Suramericana and Grupo Nacional de Chocolates Complete $250 Million Cross-Border Transaction
Holland & Knight's International and Cross Border Transactions team represented Colombian corporations Suramericana de Inversiones SA (Suramericana) and Grupo Nacional de Chocolates SA (Chocolates), holders of 6.9 percent and 2 percent, respectively, of the equity of Almacenes Exito SA (Exito), the largest retailer in Colombia, in a complex transaction that involved granting options to Citigroup to acquire their Exito shares. At the same time, French grocery retailer Casino Guichard-Perrachon et Cie. (Casino), which owns approximately 60 percent of Exito and had agreed to cede to Citigroup options that it had from Suramericana and Chocolates to buy their Exito shares, entered into a cash settlement total return swap transaction with Citicorp for the Exito shares.
The Chocolates portion of the transaction involved a share purchase agreement between Chocolates and the U.S. offices of Citigroup and an indemnity agreement between Citigroup and Chocolates which is assignable by Citigroup to Chocolates. The Suramericana portion of the transaction involved a put and call agreement (PACA) between Suramericana and the British offices of Citigroup and an indemnity agreement between Citigroup and Casino which is assignable to Suramericana. The PACA gives Citigroup the option to buy the stake in Exito held by Suramericana starting December 2009. Casino has up to three years and three months after the PACA option exercise to buy the Exito shares from Citigroup. The value of the transaction is estimated to be in excess of $250 million.
The representation essentially related to the transfer of a $250 million interest in a Colombian corporation not doing any business in the U.S. to a large, publicly traded, French food concern. While no U.S. taxes were involved, the protection that the Holland & Knight client needed against potential millions of dollars of Colombian, U.K. and French tax liabilities employ well known and accepted principles of cross-border tax representation, covenant and tax indemnity provisions found in New York contracts.