Sector developments and company hires

Agencies win ‘valid-when-made’ cases
The US OCC and FDIC yesterday received favourable court rulings in cases challenging their ‘valid-when-made’ rules. In each case, the plaintiffs were three states – California, Illinois and New York – challenging the validity of the rulemakings.

The states' attorney generals alleged that both federal agencies violated the Administrative Procedure Act. In particular, the plaintiffs claimed that each rulemaking exceeded their authority, were arbitrary and capricious, and violated federal rulemaking standards.

According to the SFA, the District Court applied a Chevron analysis to determine that both the FDIC and OCC acted within the authority delegated by Congress, and that their actions were a permissible construction of the authorising statute. The court also found that the OCC correctly interpreted the National Bank Act and did not impermissibly preempt state law.

Further, plaintiffs challenged the OCC rulemaking on the grounds that it violated the Madden versus Midland ruling. Again, the court sided with the OCC that the ruling in Madden did not preclude the OCC’s interpretation of the National Bank Act when promulgating the rule in question.

In other news…

EMEA
Clifford Chance has enhanced its structured credit and securitisation services within its financial markets group in Amsterdam with the hire of new counsel, Marijke van der Weide. She joins the firm from Lovens and Loeff, where she served as a senior associate since 2011, and brings expertise in advising corporations, lease companies, mortgage providers and financial institutions. Van der Weide has seconded on a number of global teams – namely the capital markets and treasury team at Rabobank in 2015, the capital markets team at Cadwalader, Wickersham & Taft in 2017 and Dechert’s finance and real estate team in 2017.

Pemberton has hired new md, Matthew Kirsch, to its credit team in London. Kirsch will work in the firm’s 10-person credit team and advise on risk in both existing and new investments. Prior to joining the firm, he was a founding member of Apollo’s European private credit team and has also worked as director on the leveraged finance teams at both Sumitomo Mitsui Banking Corporation Europe and GE Capital.

TwentyFour, UKML merger agreed
The boards of TwentyFour Income Fund (TFIF) and UK Mortgages (UKML) have agreed the terms of a proposed merger of the two companies, effected by way of a scheme of reconstruction of UKML. This will consist of the winding-up of UKML, the transfer of UKML's assets to TFIF and the issue of new ordinary shares by TFIF to UKML's shareholders. 

Shareholders of an aggregate circa 47% of UKML’s shares have provided written support for the scheme, which is expected to be completed by the end of the current financial quarter. UKML has granted TFIF exclusivity in relation to its portfolio until the expected date of completion of the scheme.

Both boards believe that the scheme has compelling strategic, operational and financial rationale - including a strengthened market position due to greater scale and combined asset management and securitisation expertise, with 11 investment professionals at TwentyFour Asset Management focused on the combined entity. The NAV of the enlarged group is anticipated to be circa £720m and the gross mark-to-market yield circa 7.2%.

The consideration for the transfer of the portfolio to TFIF will be satisfied through the issuance to UKML shareholders of new TFIF shares at a price representing a 1.25% premium to the NAV per TFIF share, as at the calculation date for the scheme. The proposed acquisition value per UKML share will be 84p per UKML share, less UKML's costs in relation to the scheme and the retention to meet unknown and ascertained liabilities, divided by the total number of UKML shares in issue.