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

"Ukraine was the number one place likely to default but now it's in the top ten. So you can see its better," one partner says. This somewhat facetious statement communicates an important truth about the Ukrainian market. In the wake of the financial crisis, Ukraine had been subject to escalating levels of sovereign debt. This trend continues as the new government, despite sharply criticising its predecessors, continue to increase state debt. However, owing to reviving investor interest in emerging and frontier markets, Ukraine has been able to, at least for now, borrow more relatively cheaply. Therefore, the conditions which gave rise to the partner's statement above see improvement as a consequence of the lower risk of default relative to a market which cannot yet be described as healthy.

Market commentators agree that the banking sector has been slowly improving with an increased, yet restrained appetite to provide loans. "Banks are in search of stable borrowers. Many are looking at small to mid-sized companies limited to international institutions," one partner says. Nevertheless, for lawyers there are a number of significant projects where the debt has not been restructured yet. "Western banks are in restructuring projects and are not comfortable in providing new loans. So there is no influx of new lending," one partner says, adding: "Russian banks have been more active and provide refinancing and in other cases are ready to provide new money to strategic assets." In general, banks have been more forthcoming to finance small to medium sized enterprises. Retail banking has been fairly quiet and there has been an upturn in trade and export finance while real estate has remained slow. Furthermore, there has been reshuffling in the central bank with the hire of Serhiy Arbuzov as the new central bank chairman on the resignation of Volodymyr Stelmakh.

The local capital markets are quite unstable and unpredictable; nonetheless, there has been activity as market players tend to look further afield. "The capital markets in Ukraine are volatile and not seen as a stable source of income," one partner says, with another adding: "The issuance of shares in Ukraine is not really developed for this. Infrastructure and the regulatory framework are not very supportive and there is not too much demand." The state has been active in the capital markets with the issuance of Rule 144A/Reg S Eurobonds. In fact, the 2011 state budget evinced the intention to raise $4.5 billion through Eurobonds while borrowing $500 million from the World Bank. Yet, the debt capital markets have also been active on the local front and the government is set to issue $6 billion worth of domestic loan bonds. On the equity side, an interesting trend has surfaced. Mainly in the agriculture sector, there has been a spate of IPOs directed towards the regional hub, the Warsaw Stock Exchange. "Their business structures all dream of additional funding but the banking system in Ukraine can't provide this. So, they're looking through different sources," says one partner, with another adding: "The attraction of the Warsaw market is because it is highly liquid and active in Europe. Capital is creating demand. Ukrainian companies have a higher profile in Warsaw and not in London."

Any inclination towards project finance is in the traditional energy sector. "There have been talks of measures and changes in the law to support renewable energy but no significant developments," one partner said. Additionally, the 2012 UEFA European Football Championship is set to be co-hosted by Ukraine; however, there has been little scope for the private sector. This is despite the parliament of Ukraine approving, on July 1 2010, a law to guide public-private partnerships (PPP). "The state waited too long to get the private sector involved (in Euro 2012). They've known for four years now and they didn't enact a PPP law. And when they did, it was not fully adopted, so now this has to be state funded," one partner says. There has also been enhanced focus on infrastructure projects such as ring roads and other highway projects. "The government is not talking of PPPs. They're not opening doors for private investors," one partner says.

The integrated international brand of Baker & McKenzie boasts a wealth of knowledge to supplement its multi-jurisdictional proficiency. With some notable departures in recent times, the firm was landed a blow within its own spheres of influence. Nevertheless, market commentators did not feel this affected its tier one standing, but they did note a loss of traction in the market. This was in terms of recent internal instability and also related to the impact of the financial crisis. "Baker & McKenzie are still good but a lot of people left and created a new company," one partner says. "Baker & McKenzie downsized their offices considerably. The market was dead but this does not impact on good lawyers," another partner says.

In addition to the loss of personnel that was duly noted in the previous edition of IFLR1000, the firm suffered another hit with the retirement of managing partner James Hitch in late 2010. Serhiy Chorny and Serhiy Piontkovsky were then appointed to share the new role. As one peer states: "Baker & McKenzie find themselves in an unusual situation. Until December 31, Jim Hitch ran the law firm. He was competent and knew a lot. He knew how to develop the business. There is tension now and one wonders how long it will last, but, they do have competent lawyers, so I'm not saying that they shouldn't be in tier one." Despite the above, Serhiy Chorny has been described as "active" in the field and the firm has been buoyed by the return of Oksana Simonova from maternity leave.

