PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL MEMORANDUM — CONFLICT CHECK
CALDERWOOD & HARKNESS LLP 125 Broad Street New York, NY 10004
June 10, 2022
Approved By:
Robert Adeyemi Responsible Partner, Capital Markets
Signature/Initials: ____ Date: June 10, 2022
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I. Purpose of Memorandum
This memorandum documents the results of a comprehensive conflict of interest check conducted in connection with the proposed engagement of Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") as issuer's counsel to Thalassa Shipping & Logistics SA ("TSL") in a proposed $400,000,000 aggregate principal amount offering of Senior Secured Notes due 2029 (the "Notes" and, the transaction in its entirety, the "Proposed Transaction"). The Proposed Transaction contemplates a Rule 144A / Regulation S offering of the Notes, co-issued by TSL and its wholly-owned Singapore subsidiary, Thalassa Finance Pte. Ltd. ("TFPL"), with proceeds to be used in part for the refinancing of existing bilateral ship-finance facilities and for general corporate purposes.
The conflict check described herein was initiated on June 8, 2022, and completed on June 10, 2022, in advance of the anticipated execution of the engagement letter on June 13, 2022. All searches and analyses were conducted in accordance with Calderwood & Harkness's internal conflict clearance procedures, as set forth in the Firm's General Counsel's Office Policy Manual (revised January 2022), and in compliance with all applicable professional responsibility rules, including the New York Rules of Professional Conduct (22 NYCRR Part 1200), with particular reference to Rules 1.7 (Conflict of Interest: Current Clients), 1.9 (Duties to Former Clients), 1.10 (Imputation of Conflicts of Interest), and 1.18 (Duties to Prospective Clients).
This memorandum is intended solely for internal use by the partners and associates assigned to this matter and by the Firm's General Counsel's Office. It constitutes attorney work product and is protected by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any client or third party without the prior written authorization of the Firm's General Counsel.
II. Summary of Proposed Transaction
The Proposed Transaction involves the offering by TSL and TFPL, as co-issuers, of $400,000,000 in aggregate principal amount of Senior Secured Notes due 2029 (the "Notes"). The key terms and structural elements of the Proposed Transaction, as currently understood based on preliminary discussions with the client and the initial purchasers, are summarized below.
Issuers. The Notes will be co-issued by (i) Thalassa Shipping & Logistics SA, a Greek Société Anonyme (GEMI No. 148276201000), headquartered at 42 Akti Miaouli, Piraeus 185 35, Greece, and (ii) Thalassa Finance Pte. Ltd., a private company limited by shares incorporated in Singapore (UEN 202209345K), with its registered office at 8 Marina Boulevard, #36-02, Marina Bay Financial Centre Tower 1, Singapore 018981. TFPL is a wholly-owned subsidiary of TSL, established as a special purpose financing vehicle for the purposes of the Proposed Transaction.
Offering Structure. The Notes will be offered pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"), to qualified institutional buyers in the United States, and pursuant to Regulation S under the Securities Act to non-U.S. persons outside the United States. The Notes will not be registered under the Securities Act or any state securities laws.
Governing Law. The indenture governing the Notes and the related transaction documents are expected to be governed by Singapore law, with certain ancillary security documents governed by the laws of the relevant jurisdictions in which the collateral is situated.
Use of Proceeds. Net proceeds of the offering are expected to be used to (i) fully refinance the existing bilateral ship-finance facility extended by Meridian Maritime Bank AG (approximately $190,000,000 outstanding), (ii) fully refinance the existing bilateral ship-finance facility extended by Clearwater Shipping Finance Ltd. (approximately $120,000,000 outstanding), and (iii) fund general corporate purposes, including vessel acquisition and fleet maintenance.
Calderwood & Harkness's Proposed Role. Calderwood & Harkness has been engaged to serve as issuer's counsel and lead international counsel in connection with the Proposed Transaction. The Firm's responsibilities will include, among other things, the drafting and negotiation of the indenture, the purchase agreement, the security documents, and related offering materials, as well as the provision of legal opinions as required.
Anticipated Engagement Team. The following attorneys have been identified as members of the engagement team for this matter:
Practice Area. Capital Markets (High-Yield Debt / Shipping & Transportation).
III. Parties Checked
The following is a comprehensive list of all parties, entities, individuals, and service providers identified in connection with the Proposed Transaction against whom conflict searches were conducted. Parties are organized by category and role in the Proposed Transaction.
