banking products; regulatory aspects and bank supervision.


■ Advising the arrangers and European Investment Bank, as subscriber, in a securitisation transaction of receivables arising out of an initial portfolio of lease contracts originated by Banca Agrileasing with a nominal value of €500 million.

■ Advising a fi nancial institution in the securitisation of German law auto-loans receivables. We advised in relation to trading on the Luxembourg Stock Exchange and eligibility to ECB refi nancing.

■ Advising a fi nancial institution of the restructuring of loans to automobile dealers secured by real estate, fl eets of vehicles, franchise interests and business assets.

■ Advising on a securitisation of retail auto loans originated by Russian Standard Bank. The EBRD accepted to subscribe to a portion of the bonds issued against a securitised portfolio of Russian Standard Bank’s auto loans.

■ Advising the lender in a US$40 million revolving loan warehousing facility to Automotive Leasing Specialists, LLC, an originator of automobile leases to consumers with subprime credit;

■ Advising JP Morgan and Raiffeisen as lead managers on the benchmark Roof Russia transaction, a publicly rated US$400m securitisation of the car loan portfolio of Russia’s largest foreign-owned banking group (the fi rst Russian securitisation with the senior tranche priced below 100 basis points; IFLR deal of the year 2007 nominated).

■ Advising UniCredit on the feasibility and the implementation for a true sale securitisation of receivables arising from a portfolio of auto loans of Moscow Bank for Reconstruction and Development.

■ Advising UniCredit on the securitisation of a portfolio of auto loans originated by National Bank Trust.

■ Advising Bayerische Hypo- und Vereinsbank and JP Morgan on a securitisation of the auto loan receivables of Russian Standard Bank.

■ Advising Erste Group Bank as the arranger and originator of the securitisation of the consumer loan portfolio of Erste Bank Hungary.

■ Advising ABN AMRO on a securitisation of a portfolio of Russian auto loans (CFC).

■ Advising PrivatBank as originator on the unwind of their public car loan and RMB securitisation programmes.


AUTO-LOANS SECURITISATION

EMERGING AUTO SECURITISATION MARKETS

The DLA team are actively working with originators and arranger banks on a number of auto loan and consumer loan securitisations in the CEE region. The opening of securitisation in these markets will provide a valuable funding tool for businesses in the region. Through our network of offi ces across the CEE and nordic regions we believe we have the most comprehensive coverage of consumer loan and auto fi nance issues of any law fi rm in the EMEA region.

SOPHISTICATED AUTO SECURITISATION STRUCTURES

We have worked with many of the leading vehicles manufacturers and fi nance providers to the auto sector over many years. Members of our team worked on several leading market transactions.

RELEVANT EXPERTISE

■ Advising FGA Capital, the in-house credit institution of Fiat, in respect of the securitisation of its auto-loan receivable assets.

■ Advising Citibank as deal counsel in respect of a portfolio of auto loan and consumer fi nance receivables.

■ Advising Santander Global Markets as deal counsel in respect of a variety of underlying asset types including vehicles, ships and aircraft.

■ Advising Unicredit as the arrangers on the securitisation by FGA, the in house credit institution of Fiat, of receivables relating to its auto-loan receivables business in the UK.

■ Advising a fl oor plan fi nancing company with respect to auto and boat inventories.

■ Advising a company that originated, securitized and serviced auto-loans and leases.

■ Advising on a car loans securitisation by FCE Bank plc including advising on various amendments to the structure over the years.

■ Advising a fi nancial institution performing due diligence on several billion dollars of securitised loan portfolios including auto-loans and leases.

■ Advising an auto conglomerate in connection with performing due diligence and bidding on auto-loan originator and servicing platform.

■ Advising the arranger on the establishment of a $3.6 billion future fl ow facility for a national auto-loan fi nance company.

■ Advising as lead counsel, the US fi nance subsidiary of a global automobile manufacturer for all capital markets and derivatives transactions.

■ Advising an originator of auto-loans in connection with publicly registered securitisation transactions aggregating approximately $2 billion.

■ Advising the arranger and joint lead managers on the structuring, documentation and issue of Notes listed on the Luxembourg Stock Exchange and rated by Standard & Poor’s.

■ Advising the originator and servicer on amendment and restatement of securitisation documents relating to increase in size and maturity of auto-loan securitisation transactions.

■ Advising the originator on the structuring, fi nancing and transfer of a portfolio of assets from an existing securitisation vehicle to new ownership.

■ Advising currently on auto loan securitisations in the CEE region.

■ Advising in connection with the securitisation of various UK auto-loan receivables.

■ Advising in connection with the securitisation of German auto-loan receivables arranged by Crédit Agricole CIB and Société Générale.


