On July 23, 2020, CEE Legal Matters reported that Redcliffe Partners had advised the EBRD on an up to EUR 25 million term loan to Ukrainian State Air Traffic Services Enterprise. We reached out to Konstantin Olefirenko, Principal Legal Counsel at the EBRD, to learn more about the deal.
CEEIHM: To start, how was the process initiated? Did the Ukrainian State Air Traffic Services Enterprise come to the EBRD for assistance? How does that process work in general?
Konstantin: UkSATSE is an existing client of the EBRD. Under the original project, the EBRD provided a CapEx loan for the modernization of UkSATSE facilities. The company is a state-owned enterprise responsible for air traffic control over Ukraine. Given the heavy damage the COVID-19 outbreak has caused to the air travel industry (both domestic and international), UkSATSE requested an emergency loan. The EBRD was happy to support our existing client with good financial fundamentals during this difficult period.
CEEIHM: The EBRD has a long-standing record of engagement with Ukraine. Why is that in particular?
Konstantin: Ukraine is one of the EBRD members and a large recipient of EBRD financing and technical assistance grants. This is because Ukraine’s economy is underdeveloped and has not yet realized its potential. That is complemented by the fact that Ukraine is also striving to implement a large program of economic reforms and is on a steady path towards being a truly democratic country. Therefore, the EBRD is very interested in supporting the much-needed reforms with the ultimate goal of helping to build a strong and resilient Ukrainian economy and ultimately improving the quality of life of the Ukrainian population. The EBRD has a strong and experienced team in Kyiv and London which is able to generate a large volume of business for the bank.
CEEIHM: What would you say was the most complex aspect of the deal from a legal stand-point?
Konstantin: This is a landmark transaction (I believe the first of its kind for the EBRD), where the existing client received a loan to satisfy its ongoing working capital needs. This created a range of policy issues for the bank, the Ukrainian government, and the borrower.
CEEIHM: Does the EBRD make a point of spreading its work around to different legal counsel, or when you find a firm you like, do you go back to them again and again?
Konstantin: The EBRD may engage any top tier law firm in a particular country (with appropriate integrity, experience, and expertise, of course). A particular engagement depends on the complexity of a project, the level of experience of a law firm, and the fees the firm is looking to charge.
CEEIHM: Why did you choose Redcliffe Partners to act as your external counsel on this matter?
Konstantin: Redcliffe Partners has assisted the EBRD on a range of transactions in Ukraine (ranging from loans to municipalities to renewable energy project financings). The bank so far has been pleased with the quality of work and the level of service Redcliffe Partners provides. On this particular matter, we engaged Redcliffe Partners because they assisted the EBRD on the initial loan to UkSATSE, thus they knew the borrower well and had a good working relationship with the borrower and were able to work quickly and efficiently. The EBRD has increased the amount of financing available to tackle the COVID-19 crisis effects and these projects require lawyers to work very hard under tight deadlines. This is because, in times of crisis, it is very important for the bank to support its clients quickly. Supporting vital infrastructure is one of the main priorities for us at the moment.