Clients have generally been pleased with Baker & McKenzie's performance and draw attention to the cutting edge the international element gives them in the upper levels of the rankings. However, the firm has been noted for being a bit on the expensive side.

True to its top flight status, the firm continues to attract some of the market's leading mandates. In one of the first post-crisis Eurobond deals in the region, the firm advised Metinvest on its debut offering of $500 million 10.25% guaranteed notes due 2015. The notes are listed and admitted to trading on the Global Exchange Market of the Irish Stock Exchange. Additionally, the firm advised Mobile Telesystems with regard to its $750 million ten-year Eurobond offering. The transaction was structured as an offering of 8.625% loan participation notes due 2020 and was issued under Rule 144A/Reg S, listed on the Irish Stock Exchange. Importantly, the firm has also been at the forefront of the flurry of IPOs destined for the regional hub, the Warsaw Stock Exchange. To this end, the firm has been involved in three-quarters of all the IPOs born out of the Ukraine.

Sayenko Kharenko's solid banking and finance practice is well established and retains its place in the top tier. The firm has developed itself a very strong reputation in Ukrainian transactional matters. As a local firm it has been highly successful in building international contacts. "Sayenko is always local counsel," one partner says. "Sayenko is very experienced and well connected to foreign clients," another partner says. However, there have been some comments, which suggest that the firm has lost a modicum of market share in the last year. "They are less active but I'm not saying that they are not in tier one," one partner says.

Clients have been in no doubt as to the quality exuded by the firm. "A very professional team; they always tailor products to our needs. There is always commitment," one client says, adding: "I don't use the word excellent but we're very satisfied". Recently promoted to partnership, Nazar Chernyavsky has been very active in the banking and finance front. "Sayenko have a young guy who was recently promoted to partner...his name is Nazar, he is young and recently promoted," one partner says.

The firm has been very active in banking and finance. In the capital markets, the firm advised Morgan Stanley, JPMorgan and VTB Capital on a $2 billion Eurobond placement by the State of Ukraine. This consisted of two sovereign Eurobond issues. This was the first successful placement of Eurobonds by the State of Ukraine since 2007. It is also the state's largest ever sovereign Eurobond issue. Additionally, in finance, Michael Kharenko and Nazar Chernyavsky advised VTB Bank on a $2 billion loan provided to the State of Ukraine. Furthermore, in restructuring, the firm advised Credit Suisse on the $500 million loan restructuring to Ukrtelecom, Ukraine's largest fixed-line telephone operator.

According to many commentators, Asters has had a quiet year relative to its standing in tier two. "Asters, I haven't seen them. They're not visible," one partner says. "I don't see them [Asters] a lot when Sayenko is involved," another partner says. Nevertheless, yet another partner says: "International law firms are knocking down local firms. Germany is overrepresented for existing work for German players. International investors go to international law firms [and] Asters get international clients."

When looking at Aster's deal list from the last twelve months, it becomes apparent that the latter statement is closer to the truth. The firm continues to attract some interesting mandates and has been doing much work for international finance institutions. "They mix with international financial institutions than with any others," says one competitor. In this capacity the firm has represented the European Bank for Reconstruction & Development (EBRD) and the International Finance Corporation (IFC).

The firm was involved in Ukraine's first non-financial corporate sector Eurobond issue in 2011. The firm advised Bank of America, Merrill Lynch, RBS, UBS Investment Bank and Dragon Capital on $250 million Eurobond debut issues by MRIYA Agro Holding, one of the leading agricultural groups in Ukraine. Additionally, the firm advised Sberbank on a $700 million syndicated financing to Metinvest, the largest metals manufacturing holding in Ukraine. This was one of the largest loan facilities to be secured by a Ukrainian private business since the start of the financial crisis. The firm also advised key client the EBRD in relation to a ten-year $140 million subordinated loan to UkrSibbank, a subsidiary of BNP Paribas Group. The loan boosts the liquidity of a significant financial institution in Ukraine.