A. Client and Client Affiliates
The following entities comprise the client group for purposes of this conflict check. Each entity has been separately searched in the Firm's conflict management system.
1. Thalassa Shipping & Logistics SA ("TSL")
• Entity Type: Société Anonyme (Greek corporation)
• Jurisdiction: Greece
• Registration: GEMI No. 148276201000
• Registered Office: 42 Akti Miaouli, Piraeus 185 35, Greece
• Role in Transaction: Primary issuer; co-issuer of the Notes
• Description: Greek-headquartered private shipping and logistics company engaged in the ownership, operation, and commercial management of ocean-going vessels. TSL currently operates a fleet of 50 vessels, consisting of 38 dry-bulk carriers and 12 container feeder vessels. The company was founded in 1997 by the Kallistratos family and remains majority-owned by the family through Kallistratos Maritime Holdings Ltd. (BVI). TSL reported last-twelve-months ("LTM") revenue of approximately $687.4 million and LTM Adjusted EBITDA of approximately $214.6 million.
2. Thalassa Finance Pte. Ltd. ("TFPL")
• Entity Type: Private Company Limited by Shares
• Jurisdiction: Singapore
• Registration: UEN 202209345K
• Registered Office: 8 Marina Boulevard, #36-02, Marina Bay Financial Centre Tower 1, Singapore 018981
• Role in Transaction: Co-issuer of the Notes; wholly-owned special purpose subsidiary of TSL
• Sole Director: Marina Demetriou (CFO of TSL)
3. Kallistratos Maritime Holdings Ltd. ("KMH")
• Entity Type: BVI Business Company
• Jurisdiction: British Virgin Islands
• Registered Office: Craigmuir Chambers, Road Town, Tortola, British Virgin Islands
• Role in Transaction: 72.5% equity holder of TSL; 100% beneficially owned by Dimitrios Kallistratos; expected to provide a limited parent guarantee capped at $50,000,000
4. Thalassa Dry Bulk Operations Ltd. ("TDBO")
• Entity Type: Private Limited Company
• Jurisdiction: Malta
• Role in Transaction: Fleet-owning subsidiary responsible for 22 dry-bulk carriers; expected to serve as a guarantor subsidiary under the Notes indenture
5. Thalassa Container Feeder Ltd. ("TCF")
• Entity Type: Limited Liability Company
• Jurisdiction: Republic of the marshall Islands
• Role in Transaction: Fleet-owning subsidiary responsible for 12 container feeder vessels; expected to serve as a guarantor subsidiary under the Notes indenture
6. Thalassa Port Services FZCO ("TPS")
• Entity Type: Free Zone Company
• Jurisdiction: Dubai, United Arab Emirates
• Role in Transaction: Port logistics subsidiary of TSL; expected to serve as a guarantor subsidiary under the Notes indenture
7. Thalassa Freight Solutions Pte. Ltd. ("TFS")
• Entity Type: Private Company Limited by Shares
• Jurisdiction: Singapore
• Role in Transaction: Freight forwarding subsidiary of TSL; expected to serve as a guarantor subsidiary under the Notes indenture
B. Key Principals and Individuals Associated with Client
The following individuals have been identified as key principals, officers, or directors associated with the client group. Each individual was separately searched in the Firm's conflict management system.
1. Dimitrios Kallistratos — Chairman of the Board of Directors of TSL; controlling shareholder; sole beneficial owner of Kallistratos Maritime Holdings Ltd. (KMH), the 72.5% equity holder of TSL.
2. Elena Kallistratos-Pavlou — Vice Chairwoman of the Board of Directors of TSL; member of the Kallistratos family; oversees fleet management and vessel acquisitions.
3. Spyros Andreou — Chief Executive Officer of TSL; responsible for day-to-day management and operations; primary management contact for the Proposed Transaction.
4. Marina Demetriou — Chief Financial Officer of TSL; sole director of TFPL; primary financial and treasury contact for the Proposed Transaction.
5. Alexandros Theodorakis — General Counsel (in-house) of TSL; primary legal contact on the client side; responsible for coordination with external counsel.
