Corrs partner with Foster's on sale of Kent Brewery site

24 July 2007

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Corrs has successfully advised Carlton and United Breweries (CUB), the Australian beer and spirits division of Foster's Group (Foster's), on the $208 million sale of the former Kent Brewery site in Sydney to Frasers Property.

As Foster’s CEO, Trevor O’Hoy, said in his ASX announcement on 12 June, 2007: “This is a great outcome for Foster’s, Frasers Property and the city of Sydney. It represents an opportunity for a new lease of life for this 160 year old brewery site – while preserving its significant local heritage”.

The site, covering nearly 5.8 hectares, is probably the biggest CBD fringe site to be sold in the last five years and has been called the “largest inner-city development site ever offered in Australia”. It was sold with concept approval for a “mixed residential, office, retail, entertainment and dining precinct, while preserving the site heritage and introducing parks and open space”.

The sale was extremely complex as the site is subject to 29 titles, five liquor licences and a range of issues such as heritage buildings and items, site contamination, a current Land and Environment Court appeal challenging the validity of the Minister's Concept Plan Approval and a commercial lease-back to Foster's.

In addition to the sale contract, the sale required the completion of an environmental indemnity deed, two voluntary planning agreements, liquor licence transfers, hand over of a Land and Environment Court appeal, the negotiation of a lease-back and “moving a mountain of paper in order to close the deal on time”.

The international marketing of the sale, facilitated by Colliers using an open market expression of interest, attracted 12 bids. The process ran to an extremely tight timeframe as the Foster's Board needed completion of the sale by the end of the financial year. The resulting drop dead completion date of 29 June 2007 was met, with completion occurring at 4.55pm that day.

Christine Covington, lead partner of the Corrs project team, said: “with such a tight timeframe, it would have been impossible to close the transaction on time without a collaborative approach with Foster's property and in-house legal team. Paul Conroy in legal and Chris Noble and David Ford on the property side made a great team. Paul Conroy, despite concurrently juggling several deals at Foster's, was available at all times of the day and night to keep our negotiations moving so the program did not slip”.

Paul Conroy, Foster’s Legal Affairs Director, comments: “The collaborative approach allowed all parties to quickly focus on the key legal and commercial issues when finalising negotiations. The Corrs team did more than just focus on the legal issues; they were the ones all parties turned to when trying to understand the relevant environmental, planning and political background to this site”.

"The Corrs team's detailed knowledge of the site and its myriad of historical complexities allowed them not only to meet the tight transaction timeframes sought by Foster's but to tackle the challenge of distilling a vast volume of due diligence material into a format that would allow potential purchasers to understand the site in a short space of time”, he said.

Christine Covington advised on the property aspects of the deal, Craig Milner, one of Corrs newly promoted partners, handled the tax matters, and Eugenia Kolivos advised on IP issues. They were supported by Stephen Kelly, Darren Roll, Jessica Falvey and Maureen Joseph, together with Corrs Legal Technology Solutions Group, who managed the virtual dataroom.

The dataroom demonstrated the benefits of using legal technology to enhance a commercial property sale process. Christine comments: “The Kent Brewery is an icon site in Sydney and with anticipated overseas bidder interest, we knew the dataroom would get a real workout”.

“To ensure consistency of information from the seller's side, Corrs recommended each of the key project consultants should record a DVD to be streamed through the dataroom. In this way, the vendor presentation could be replayed by bidders as often as required, providing a roadmap through the extensive due diligence pack. Furthermore, Foster's was comfortable that each bidder would receive a uniform information flow that was vetted in advance of release”, she said.

The successful completion of this complex deal continues Corrs long and deep history in advising Foster’s on its business needs. As Corrs partner Simon Morris recently stated: “Foster’s is one of Australia’s great companies, a market leader in many sectors and for us as advisers it is always a great compliment to assist their management in implementing new transactions and strategies”.

Corrs has been advising Foster's on the sale of the Australian and New Zealand components of its Wine Clubs and Services Business, which was also completed in June 2007. The business, sold to funds managed or advised by Australian private equity firm, Archer Capital, includes Cellarmaster Wines and Vinpac International in Australia, Cardmember Wines and Carters in New Zealand and an investment in Wine Buzz in Japan.