On Friday, 2 September 2016, the Austrian Finance Minister has given the green light to finance a public offer by Kärntner Ausgleichszahlungs-Fonds (KAF) to HETA creditors pursuant to § 2a of the Austrian Financial Market Stability Act. The offer will implement the Memorandum of Understanding (MoU) concluded in May 2016 between the Austrian Minister of Finance and a significant number of creditors of debt instruments issued by HETA ASSET RESOLUTION AG (HETA) that are subject to a regional law deficiency guarantee. The offer will be published by KAF on Tuesday, 6 September 2016.

The European Commission cleared the offer under state aid law on 1 September 2016. Prior to the launch of the offer a substantial number of HETA creditors informed the Republic of Austria that they were willing to participate in the offer. This will also result in the termination of the so-called lock up agreements between HETA creditors in order to enable all HETA creditors to accept the offer. The Republic of Austria therefore expects that the offer will be accepted by the statutorily required majorities.

The key commercial terms of the offer were announced in May 2016 with the publication of the MoU and remain unchanged. The Province of Carinthia will contribute an amount of EUR 1.2 billion. The remaining funds will be provided to KAF by the Republic of Austria, thereby pre-financing to a large extent the recovery from the HETA resolution.

Schoenherr has assisted the Republic of Austria via ABBAG – Abbaumanagementgesellschaft des Bundes (ABBAG) – in negotiating the MoU. In execution of the MoU, Schoenherr also supported in implementing the complex transaction and in preparing the substantial tender offer documentation.

The Schoenherr team was led by Sascha Hödl (partner, corporate/m&a), Ursula Rath (partner, banking & finance) and Wolfgang Höller (partner, banking & finance). The core Schoenherr team further consisted of Stefan Paulmayer (counsel, banking & finance), Miriam Simsa (attorney, banking & finance) and Thomas Kulnigg (partner, corporate/m&a). The core team was supported by Martin Ebner (partner, banking & finance).

The Republic of Austria as guarantor of the zero coupon bond of KAF was advised by the Frankfurt office of Linklaters LLP. The Province of Carinthia was advised by Skadden, Arps, Slate, Meagher & Flom LLP (team lead by Stephan Hutter) and as to Austrian law by attorney at law Norbert Abel and Hausmaninger Kletter Rechtsanwälte Gesellschaft m.b.H. The banks were internationally advised by Linklaters LLP (team lead by Peter Waltz) and as to Austrian law by CMS Reich-Rohrwig Hainz Rechtsanwälte GmbH.