IPIC's purchase of Nova Chemicals is historic, says Philip Brown in AmLaw Daily

Energy, Medical Devices and Bailouts: Some Deals Remain Hot

February 23, 2009

Canadian chemicals company Nova Chemicals' decision to accept a US$2.3 billion bailout from Abu Dhabi-based state-owned International Petroleum Investment Co. (IPIC) offers a view into a sector that might remain hot even as the economy struggles in 2009.

According to Bloomberg, Nova needed a capital injection badly, as it was at risk of failing to live up to lending requirements. The company recently had difficulty securing an additional US$150 million in funding to stay afloat amid massive losses due to plummeting consumer demand.

The deal marks a historic moment in Canada, says Philip Brown, who led Torys' team advising IPIC (a first-time client who selected Torys after reaching out to several Canadian firms). The Abu Dhabi company will become the first foreign sovereign wealth fund to take 100% ownership of a Canadian company.

Of the $2.3 billion, about $499 million would cover Nova shares, and the rest would go toward assuming Nova's debt. IPIC will also provide a US$250 million credit backstop for Nova, which will be run independently from IPIC.

"This was a very unique deal," says Phil. The deal is a takeover and a loan at the same time, which is rare. Two different sets of documents had to be written with separate financial covenants that nonetheless had to overlap.

Read the full article here.

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