Environmental Aspects of Transactions and SEC Disclosure
Environmental Aspects of Transactions
Identifying realistic environmental risks, and making an informed assessment and/or allocation of such risks, are key components to business transactions cutting across all industries and deal structures. Whether one needs to develop a pragmatic diligence strategy, or simply complete due diligence within a limited time frame, Sidley has the experience and resources to assemble a skilled team and to present the results in an understandable fashion.
We have extensive experience in both domestic and international deals ranging from straightforward transfers of real property, to complex business acquisitions or divestitures and related financing, capital markets transactions and project finance. We are also intimately familiar with required environmental disclosures under the securities laws, with state property transfer laws, and with parent and successor corporation liability theories and their effects on risk allocation. We frequently advise clients in the bankruptcy and workout area, providing advice on structuring workouts to minimize the risk of environmental liability, and the risks of foreclosure on contaminated property. And, we have assisted both Brownfield sellers and Brownfield redevelopers in structuring brownfield projects, securing available financial incentives and developing effective land use controls to minimize future risks.
Our national coverage and interoffice teamwork ensures national quality and consistency, coupled with substantial local experience in key states, such as California, Illinois and New York. Our team approach also ensures that we are abreast of the latest legal developments impacting transactions.
Some of our recent representations include:
- Representing energy, utility and transportation clients in various transactions, including a major auction divestiture of power-generating assets and the acquisition of an interstate gas pipeline;
- Representing issuers and underwriters in the sale of securities by natural gas processing companies, biofuel producers, mining companies, REITs and other entities;
- Advising lenders and financial investors regarding environmental risk implications in exchanging debt for equity as part of financial restructuring or bankruptcy reorganizations;
- Representing multinational, domestic and non-U.S. businesses in acquisitions and divestitures in industries such as aerospace, appliances, automotive, bioengineering, chemicals, diversified manufacturing, food processing, grain milling, hotels, printing, radio/television, shipping/transportation, software and telecommunications;
- Assisting clients working with environmental counsel and consultants in other countries to appropriately identify and address cross-border or foreign environmental risks;
- Assisting residential home builders and commercial developers in connection with the development of greenfield properties – where wetlands, Endangered Species Act and other resource management issues often predominate – and brownfield properties – where legacy contamination and risk management often present material challenges; and
- Counseling clients in connection with various risk mitigation strategies, including a variety of environmental insurance options, as well as contractual indemnities.
SEC Disclosure
We regularly advise corporations on how to comply with SEC requirements governing disclosure of environmental liability, especially the SEC regulations known as Description of Business, Legal Proceedings and Management’s Discussion & Analysis of Financial Condition and Results of Operations. Our services include: (1) counseling clients about developing procedures to gather the environmental information needed to prepare registration statements, 10-Ks, 10-Qs and financial statements; (2) assisting registrants draft appropriate environmental disclosure; (3) advising clients about responding to environmental inquiries in SEC comment letters; and (4) representing underwriters in offerings. In the absence of SEC guidance about disclosure of climate change impacts, we are consulting with clients about how to apply existing SEC regulations to those impacts and about how their voluntary climate change disclosures should be considered while drafting SEC filings. Further, we monitor developments in financial accounting standards, including those relating to accounting treatment of contingent environmental liabilities.
Examples of our work include:
- Advising a computer chip manufacture about environmental disclosure requirements during an IPO and coordinated diligence with counsel for underwriters;
- Counseling a Western electric utility about how to address climate change issues in its 10-K and analyzed how other utilities were disclosing those issues;
- Working closely with a diversified multinational corporation and its accountants in performing environmental due diligence which focused on the adequacy of the target’s environmental reserves;
- Assisting a variety of national and international manufacturing clients in devising environmental management systems so that environmental liabilities and environmental performance can be tracked and data presented in formats useful for management’s evaluation of SEC and similar reporting obligations; and
- Assisting an entertainment corporation perform environmental due diligence, and draft appropriate disclosure, in connection with a securities offering.