TAX EFFICIENCY

BOND AND NOTE ISSUANCE

INTERCREDITORAND SECURITY ISSUES

EQUITY FINANCE

DERIVATIVES

CORPORATE SUPPORTAND ADVISORY

INSOLVENCY PROTECTIONSAND ENFORCEMENT ISSUES

CROSS BORDERAND TRANSPARENCYISSUES

FINANCIALREGULATION AND

EFFICIENT CAPITALSTRUCTURING

STRUCTURED FINANCE

We have more than 200 fi nance lawyers practising in this important sector of the market on a global basis. The team is supported by our leading corporate, regulatory and tax teams and, as required, works together with our enforcement, litigation and restructuring teams, enabling us to call on over 2,000 lawyers within these areas to complete large and/or complex and multi-disciplinary transactions.

This effective combination of practice skills and geographical reach is essential in an increasingly complex and global economic environment. Our ability to deliver an effi cient integrated service allows us to offer quick and high quality solutions with signifi cant savings for clients in terms of administration, management time and bureaucracy. Our solutions are both legally effective and economically attractive.

UNDERSTANDING YOUR REQUIREMENTS

The credit market meltdown not only put a virtual halt to most new issuance in the CMBS and ABS markets, but also had a debilitating impact on most law fi rms with any signifi cant commitment of resources to structured fi nance. DLA Piper was fortunate in that it was not forced into a downsizing mode by the meltdown but has instead been able to take a contrarian view and use the down market as an opportunity to expand and upgrade its securitisation capabilities.

The structured fi nance practice of DLA Piper now encompasses a deep bench with signifi cant substantive experience in a broad range of structured debt transactions, running the gamut from CMBS and RMBS through CDOs and CLOs, auto loan securitisations and other consumer

ABS and esoteric assets such as ships, aircraft and project fi nance securitisations, tobacco fee securitisation, IP securitisation and whole business securitisation. The structured fi nance group of DLA Piper comprises not only practitioners with years of hands-on experience with these diverse types of transactions, but also thought leaders who are known in the industry for their creative problem-solving and their entrepreneurial track record in designing and executing new structured fi nance programs. In addition, the DLA Piper Structured Finance lawyers have ready access to the Firm’s diverse mix of other global specialty practices to provide substantive law and business coverage for anticipated future securitisation activity, including real estate, litigation, bankruptcy, intellectual property, franchising, insurance and renewable energy.


LEADING EXPERTISE IN THE AUTO SECTOR

DLA Piper has extensive experience advising clients in the automotive sector as we act for the full spectrum of clients in the automotive and manufacturing industries.

As stand-out examples, we recently advised RCI Banque on some of its most signifi cant securitisation programmes including its Harmony and Opera programmes; we are currently working on a number of auto loan and consumer loan securitisations in the CEE region; and we have advised a number of leading banks on securitisation structures, including Unicredit as arranger in respect of FGA, the in-house credit institution of Fiat, with regard to the securitisation of its UK receivables.

WE CAN HELP IN FINDING THE RIGHT ROUTE

Reducing Legal

Service Costs

We have extensive experience both from working for regulatory organisations such as the FSA and advising leading fi nancial institutions and new and emerging players establishing themselves in the new and increasingly complex regulatory environment.

We provide a wide range of regulatory advice and structuring and cover all aspects of capital structuring.

We have structured and implemented many of the largest and most complex auto loan sale transactions in recent years, placing us at the forefront of crafting the solutions that intelligently address the challenges presented by today’s global economy.

We have tightly integrated a specialist team of multi-disciplinary dedicated lawyers from our structured fi nance, asset fi nance, debt capital markets, corporate, tax, and funds practices. The collective expertise of this team offers you a comprehensive solution that includes the structuring of tax-effi ecient and regulatory compliant investment vehicles, the implementation of sophisticated debt and equity fi nancing, and unparalleled knowledge of the diffi cult markets in which these transactions operate.

Compliance

with article

122a and regulatory

capital requirements


Auto Loans

World leading

auto securitisation

experience

Use of structured credit and bond fi nance/securitisation techniques to improve return on assets – our capital markets and securitisation lawyers work with issuers, sponsors, arrangers, lead managers, originators, dealers and conduit fi nanciers providing expert advice on structuring fi nanciers solutions to assist in asset origination and other holding structures.

Flat rate and cap fee arrangements

Volume discounts

Retainer discounts

Contingency fee arrangements/risk sharing/conditional fee arrangements

Value billing arrangements

Effective cost effi ciencies – We are uniquely placed to utilise our offi ce network in the UK and worldwide to ensure that work, which can be done in offi ces outsides of London at a lower rate, is under taken by lawyers experienced in such transactions in our regional and country offi ces. We have developed a strategic “North shoring” and outsourcing approach in the UK and worldwide to ensure our clients receive the right advice in the most cost effective manner.

Auto LoansGenerating

increased

returns from

reduced asset book

Imaginative

and innovative

fee arrangements