C. Equity Investors / Sponsors
1. Pelagos Capital Partners Fund III LP ("Pelagos Fund III")
• Entity Type: Exempted Limited Partnership
• Jurisdiction: Cayman Islands
• Registered Office: PO Box 309, Ugland House, George Town, Grand Cayman, Cayman Islands
• Role: 18.0% equity holder of TSL; holds board representation (2 of 7 directors); expected to hold observer rights on Notes documentation (no direct party status)
• AUM (Fund III): Approximately $1.4 billion
2. Pelagos Capital Management Ltd.
• Entity Type: Exempted Limited Company
• Jurisdiction: Cayman Islands
• Role: General partner / investment manager of Pelagos Fund III
• Managing Partner: Andreas Vournas
3. Management (ESOP Trust)
• Role: 9.5% equity holder of TSL, held through a management equity incentive plan and employee stock ownership trust
D. Initial Purchasers / Underwriters
1. Anchor Bay Securities LLC ("ABS")
• Entity Type: Limited Liability Company
• Jurisdiction: Delaware, United States
• Regulatory Status: SEC-registered broker-dealer; FINRA member
• Address: 599 Lexington Avenue, 28th Floor, New York, NY 10022
• Role in Transaction: Lead-left bookrunner and lead initial purchaser
• Key Contacts:
• Marcus Reinhardt, Managing Director, Head of Shipping & Transportation DCM
• Priya Subramanian, Director, High-Yield Origination
• David Loh, Vice President, Singapore DCM
2. Halcyon Partners International Ltd. ("HPI")
• Entity Type: Company incorporated in England & Wales
• Regulatory Status: FCA-authorized
• Address: 25 Old Broad Street, London EC2N 1HQ, United Kingdom
• Role in Transaction: Co-manager and co-initial purchaser
• Key Contacts:
• James Ogilvie, Managing Director, European High-Yield
• Sophie Chen, Director, Transportation & Infrastructure
E. Trustee and Security Agent
1. Marlowe Asset Management Trust Company of Singapore Pte. Ltd. ("VTC")
• Entity Type: Private Company Limited by Shares
• Jurisdiction: Singapore
• Registration: UEN 199804782D
• Address: 80 Robinson Road, #02-00, Singapore 068898
• Role in Transaction: Indenture trustee for the Notes
• Key Contact: Richard Tan, Vice President, Corporate Trust
2. Atlas Collateral Agency Pte. Ltd. ("ACA")
• Entity Type: Private Company Limited by Shares
• Jurisdiction: Singapore
• Registration: UEN 200115678R
• Address: 80 Robinson Road, #02-00, Singapore 068898
• Role in Transaction: Security agent / collateral agent for the Notes
• Key Contact: Karen Ng, Associate Director, Collateral Services
F. Existing Lenders (To Be Refinanced)
The following existing lenders to TSL hold outstanding bilateral ship-finance facilities that are expected to be refinanced, in whole or in part, with the net proceeds of the Notes offering. These parties warrant heightened scrutiny in the conflict check process because the offering may be viewed as adverse to their interests insofar as their facilities are being taken out.
1. Meridian Maritime Bank AG
• Entity Type: Aktiengesellschaft (Swiss corporation)
• Address: Talstrasse 18, 8001 Zürich, Switzerland
• Role: Existing bilateral ship-finance lender to TSL; approximately $190,000,000 outstanding; facility to be fully refinanced with Notes proceeds
• Key Contact: Hans-Peter Gerber, Senior Director, Shipping Finance
2. Clearwater Shipping Finance Ltd.
• Entity Type: English private limited company
• Address: 1 Fleet Place, London EC4M 7RA, United Kingdom
• Role: Existing bilateral ship-finance lender to TSL; approximately $120,000,000 outstanding; facility to be fully refinanced with Notes proceeds
• Key Contact: Emma Blackwood, Director, Structured Ship Finance
G. Other Counterparties and Service Providers Identified
The following additional parties have been identified as counterparties, service providers, or counsel involved in the Proposed Transaction. While conflicts with these parties are less likely to present material issues, each was searched in the Firm's conflict management system as a matter of standard practice.
1. Polaris Ratings Group Ltd. — Bermuda exempted company; ESMA-registered credit rating agency; engaged to provide a credit rating for the Notes.
2. Oceanic Credit Assessments Inc. — Delaware corporation; SEC-registered Nationally Recognized Statistical Rating Organization ("NRSRO"); engaged to provide a credit rating for the Notes.
3. Kestrel & White Chartered Accountants — Greek Société Anonyme; independent auditor to TSL; will provide comfort letters in connection with the offering.
