PSALM taps Pinsent for $3.4M Lehman case
STATE-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) has tapped an international legal counsel for its claims against the Lehman Brothers Special Financing Inc.
In a statement, Emmanuel R. Ledesma, Jr., PSALM president and chief executive, said that they have engaged the services of Pinsent Masons to help run after the agency’s $ 3.4- million claim with Lehman Brothers.
PSALM made the announcement after it issued the notice of award to Pinsent Masons for the consultancy service on Jan. 31, 2012. PSALM conducted negotiated bidding with Pinsent Masons after the project underwent two failed biddings.
Pinsent Masons’s original bid of P18.63 million was lowered to P18.33 million after further negotiations.
Pinsent Masons is an international law firm that provides a wide range of commercial legal advice and support services in specific market sectors, such as banking, energy, and insurance. The law firm operates in the United Kingdom, the Gulf, and the Asia-pacific region. It has signifi- cant experience in hedging and other derivative transactions using International Swaps and Derivatives Association, Inc. (ISDA) documentation and has handled various bankruptcy litigation cases in New York.
Ledesma also said that PSALM did not incur losses from the $100million Principal-only-swap (POS) hedging transaction it entered into with LBSF in 2007.
Under the POS deal, PSALM, which is tasked to manage National Power Corp.’s assets and liabilities, agreed to pay an annual expense premium of 2.687 percent for the said amount for 19 years.
In exchange, PSALM, or the government, has the right to buy dollars at P44.788 in 2028 regardless of the foreign exchange rate at that time. Napocor’s total debt stands at $16.5 billion. When LBSF went bankrupt in 2008, PSALM immediately invoked the ISDA agreement, terminated the transaction on Nov. 3, 2008, and replaced it with a new POS with the same terms and conditions.
“The replacement ensures the continuous protection of PSALM’S trans- action that it initially made with Lehman Brothers,” Ledesma said.
“The value of the Lehman swap that was replaced may now be sold in the derivatives market for up to approximately $12.85 million as of Nov. 2011,” he added.
Pinsent Masons will provide legal services to facilitate the claims filed by PSALM before the New York bankruptcy court representing the cost of the replacement and other expenses, such as legal fees and damages as may be allowed under the provisions of the ISDA.