Greenwich NatWest and National Westminster Bank, subsidiaries of The Royal Bank of Scotland, are suing a law firm for its role in the structuring and documentation of a CDO for them some six years ago.
Sabre Funding No. 1 was structured by the London office of the New York-based firm in 1999. The $2.25 billion cash CDO is a resecuritized portfolio backed by European, Japanese and U.S. ABS, MBS and CDOs, according to Moody's Investors Service. The notes were first issued in December 1999, with a tap issue following in June of 2000.
The firm declined to comment on the matter, other than, "we consider the claim to have no merit and do not propose to comment further on the proceedings," said Mike Ford, a spokesman for Weil Gotshal & Manges. RBS did not return a request for comment.
In June 2004, the CDO's noteholders voted to terminate the outstanding transaction and transfer all of the remaining bonds, investments and cash held by the structure to the class A1 noteholders on a pro rata basis. The class A3 notes were redeemed at par, and the B1 and B2 classes were redeemed at 62% and 27% of their outstanding principal amounts, respectively, according to Fitch Ratings and Moody's.
The triple-A rated A1A, A1B and A1C notes, totaling $330 million each, were due in 2040, and carried initial pricing of Libor plus .08%. Royal Exchange Trust Company Limited served as trustee on the deal.
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