4. Compass Marine Valuations Ltd. — English private limited company; independent fleet appraiser; engaged to provide vessel appraisals for collateral valuation purposes.
5. Whitfield & Crane LLP — International law firm; counsel to the Initial Purchasers (ABS and HPI). Searched as an adverse-party check, given that Whitfield & Crane's clients (the Initial Purchasers) will be counterparties to TSL in the purchase agreement negotiations.
6. Delphi & Karidis LLP — Greek law firm; engaged as issuer's Greek local counsel, to work alongside Calderwood & Harkness as co-counsel on matters of Greek corporate law and regulatory compliance. Searched as a co-counsel check.
7. Rajendra & Osman LLP — Singapore law firm; engaged as issuer's Singapore local counsel, to work alongside Calderwood & Harkness as co-counsel on matters of Singapore law, including the governing law of the indenture and related transaction documents. Searched as a co-counsel check.
8. Thornton Ashworth LLP — International law firm; counsel to the Trustee (VTC) and the Security Agent (ACA). Searched as an adverse-party check.
IV. Methodology
The conflict check described in this memorandum was conducted in accordance with Calderwood & Harkness's standard conflict clearance procedures, as set forth in the Firm's General Counsel's Office Policy Manual. The following methodology was employed:
1. Centralized Conflict Management System ("CMS"). A comprehensive full-text search was conducted of the Firm's centralized conflict management database, which contains records of all current and former client representations, adverse parties, related parties, and key individuals associated with each matter. The CMS is maintained by the Firm's General Counsel's Office and is updated on a continuous, real-time basis by intake personnel and practice group administrators. As of June 8, 2022, the CMS contained records relating to approximately 147,000 matters and approximately 412,000 unique party entries.
2. Search Terms. Searches were conducted against all party names, short names, trade names, and known aliases for each entity and individual listed in Section III of this memorandum. A complete list of all search strings used is set forth in Appendix A. To minimize the risk of false negatives, wildcard and partial-match searches were employed in addition to exact-match queries. Searches were conducted using both the full legal name of each entity and commonly used abbreviations (e.g., "TSL," "Thalassa," "Kallistratos," "KMH," "Pelagos," "Anchor Bay," "Meridian Maritime," etc.).
3. Individual Searches. Additional searches were conducted against the names of all key individuals listed in Section III.B (Key Principals and Individuals Associated with Client) and Section III.C (Equity Investors / Sponsors), including Dimitrios Kallistratos, Elena Kallistratos-Pavlou, Spyros Andreou, Marina Demetriou, Alexandros Theodorakis, and Andreas Vournas.
4. Cross-Referencing. CMS search results were cross-referenced against the following additional sources to ensure completeness:
(a) The Firm's current active matter list, as maintained by the Firm's Finance Department;
(b) The Firm's recently closed matters database, covering all matters closed within the past 36 months (i.e., from June 2019 to the present);
(c) The Firm's lateral hire portability lists, which track client relationships brought to the Firm by lateral partners and associates hired within the past 36 months;
(d) The Firm's declined and prospective engagement logs, which record all matters that were declined or for which an engagement was considered but not consummated within the past 36 months.
5. Practice Group and Sector Review. In addition to the automated CMS searches, the undersigned manually reviewed the Capital Markets practice group's client roster and the Firm's Shipping and Transportation sector client list to identify any potential conflicts that may not have been captured by the automated search. Both reviews were completed on June 9, 2022, and no additional conflicts were identified beyond those described in Section V of this memorandum.
6. Heightened Scrutiny — Existing Lenders. Given that proceeds of the Notes offering will be used, in part, to fully refinance the existing bilateral ship-finance facilities extended by Meridian Maritime Bank AG ($190,000,000 outstanding) and Clearwater Shipping Finance Ltd. ($120,000,000 outstanding), heightened scrutiny was applied to the conflict search results for these two parties. In particular, the search was designed to identify any existing representations of, or adverse to, Meridian Maritime Bank AG and Clearwater Shipping Finance Ltd. across all practice groups and offices of the Firm. The rationale for this heightened scrutiny is that the offering may be viewed as adverse to these lenders' interests insofar as their facilities are being taken out and their lending relationships with TSL are being terminated. Although the refinancing is expected to be a consensual full payoff and discharge (and therefore not adversarial in the traditional sense), the Firm's conflict clearance procedures require that such relationships be flagged and analyzed with care.
