State-owned enterprises

The role of the public sector in facilitating, through specialized investment companies, investment in specific areas of the economy, when needed, is essential.

Assisting public investment companies in this context requires a specific awareness of the constraints faced by such investment companies.

LIME’s team has over the years assisted public companies for investments in various funds or start-up structures and has been active among others in:

• assisting the Federal Participation and Investment Company (SFPI/FPIM) for the acquisition, along with other public and private actors, of a shareholding in the airline company Air Belgium set up in 2018, and in the negotiation of a shareholders’ agreement organizing the management of the company

• assisting said public holding company on an on-going basis in the context of the shareholding held in Brussels Airport and has been active among others for the refinancing and the renegotiation of the agreements entered into with the Macquarie Group (2007) and the entry of Ontario’s Teacher’s Pension Plan in the capital (2011)

• assisting public holdings in a range of acquisitions of various shareholdings in several private investment funds or determined institutions (Nanocyl, Xylowatt, Gingko Fund, ...)

The sale and purchase of public assets in the form of shareholdings in an enterprise is part of a process in line with classic merger and acquisitions.

Said sale and purchase must however also be conceived and implemented in the very specific context of a collaboration with strategic partners from the private sector and in line with the regulatory environment of the concerned sector.

These transactions also require in-depth skills for the drafting of law, regulations and governance documentation in this context.

Our team is very cognizant with this type of constraints.

LIME’s team and more specifically Thierry Tilquin has been actively involved in the assessment of the opportunity and structuring of the sale and purchase of public assets and assisted various actors in the context of privatizations, amongst which :

• the Federal Participation Company (SFP/FPM) in the framework of the privatizations of various institutions in the years 1990 – early 2000

• Credibe with the sale and purchase of its mortgage credit portfolio (2003)

• SFPI/FPIM on an on-going basis in the context of the shareholding held in Brussels Airport and has been active among others for the refinancing and the renegotiation of the agreements entered into with the Macquarie Group (2007) and the entry of Ontario’s Teacher’s Pension Plan in the capital (2011)

• the Société Wallonne des Aéroports (Sowaer) in the context of partnership of Sowaer in Brussels Airport Charleroi SA (BSCA)

• various public companies for the organization and the follow-up of public procurement procedures relating to the designation of consultants for several missions, amongst which financial and strategic mission of analysis of the shareholdings held by the Belgian State as well as a consultancy mission relating to shareholding public policy of the Belgian State

• the committee representing the historical shareholders of SN Airholding, including public authorities, in the context of the negotiations with Lufthansa relating to the acquisition by the latter of the remaining 55% of the holding (2016)

• more generally, analyzing the opportunity and structures of numerous strategic partnerships over the years

The financial crisis of 2008 lead to major interventions of public authorities in various banking, insurance and financial institutions, aiming at restoring the stability of the sector through capital increases, shares acquisitions or setting-up of hive-off vehicles.

The role of public investment companies was strongly reinforced in that context, with these companies acting consequently as effective holder and manager, on behalf of public authorities, of shareholdings held in the banking, insurance and financial sector.

LIME’s team has been very active in the context of the financial crisis and in transactions deriving therefrom, and assisted public authorities in the transactions that took place during and after the financial crisis of 2008, amongst which:

• the acquisition, through capital increase, of a 49% shareholding in the capital of the Belgian credit institution Fortis Bank SA/NV (September 2008), the purchase of the outstanding 51% of the shares in Fortis Bank SA/NV (October 2008) and the negotiation with the French listed credit institution BNP Paribas for the contribution to the latter of 75% of the shares in Fortis Bank SA/NV (October 2008-May 2009), including the negotiation of all ancillary agreements (sales and purchase, option entered into with Ageas and the winding-up of said option, State guarantees, ...)

• the structuring in this context of Royal Park Investment SA/NV, the hive-off vehicle of the Belgian credit institution Fortis Bank SA/NV (2008-2009)

• the acquisition, along with the Governments of the Flemish and the Walloon regions, through capital increase of 1.5 billion EUR of a 75% stake in Ethias Group, the Belgium-based financial services group

• the subscription to a Ethias Finance bond issue (2011)

• the 1 billion EUR capital increase of Dexia SA/NV, along with the Belgian regions, the French State and the French Caisse des Dépôts et Consignations (2008)

• the 4 billion EUR acquisition of Dexia Bank Belgium SA/NV (renamed Belfius SA/NV in the meantime), both for M&A aspects as well as for regulatory aspects in Belgium and various foreign jurisdictions (2011-2012); our team further provided numerous pieces of advice after the transaction in matters such as governance, separation issues and profit shares issued by Belfius

• the sale to the major French listed credit institution BNP Paribas of the 25% +1 share held in BNP Paribas Fortis SA/NV (previously Fortis Bank SA/NV) (2013)

• in the context of the sale and purchase of the receivables portfolio held by Royal Park Investments SA/NV, the hive-off vehicle of the Belgian credit institution Fortis Bank SA/NV (2013)

Our team also assisted the Belgian State in the litigation procedures relating to the transactions operated during the financial crisis, amongst which:

• the various proceedings (interim proceedings, appeal, court of cassation) led by Fortis minority shareholders and several organizations representing the shareholders’ rights, further to the acquisition of Fortis Bank and its contribution to the French credit institution BNP Paribas

• the international arbitration procedure, under the ICSID rules relating to international investment treaties, brought by the Chinese insurance group Ping An, main shareholder of the Fortis holding

State-held companies are often hybrid vehicles which exist and operate as usual companies, but are at the same time public entities subject to administrative status. Governance’s standards of these companies are therefore specific, due to the necessity of combining commercial constraints and best public practices, be they defined at regional, federal or supranational level, such as those defined by the OCDE guidelines.

Our team has been historically assisting public holding companies with the whole range of their activities (usual corporate operations, specifically-defined investments or major strategic transactions) and has therefore developed a particular expertise as to their specific governance, taking into account the constraints faced by the latter and their unique way of functioning.

Our team has been active for state-owned companies in:

• assisting in the setting-up and the updating of governance structures, through the drafting of charters for different ways or mechanisms of intervention (investment charter, public holding charter, “missions déléguées” charter), governance charters, various internal rules (board of directors, committees, managing director), internal audit charter and an ethics and deontological code, …

• advising on various specific governance questions, including within the frame of the “mission déléguée” mechanism

• analyzing of the status of public entities under the laws on public accounting and the regulations linked thereto, especially the SEC accounting principles

• advising with a view to corporate matters specific to their status

• drafting laws or Royal Decrees in relation with the above whenever necessary