CDT Roundup: 12 Deals, 9 Firms, 115 Lawyers, $4.44B

V&E Advises Enviva on $347M Plant Acquisitions, $200M Placement

On June 18, Enviva Partners announced two separate purchases of wood pellet production plants, one in Waycross, Ga., the other in Greenwood, S.C.

Teams from Vinson & Elkins advised on both acquisitions, as well as a $200 million private placement to help finance the deals.

Enviva acquired the Waycross plant through its acquisition of Georgia Biomass Holding LLC from innogy SE and one of its subsidiaries for $175 million in cash. As part of the acquisition, Enviva acquires the company’s long term take-or-pay contracts that remain in effect through 2024. As part of the purchase, Enviva also acquires the company’s long-term terminal lease at the Port of Savannah.

A V&E team led by New York partner Caroline Blitzer Phillips advised Enviva with help from Houston senior associate Daniel McEntee. The team also included a broad swath of lawyers from Houston and Dallas: corporate partners Ryan Carney and David Cole and associates Dan Henderson and Christine Mainguy on tax, partner Ramey Layne (corporate); counsel Scot Dixon (real estate); partner Brian Bloom, counsel Christie Alcalá and senior associate Kristy Fields (executive compensation/benefits); partner Sean Becker (labor/employment); and counsel Sarah Mitchell and senior associate Robert Stelton-Swan (insurance).

To acquire the Greenwood plant, Enviva paid $132.0 million in cash along with the assumption of a $40 million third-party promissory note bearing interest at 2.5 percent per year. As with the Waycross acquisition, Enviva acquired the plant’s existing contracts, as well as a waiver on certain costs over the $28 million Enviva has promised to invest in a planned expansion.

In connection with the Greenwood Acquisition, Enviva’s sponsor has agreed to assign to the Partnership five firm, long-term, take-or-pay off-take contracts with creditworthy Japanese counterparties (the “Associated Off-Take Contracts”) that have maturities between 2031 and 2041, aggregate annual deliveries of 1.4 million metric tons per year (“MTPY”), and an aggregate revenue backlog of $5.3 billion.

The V&E team advising Enviva on the Greenwood acquisition was also led by Caroline Blitzer Phillips with lawyers from New York assisted by Houston partner Ryan Carney and associate Dan Henderson (tax); partner Ramey Layne (corporate); and counsel Scot Dixon (real estate).

On the finance side, Bracewell’s Will Anderson advised Evercore, financial advisor to the conflicts committee of Enviva’s board of directors.

There was a third capital markets leg connected to the two acquisitions. Enviva also announced that it has signed a purchase agreement with investors for the sale of $200.0 million in common units in a private placement (the “Private Placement”) to finance a portion of the combined purchase price of the acquisitions.

V&E also advised the Partnership on the private placement. The team was led by partner Ramey Layne with assistance from New York counsel Chris Mathiesen, Houston senior associate Jessica Lewis and associates Maggie Webber and Madison Guidry, also of Houston.

Latham & Watkins advised the placement agents, with a team led by Houston corporate partner Michael Chambers and New York-based partner Stelios Saffos. The team also included Houston associates Eric Schoppe, Erin Lee, Jordan Mack, and Sarah Dunn.

On total investment of $375 million, the acquisitions are expected to generate net income in the range of $18.7 million to $22.7 million and adjusted EBITDA in the range of $56.0 million to $60.0 million.

The ValueAct Spring Fund, a leading investor in companies with environmental and social value, anchored the private placement and ValueAct’s Chairman, Jeff Ubben, has agreed to join the Eviva board.

“The Greenwood and Georgia Biomass acquisitions are fundamentally transformative for Enviva’s scale and diversification,” said John Keppler, Chairman and Chief Executive Officer of Enviva. “Not only are we increasing Enviva’s fully contracted production capacity by 35 percent, but we are doing so in new fiber baskets, with new deep-water terminal infrastructure, and with new customers under new long-term, take-or-pay off-take contracts that we expect will enable us to continue our track record of generating durable cash flows and growing our distributions sustainably well into the future.”

V&E Advise Tortoise Acquisition Corp. Merger With Hyliion

Austin-based Hyliion Inc., a developer and manufacturer of electrified power trains for Class 8 commercial vehicles, announced June 19 that it has agreed to merge with Tortoise Acquisition Corp.

The combined company, to be named Hyliion Holdings Corp. will be traded on the New York Stock Exchange under the symbol HYLN and is expected to have a pro forma market capitalization exceeding $1.5 billion.

Tortoise, an energy-focused SPAC backed by Lightfoot Capital Partners, was advised by a Vinson & Elkins team led by Houston corporate partner Ramey Layne with two New York lawyers and Houston counsel Doug Lionberger. Other team members included Houston senior associate Robbie Hopkins, partner Devika Kornbacher and Austin senior associate Ben Cukerbaum on intellectual property matters; partner Jason McIntosh, senior associate Brian Russell and associate Daniel Henderson on tax matters; partner David D’Alessandro and counsel Missy Spohn on employment matters; senior associate Andrew Schulte and associates Layton Suchma and Chandler Jones on securities law matters. Barclays Capital served as financial advisor.