7. Timing. The initial CMS search was run on June 8, 2022, at 9:15 a.m. Eastern Time. Follow-up searches and manual reviews were completed on June 9, 2022. The final search was refreshed on June 10, 2022, at 8:00 a.m. Eastern Time, to capture any matters opened or updated after the initial search date. No new results were identified in the refreshed search.
V. Results of Conflict Search
The results of the conflict search are set forth below, organized by party or party group. For each party, the memorandum describes the search results, the assessment of any potential conflict, and the conclusion.
A. Thalassa Shipping & Logistics SA and Affiliates (TSL, TFPL, KMH, TDBO, TCF, TPS, TFS)
A comprehensive search was conducted for each of the seven entities comprising the Thalassa client group: Thalassa Shipping & Logistics SA, Thalassa Finance Pte. Ltd., Kallistratos Maritime Holdings Ltd., Thalassa Dry Bulk Operations Ltd., Thalassa Container Feeder Ltd., Thalassa Port Services FZCO, and Thalassa Freight Solutions Pte. Ltd. Searches were run against the full legal name of each entity, all known abbreviations and short names (e.g., "TSL," "TFPL," "KMH," "TDBO," "TCF," "TPS," "TFS," "Thalassa"), and relevant trade names and d/b/a designations.
No current representations of any Thalassa entity were identified in the CMS. No prior representations of any Thalassa entity were identified in the CMS, including in the recently closed matters database covering the past 36 months. No Thalassa entity appeared as an adverse party, related party, or interested party in any current or prior matter of the Firm. No lateral-hire portability conflicts were identified with respect to any Thalassa entity.
Result: CLEAR.
B. Dimitrios Kallistratos, Elena Kallistratos-Pavlou, Spyros Andreou, Marina Demetriou, Alexandros Theodorakis
Searches were conducted for each of the five key individuals identified in Section III.B. Each individual's full name was searched, along with common variants and alternate spellings. No current or prior representations of any of these individuals were identified in the CMS. None of these individuals appeared as adverse parties, related parties, or interested parties in any current or prior matter of the Firm.
Result: CLEAR.
C. Pelagos Capital Partners Fund III LP / Pelagos Capital Management Ltd. / Andreas Vournas
Searches were conducted for each of the Pelagos entities and for Andreas Vournas, the managing partner of Pelagos Capital Management Ltd. No current representations of any Pelagos entity or of Andreas Vournas were identified in the CMS. No prior representations were identified in the CMS, including in the recently closed matters database covering the past 36 months. No Pelagos entity or Andreas Vournas appeared as an adverse party, related party, or interested party in any current or prior matter of the Firm.
It is noted that Pelagos Capital Partners Fund III LP, as a minority equity holder of TSL, will hold observer rights on the Notes documentation but is not expected to be a direct party to the transaction documents (i.e., Pelagos will not be a signatory to the indenture, the purchase agreement, or the security documents). Pelagos's observer-rights status reduces the likelihood of any conflict arising from its involvement in the Proposed Transaction.
Result: CLEAR.
D. Anchor Bay Securities LLC
Searches were conducted for Anchor Bay Securities LLC ("ABS") and relevant variants (including "Anchor Bay," "ABS," and "Anchor Bay Securities"). The search returned one result:
Prior Matter Identified. Calderwood & Harkness previously represented ABS in a limited capacity as co-manager in a convertible notes offering for a technology company (the "2019 ABS Matter"). The 2019 ABS Matter was opened in September 2019 and closed in February 2020. The engagement involved Calderwood & Harkness's Technology M&A practice group, with no involvement of any member of the Capital Markets team assigned to the Proposed Transaction. The 2019 ABS Matter involved an entirely different issuer, different co-managers, different transaction structure, and different industry sector. There is no ongoing relationship, retainer, or continuing obligation between Calderwood & Harkness and ABS arising from the 2019 ABS Matter.
