IFLR 1000
The Guide to the World's Leading Financial Law Firms

Austrian banks saw hard times during 2009, with some, such as Erste Bank, requiring government bailouts. The trickle-down to law firms has been an ebbing-away of lending mandates and a marked increase in re-financings, debt restructurings and tricky regulatory work....

Austrian banks saw hard times during 2009, with some, such as Erste Bank, requiring government bailouts. The trickle-down to law firms has been an ebbing-away of lending mandates and a marked increase in re-financings, debt restructurings and tricky regulatory work. As was the case with the capital markets, 2009 was the year when the firms prospering were those with the capacity to handle highly-complex mandates in flexible and innovative ways.

Syndicated lending dropped to an all-time low in 2009, meaning that some firms found themselves having to create the documentation for some innovative club structures, adjusting agreements for understandably cautious lenders. As for acquisition finance, the uncertainty surrounding loans meant that the creation of get-out-free arrangements for potential buyers became an important consideration.

All in all, the deal-flow for most firms (that is, the ones that did not rely too heavily over the past two years on real-estate financing work) has been steady because of the way the downturn has forced large-scale re-financings, restructurings and the bailout of banks across the market. As with all times of crisis, it has pushed market participants to develop skills that are less called for in more buoyant times, the legal community being a case in point.

Equity capital markets activity was incredibly low in 2009. In Q2, partners at some of the leading firms commented that the last big deal happened in May 2008 and there was no sense of when the next might come along....

Equity capital markets activity was incredibly low in 2009. In Q2, partners at some of the leading firms commented that the last big deal happened in May 2008 and there was no sense of when the next might come along.

However, the debt markets showed some encouraging signs of growth. For example, Cerha Hempel Spiegelfeld Hlawati advised Bawag on the 2008 update of its €10 billion debt issuance programme, and also counselled Strabag on its €75 million bond. Another notable debt mandate, albeit one that serves to indicate trouble in the markets, saw Freshfields Bruckhaus Deringer advise Morgan Stanley on Immofinanz's €1.5 billion exchange offer to holders of its existing convertible bonds for new convertible bonds. The latter is a clear example of just how flexible firms have had to be over the last year, drawing on all of their technical expertise.

Bank bailout measures extended by the Republic of Austria have also been generating some work. For instance, Wolf Theiss's capital markets team was called on by Erste Bank for advice on the first of the bailouts, which involved the state acting as guarantor on its €6 billion debt programme.

Pure M&A activity fell dramatically in Austria during 2009, with some agencies reporting a 70% drop in deal-flow across Europe. Deals that did come to light in the first part of the year were either put on indefinite hold or fell away entirely in the face of a lack of lenders willing to enter into highly-leveraged acquisition financings....

Pure M&A activity fell dramatically in Austria during 2009, with some agencies reporting a 70% drop in deal-flow across Europe. Deals that did come to light in the first part of the year were either put on indefinite hold or fell away entirely in the face of a lack of lenders willing to enter into highly-leveraged acquisition financings.

However, law firms have reported good levels of M&A work driven by restructurings, including distressed auctions, with some that had made pessimistic predictions for Q1 2009 being pleasantly surprised by the availability of a different kind of work.

Restructuring mandates for banks and other financial institutions made up a good part of this activity. For instance, Schoenherr advised on the €1.5 billion sale of Immoaustria to Immoeast as part of the restructuring of Immofinanz, and Wolf Theiss advised on the disposal of GE Money Bank Österreich to Santander.

Private equity investors were notably absent from the market, but many partners predict possible renewal of activity in Q4 of 2009, depending on market opinion concerning whether or not prices have bottomed-out. In the meantime, many firms' corporate teams are busy helping private-equity funds with issues such as adjusting their investment guidelines.