V&E also represented Tortoise Acquisition in its $233 million initial public offering that closed in February 2019.

Cooley and Wick Phillips advised Hyliion, and Marathon Capital is serving as exclusive strategic and financial advisor.

Founded in 2015, Hyliion produces hybrid and fully electric powertrains capable of reducing the carbon footprint truck fleets on a scalable basis. The company says its powertrain solutions integrate easily will almost any make of heavy-haul commercial vehicle.

The $1.5 billion pro forma implied market capitalization is calculated at $10.00 per share PIPE subscription price and assumes no public shareholders of Tortoise Acquisition Corp. exercise their redemption rights. The company will receive $560 million of proceeds from an upsized $325 million PIPE, along with cash held in trust.

Barclays Capital and Goldman Sachs served as joint-placement agents on the PIPE offering.

All existing shareholders and investors will continue to hold their equity ownership, including Dana, Sensata Technologies, Sumitomo Corporation of Americas, Axioma Ventures, FJ Management, New Era Capital Partners, Colle Capital Partners and others.

These funds will be used to accelerate product commercialization, product production, operational growth and for general corporate purposes. The boards of directors of both Tortoise Acquisition Corp. and Hyliion unanimously approved the transaction. Completion of the proposed transaction is subject to customary closing conditions and is expected to be completed around the end of the third quarter of 2020.

Hyliion founder and CEO Thomas Healy will be joined on a new constituted board of directors by Tortoise’s CEO Vince Cubbage and CFO Stephen Pang.

Said Healy: “Hyliion’s solutions were specifically developed to utilize existing infrastructure in an effort to support rapid technology deployment. Our mission is to enable our fleet customers to quickly realize lower carbon emissions and significantly lower cost of ownership benefits provided by our technology.”

Baker Botts Advises Rheogistics in Acquisition by IGI

Baker Botts announced June 15 that it had advised Rheogistics LLC in its acquisition by the International Group, Inc.

Rheogistics operates a Picayune, Mississippi, factory that produces lubricants for PVC manufacturers. Toronto-based International Group operates a fully integrated supply chain of waxy feedstocks, refining and blending facilities.

Baker Botts represented Rheogistics in the transaction led by Houston corporate senior counsel Bill Lamb and Washington, D.C. partner Brendan Dignan (Partner, Washington). Other Texas lawyers included partner Mark Bodron and special counsel Krisa Benskin in Houston on tax matters; Austin-based partner Paulina Williams on environmental matters and Dallas-based real estate special counsel Joel Overton.

Weil Advises Main Event Entertainment in $80M Investment by RedBird Capital

Ardent Leisure Group announced June 15 that it has agreed to sell a 24.2% interest in Dallas-based Main Event Entertainment to RedBird Capital Partners for $80 million.

The deal includes a RedBird option to acquire an additional 26.8% interest in Main Even from Ardent, which is headquartered in Australia.

A Texas-based corporate lawyers led a team from Weil that advised Main Event, which owns and operates 44 indoor family amusement centers in 18 states.

The Weil team was led from Dallas by corporate partners Jim Griffin and Rick Frye with assistance from corporate associates Anne Moretti Langford, Rob Martin, Preston Moore, Austin Freeman, Chris Perkins, Niko Lane and Mark McGonigle. Also pitching in were finance associate Matt Berde, real estate attorney Leslie Smith and lawyers from New York, Washington D.C. and Silicon Valley.

Goldman Sachs served as exclusive financial advisor to Ardent Leisure and Main Event Entertainment.

Headquartered in New York, Redbird Capital is a private equity investment firm formed in 2013 by 20-year Goldman Sachs alumnus, Garry Cardinale. It was advised in the transaction by Fried, Frank, Harris, Shriver & Jacobson.

Based in Plano, Main Event centers feature indoor activities like laser tag, bowling and miniature golf. All of its centers were closed in March because of shelter-in-place restrictions due to the coronavirus pandemic. As of last week’s announcement, 28 of the its locations had reopened on a restricted basis, including all of its locations in Texas.

In the interim the company said it had closely-monitored its capital requirements and had made adjustments to conserve capital and maintain operating liquidity. Main Event said its various location openings have been encouraging, despite enhanced public health security measures. Several of its newly-opened locations had experienced above or near four-wall EBITDA break-even.

CAPITAL MARKETS TRANSACTIONS

Baker Botts Advises Underwriters on $500M Upsized Offering of DCP Midstream Notes

DCP Midstream announced June 17 that it is offering $500 million in 5.625% senior for its subsidiary, DCP Midstream Operating LP, due 2027. The amount has been upsized from an original offering of $400 million.

DCP Operating Partnership intends to use the net proceeds from the offering for the repayment of indebtedness under its revolving credit facility and the funding of capital expenditures.

Baker Botts said it represented the underwriters. BofA Securities, Inc. and Wells Fargo Securities, LLC as joint active book-running managers for the offering. PNC Capital Markets LLC, SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. are acting as joint book-running managers for the offering.

The mostly Houston-based Baker Botts team was led by corporate partners Josh Davidson and A.J. Ericksen assisted by special counsel Chuck Campbell on tax, partner Scott Janoe on environmental issues and partner Connie Simmons Taylor on real estate.