Dentons’ Banking and Finance team in Warsaw has advised a syndicate of four banks – Santander Bank Polska, PKO Bank Polski, BGK and mBank – on increasing the financing for construction of the Galeria Młociny shopping mall in Warsaw up to €189 million and PLN 34 million.

Galeria Młociny is the biggest retail and entertainment complex currently being built in Warsaw. It will comprise 220,000 sqm and is scheduled to open in spring 2019.

Partner Mateusz Toczyski, Head of Dentons’ Banking and Finance practice in Europe, supervised the project. Counsel Bartosz Nojek led the transaction team with the support of associates Katarzyna Błachnio and Magda Kulesza.

In 2017 lawyers from three Dentons teams (Real Estate, Banking and Finance and Capital Markets) advised on primary financing of this investment. Then, a syndicate of BZ WBK (now Santander Bank Polska), PKO Bank Polski and BGK granted a loan of up to €177 million and PLN 34 million to a company owned by Echo Investment S.A. and EPP N.V.

The scope of this complex transaction included not only negotiating and executing the transaction documents (including the senior facility agreement), but also an intercreditor agreement which was preceded by arrangements on mezzanine principles. A significant part of the transaction included preparation of an extensive legal due diligence report on the real estate, the borrower, its shareholder, project documents and mezzanine documents. Mezzanine financing was provided to the borrower’s shareholder by the subsidiaries of Oaktree Capital Group and Pacific Investment Management Company.

The Dentons team assisted the senior lender on executing the facility agreement, intercreditor agreement, hedging documents and security documents, and reviewed and commented on the mezzanine documents. The transaction was challenging due to the number of parties engaged and the quantum of legal issues which had to be addressed between the parties, e.g. the relationship between the senior lenders and mezzanine bondholders that secured the mezzanine financing.

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