Assessment. ABS is the lead-left bookrunner and lead initial purchaser in the Proposed Transaction. In the Proposed Transaction, Calderwood & Harkness will represent the issuer (TSL), not ABS. Whitfield & Crane LLP will serve as counsel to the Initial Purchasers, including ABS. The prior representation of ABS in the 2019 ABS Matter does not create a conflict of interest under Rule 1.9 (Duties to Former Clients) of the New York Rules of Professional Conduct because (i) the prior matter is closed and no attorney-client relationship currently exists between Calderwood & Harkness and ABS, (ii) the Proposed Transaction is not substantially related to the 2019 ABS Matter, and (iii) no confidential information obtained from ABS during the 2019 ABS Matter is relevant to or could be used to the disadvantage of ABS in the Proposed Transaction. Additionally, because Calderwood & Harkness is not representing ABS in the Proposed Transaction, the Firm is not acting adversely to a current client. No waiver or consent is required.
Result: CLEAR — no conflict; no waiver required.
E. Halcyon Partners International Ltd.
Searches were conducted for Halcyon Partners International Ltd. ("HPI") and relevant variants (including "Halcyon Partners," "HPI," and "Halcyon"). No current or prior representations of HPI were identified in the CMS. HPI did not appear as an adverse party, related party, or interested party in any current or prior matter of the Firm.
Result: CLEAR.
F. Marlowe Asset Management Trust Company of Singapore Pte. Ltd.
Searches were conducted for Marlowe Asset Management Trust Company of Singapore Pte. Ltd. ("VTC") and relevant variants (including "Marlowe Asset Management Trust," "VTC," and "Marlowe Asset Management Trust Singapore"). The search returned two results:
Prior Matters Identified. Calderwood & Harkness worked on two prior capital markets transactions — one in 2018 and one in 2020 — in which VTC served as indenture trustee. In each case, Calderwood & Harkness represented the issuer, not VTC. VTC's role in both prior matters was limited to its institutional capacity as indenture trustee. No attorney-client relationship was established between Calderwood & Harkness and VTC in either prior matter. VTC was identified in the CMS as a "Related Party — Institutional Trustee" in connection with both prior matters, consistent with the Firm's standard practice for tracking institutional trust companies that appear in capital markets transactions.
Assessment. VTC's role as indenture trustee in the Proposed Transaction is consistent with its institutional trust business and with its role in the two prior matters. Calderwood & Harkness did not represent VTC in either prior matter and does not currently represent VTC. No attorney-client relationship has existed between Calderwood & Harkness and VTC. No conflict arises from VTC's participation in the Proposed Transaction. Thornton Ashworth LLP will serve as counsel to VTC in the Proposed Transaction, and Calderwood & Harkness will have no advisory role with respect to VTC.
Result: CLEAR.
G. Atlas Collateral Agency Pte. Ltd.
Searches were conducted for Atlas Collateral Agency Pte. Ltd. ("ACA") and relevant variants (including "Atlas Collateral," "ACA," and "Atlas Collateral Agency"). No current or prior representations of ACA were identified in the CMS. ACA did not appear as an adverse party, related party, or interested party in any current or prior matter of the Firm.
Result: CLEAR.
H. Meridian Maritime Bank AG
Searches were conducted for Meridian Maritime Bank AG and relevant variants (including "Meridian Maritime," "Meridian Maritime Bank," "Meridian Bank," and "MMAG"). The search returned one result that requires detailed analysis.
Active Matter Identified. Calderwood & Harkness's Banking & Finance practice group in the Firm's London office currently represents Meridian Maritime Bank AG as lender's counsel in an unrelated European project finance transaction (the "Meridian Active Matter"). The Meridian Active Matter involves a syndicated lending facility for a North Sea offshore wind project. The Meridian Active Matter is led by a partner in the Banking & Finance group with no involvement of any member of the Capital Markets team assigned to the Proposed Transaction. The Meridian Active Matter involves different parties, a different industry sector, different transaction structures, and entirely different subject matter from the Proposed Transaction. The Meridian Active Matter remains active and ongoing as of the date of this memorandum.
Assessment. This is the key potential conflict identified in the conflict search. The analysis proceeds as follows:
Nature of the Conflict. Meridian Maritime Bank AG is an existing bilateral ship-finance lender to TSL, with approximately $190,000,000 in principal amount outstanding under its facility. The proceeds of the Notes offering will be used, in part, to fully refinance the Meridian facility. Accordingly, the Proposed Transaction involves the payoff and termination of Meridian's lending relationship with TSL. While the refinancing is expected to be a consensual full payoff and discharge — and is therefore not adversarial in the traditional sense — Calderwood & Harkness would effectively be assisting TSL in a transaction that results in the elimination of Meridian's lending exposure to TSL and the termination of Meridian's ship-finance facility.