Having now secured a spot in the second tier, Salans is the big mover this year. Opening in Kyiv in 1992, but with functions in Ukraine from 1988, the firm is among the first international firms to be operational in the country. It is well established and has built itself a sound reputation on the market. "Salans have good Russian clients, they should be tier two," one partner says.

Impressions from clients paint Salans as a workhorse firm where the whole is greater than the sum of the parts. "There are five or six lawyers of the same calibre," says one client, adding: "They work around the clock and are always accessible."

Over the last twelve months, the firm has been involved in some big-ticket mandates. The firm advised one of the leading international investment banks on a $568 million Eurobond issue by a Ukrainian state enterprise "Financing of Infrastructure Projects". This was secured by a Ukrainian sovereign guarantee. Furthermore, the firm advised one of the biggest Ukrainian banks, PJSC Kreditprombank, on the restructuring of its $300 million internal and external debt with over twenty creditors. The firm also advised ING Lease Ukraine on the preparation of the transaction documentation to convert a €77 million loan to financial leasing. The original loan was actually extended to Sirius Project Lviv in 2008 for the construction of one of the largest shopping and entertainment centres in Ukraine, King Cross Leopolis in Lviv.

Oleg Mazur has been very active for Chadbourne & Parke and is assisting the firm in its representation of a large group of lenders in a $400 million debt restructuring of Kreditprombank, one of the largest banks in Ukraine.

Having opened in Kyiv near the end of 2008, Clifford Chance became the first UK magic circle firm in Ukraine. The firm acted for UBS who in turn worked as a solicitation agent in a $175 million Eurobond restructuring of one of the largest Ukrainian banks under temporary administration. The firm also advised the European Bank for Reconstruction and Development (EBRD) on a $20 million loan to a Ukrainian agricultural group.

"They entered the market just at the beginning of the crisis and held their activities. They didn't hire, it's difficult to survive," one partner says. "They're more active in banking and finance," another partner says.

DLA Piper continues to advise Donetsksteel Iron & Steel Works on the restructuring of its debt portfolio in excess of $1 billion. This comprises representation of the client before a creditors' pool of more than thirty domestic and international banks. The firm also advised the European Bank for Reconstruction and Development (EBRD) in its $50 million and $20 million loans to Nibulon and Agroinvest respectively. "We see and work with DLA Piper," says one partner.

Led by Denis Lysenko, Vasil Kisil & Partners has been very active with acquisitions in the banking sector and also with debt restructuring. The firm advised DeltaBank on its acquisition of a number of distressed assets of Ukrprombank. This included its indebtedness towards the National Bank of Ukraine and the firm then advised the same client on the €269 million restructuring of the aforesaid indebtedness. Market commentators see the firm as being more of a force in M&A than banking and finance. "Vasil is strong in a different sphere, in M&A and corporate," one partner says, with another adding: "They're not really active in banking and finance".

Amid the internal and external discord that has beset the firm this year; it drops a place into the third tier. In truth, Magisters has been the subject of some animated discussion, as earlier in the year, its office suffered an armed raid from men acting on behalf of the General Prosecutor's office. In light of a criminal investigation into a client of the firm, the country's state energy company NAK Naftogaz Ukrainy, the men seized documents for that purpose in an extended search.

"Magister's clients are worried and partners feel it," another peer says, adding: "Everything is being scrutinised. The state security bureau has taken client's documents and servers, files, emails."

How these unfortunate events impact the firm's banking and finance practice has been explained in measured terms. "They had a problem. How this damaged them we don't know. We have transactions where they are hired by foreign banks. Clients still trust them," one partner said, adding: "How the event influences the practice is difficult to predict. It's not a big story in Ukraine but how foreigners see it, we'll see. But clients still take their advice."

Nevertheless, the firm has been active in the capital markets. It advised joint lead managers, JPMorgan Securities, Morgan Stanley and VTB Capital in relation to the issuance of $1.5 billion 7.95% notes due 2021 for Ukraine's external state borrowing. "I've seen them on the capital markets side. I don't think they're out of place," says one partner.

