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“How can we optimise protection for our risk-averse blue chip client, by structuring a deal to support its acquisition of a business with a contaminated land holding?” The problem Late on in a corporate transaction, environmental due diligence undertaken by City Law firm Travers Smith identified a site with potential environmental issues arising from its previous land use. The question for Travers Smith was; “How can we optimise protection for our risk-averse blue chip client, by structuring a deal to support its acquisition of a business with a contaminated land holding?” In response Travers Smith had developed an innovative risk-transfer solution to protect its risk sensitive client, involving a package of contractual protection and insurance. An environmental insurance broker had provided input but Travers Smith, prior to closure of the deal, sought additional external support to interrogate the effectiveness of the proposed structure. With a decade-long track record of structuring more than 250 environmental risk-transfer solutions, to facilitate often complex property and corporate deals, Sykes Environmental was approached for advice. Our solution The benefits With input from the client’s retained Environmental Consultants, we identified various loss scenarios. These scenarios were then tested against the wording of the risk solution, including a worse case scenario involving multiple losses. This test identified that the proposed innovative solution was robust but additional policy modifications enhanced still further the protection afforded by the policy. The service provided by Sykes Environmental had the following benefits: • It provided reassurance that, although innovative, the risk transfer solution that Travers Smith had conceived for its client was robust; • It helped to enhance the client’s protection, and increase its comfort levels as it proceeded with its transaction; and • It achieved an overall broader and more cost-effective risk protection for the client. “ Stephen Sykes of Sykes Environmental, with his unique legal and environmental insurance experience, was the obvious choice for a robust second opinion on a novel but deal critical risk transfer structure. Very approachable and responsive.” Steven McNab Environment, Health, Safety and Planning Travers Smith The Coach House Cookhams Sharpthorne West Sussex RH19 4HU Telephone: +44 (0)1342 811938 email: [email protected] web: www.sykesenvironmental.com