Concurrently, Calderwood & Harkness's Banking & Finance group in London represents Meridian as lender's counsel in an unrelated project finance transaction. The simultaneous representation of Meridian (in the Meridian Active Matter) and TSL (in the Proposed Transaction) gives rise to a potential concurrent-client issue under Rule 1.7 of the New York Rules of Professional Conduct, which prohibits a lawyer from representing a client if the representation involves a concurrent conflict of interest — i.e., if there is a significant risk that the representation of one client will be materially limited by the lawyer's responsibilities to another client.
Mitigating Factors. Several factors mitigate the severity of this potential conflict:
(a) Calderwood & Harkness's role in the Proposed Transaction does not involve representing the Firm adversely to Meridian in a litigation, contested matter, or adversarial proceeding. The refinancing of the Meridian facility is a voluntary prepayment by TSL pursuant to the terms of the existing facility agreement.
(b) The Proposed Transaction and the Meridian Active Matter are entirely unrelated in substance. They involve different clients, different industries, different geographies, different practice groups, different engagement teams, and different transaction structures. There is no overlap in subject matter, personnel, or confidential information.
(c) The Banking & Finance team representing Meridian in the Meridian Active Matter was consulted regarding the Proposed Transaction. The relationship partner responsible for the Meridian Active Matter confirmed, on June 9, 2022, that the proposed engagement of Calderwood & Harkness as issuer's counsel to TSL does not compromise the Banking & Finance group's representation of Meridian in the Meridian Active Matter, and that the two matters are entirely unrelated in substance. The relationship partner further confirmed that no confidential information obtained from Meridian in the Meridian Active Matter is relevant to or could be used in connection with the Proposed Transaction.
(d) The refinancing of the Meridian facility is expected to be a standard consensual payoff in which Meridian will receive full payment of all outstanding principal, accrued interest, and breakage costs (if any), with no loss or impairment to Meridian.
Conclusion. A potential concurrent-client issue exists but is manageable under Rule 1.7(b) of the New York Rules of Professional Conduct, which permits a lawyer to represent a client notwithstanding a concurrent conflict of interest if: (i) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (ii) the representation is not prohibited by law; (iii) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (iv) each affected client gives informed consent, confirmed in writing.
Recommended Course of Action. The following steps are recommended to resolve this potential conflict:
(i) Obtain informed written consent from both TSL and Meridian Maritime Bank AG, acknowledging the concurrent representation and waiving any conflict arising therefrom; or, in the alternative,
(ii) Establish an ethical screen between the Capital Markets team working on the Proposed Transaction and the Banking & Finance team working on the Meridian Active Matter, to ensure that no confidential information is shared between the two engagement teams.
Given that the Meridian refinancing is a standard consensual payoff and discharge, and given the absence of any substantive overlap between the two matters, the recommended approach is to proceed with disclosure to both clients and to obtain waiver/consent from Meridian through the Meridian relationship partner.
Status of Consent/Waiver. A waiver request was circulated by the undersigned to the Banking & Finance team (attention: the Meridian relationship partner) on June 9, 2022. Confirmation of consent was received from the Meridian relationship partner on June 10, 2022. The Meridian relationship partner confirmed that Meridian Maritime Bank AG has been informed of Calderwood & Harkness's proposed representation of TSL in the Notes offering and has no objection to the engagement. The correspondence relating to this waiver is referenced in Appendix B to this memorandum.
TSL's consent to the concurrent representation will be obtained through the engagement letter, which is expected to be executed on June 13, 2022. The engagement letter will include a disclosure of the Firm's concurrent representation of Meridian in an unrelated matter and a waiver of any conflict arising therefrom.
Result: POTENTIAL CONFLICT IDENTIFIED — CLEARED with consent/waiver. Meridian's consent was obtained on June 10, 2022. TSL's consent is to be embedded in the engagement letter dated June 13, 2022.
I. Clearwater Shipping Finance Ltd.
Searches were conducted for Clearwater Shipping Finance Ltd. and relevant variants (including "Clearwater Shipping," "Clearwater Shipping Finance," "Clearwater," and "CSFL"). No current or prior representations of Clearwater Shipping Finance Ltd. were identified in the CMS. Clearwater did not appear as an adverse party, related party, or interested party in any current or prior matter of the Firm. No lateral-hire portability conflicts were identified.