Andriy Kravets & Partners continues to build its presence on the market. In the last year, the firm was involved in one of the market's significant deals in banking and finance. The firm advised the state enterprise "Financing of Infrastructural Projects" in its garner of funds for the preparation of the 2012 European football championships. These were raised by the issuance and placement of $568 million 8,375% quasi-sovereign notes due 2017 and secured by the guarantee of the Cabinet of Ministers of Ukraine. "I have a good opinion of Andriy," says one peer.

This edition, Avellum Partners break into the rankings to secure a spot in the fourth tier. The firm has been causing quite a stir in the Ukrainian market of late. It was formed by former Baker & McKenzie partners Mykola Stetsenko and Glib Bondar. Moreover, market commentary on Avellum is quite diverse. "Avellum is quite visible, they've done quite well. It will be interesting to see what happens in the long term," one partner says. "Avellum tried to create a company specialised in banking and finance. They took some clients," another partner says. Yet another partner says: "They are small but active. I would put them in tier two."

Whatever opinion one may hold of Avellum, it is clear that it is here to stay and it is attracting some high profile mandates. The firm advised Credit Suisse Securities Europe, Deutsche Bank London Branch, ING London Branch, Sberbank, RBS and VTB Capital on the establishment of the $1 billion GMTN Programme of Metinvest and the issue of $750 million 8.75% guaranteed notes due 2018 under this EMTN Programme.

BC Toms & Co has had a relatively quiet year on the transactional front. "They have quite a good corporate advisory practice and assist smaller corporations, not on financing. They have oil, gas and energy focus not finance," one partner says. The firm advised Continental Farmers Group with a due diligence report as part of the client's preparation for its prospective IPO. The firm is also advising Telecoms group with financing to the extent that it is involved in restructuring and initial due diligence for fund-raising. "It used to be one of the only international law firms here," says one partner.

Marina Tegypko led a team of four when Beiten Burkhardt advised Agroton on the $54 million public offering in Poland of 26.2% of its shares and its admission to trading on the Regulated Market of the Warsaw Stock Exchange. "Beiten has a reduced presence," one competitor says.

Gide Loyrette Nouel benefits from the French clientele it attracts. The firm advised Lafarge with regard to its equity investment of up to €80 million into a regional holding vehicle created to hold existing quarry and distribution operations in Ukraine and pursue further developments in surrounding countries.

Schoenherr advised Erste Group on the restructuring of acquisition and development financing of three real estate projects in the region (East Gate in Boryspil, Ukraine). The $52 million restructuring was aimed at optimising the borrower's cash flows from the three projects and ensuring timely repayment of loans to Erste.

CMS Cameron McKenna’s banking and finance practice consolidates its position in tier three of this year’s edition. Led by Adam Mycyk and Peter Malecek, the firm continues to build market share on the Ukrainian legal landscape.

CMS won mandates in the framework of the country’s Euro 2012 programme and in one of the few real estate financings in Kyiv of late, led by Malecek and supported by a team including Taras Burhan and Victoria Kaplan among others, it acted for a confidential client in a $68 million loan to a Ukrainian developer for the construction of a mix-use project in downtown Kyiv. The deal was also interesting for its hotel component and in mid-2011 was still pending closure. Another financing had Malecek, Burhan and Taras Stasiv advise an international finance institution (IFI), whose identity remains confidential, with regard to a $24 million long term loan to a Ukrainian grain trader. This deal involved a number of jurisdictions including the UK, Hong Kong and the Netherlands.

IFIs proved a mainstay of the firm’s portfolio of finance deals. Mycyk, working with Burhan and Stasiv, advised another IFI on a $26 million loan to a municipal enterprise and guaranteed by the municipality. The deal was still ongoing in mid-2011 and parties remain confidential. Another IFI mandate, this time of different pro-bono nature, saw Burhan assist the client on conducting debt restructuring and insolvency seminars across nine cities in Ukraine with the aim of helping small-to-medium enterprises. The firm was not only limited in scope to financing work as a large team, again led by Malecek, was kept busy in early 2011 advising a confidential bank on matters pertaining to existing loans. The firm closed this matter in February 2011.