© 2018 The Texas Lawbook.
By Claire Poole
(Mar. 12) – Last week saw the closings of two big deals in the Texas power sector: Energy Future Holdings’ long-awaited sale of Oncor to Sempra Energy for $18.8 billion; and Calpine’s take-private by Energy Capital Partners for $5.6 billion.
But new deal activity slipped again this past week, with only 15 transactions announced worth $3.13 billion versus 19 deals worth $5.4 billion the previous week. The transactions involved 11 law firms and 43 Texas lawyers versus 13 law firms and 116 Texas lawyers the week before.
Indeed, last week was the slowest so far this year, which has seen the number of deals peak at as high as 23 and the deal value rise to as high as $16.5 billion. Maybe everyone is too busy getting ready for spring break to transact?
The biggest deal of the week was CommerceHub’s $1.1 billion sale to private equity firms GTCR and Sycamore, followed by Juniper Capital raising $677.5 million for its third fund and Devon Energy’s $533 million property sale. Marathon also shed non-core assets while Mettle Midstream attracted $100 million in commitments from Pearl Energy and NGP and Oceaneering paid $69 million for a Scottish technology provider.
The week also saw CapStreet exit Gulf Stream Marine, the Austin American-Statesman sold to New Media and two Austin startups announced capital raisings just in time for the big South by Southwest conference.
Baker Botts aids CommerceHub on $1.1B sale to GTCR, Sycamore
Baker Botts said March 6 it advised publicly traded CommerceHub on its sale to private equity firms GTCR and Sycamore for $1.1 billion.
Most of the attorneys involved were in the firm’s New York office. But five who worked on it were in Texas: senior associate Bryan Henderson and associate Jennifer Ybarra on the corporate side, who are both in Dallas; Houston partner Jon Lobb on tax; Houston partner Rob Fowler on employee benefits; and Houston partner Dan Tristan on finance.
Baker Botts has represented CommerceHub for several years, including involvement with its spin-off from Liberty Interactive in 2016.
Based in Albany, New York, CommerceHub helps retailers and brands boost sales by expanding product assortments, promoting products on hot channels and enabling rapid, on-time customer delivery. It claims to have assisted 11,500 retailers, brands and distributors achieve an estimated $16 billion in gross merchandise value last year.
CommerceHub stockholders are getting $22.75 in cash for each of their shares, a 24.5 percent premium over the stock’s closing price the day before the deal was announced. The transaction has to clear stockholders and regulators but is expected to close in the third quarter.
Juniper raises $677.5M for third fund
Houston private equity firm Juniper Capital Advisors said March 7 it conducted the final close of Juniper Capital III at its hard cap of $677.5 million, including $27.5 million from the fund’s general partner. Its earlier fund raised $500 million in 2016.
Juniper said it used Latham & Watkins for outside legal counsel, but the individual attorneys couldn’t be determined by press time. It didn’t use a placement agent. Juniper’s general counsel is Tim Gray, who is based in New York and previously worked at Och-Ziff Capital and O’Melveny & Myers.
Led by Edward Geiser, Richard Gordon and Kevin Cumming, Juniper targets smaller investments than those by larger energy-focused private equity funds and most strategic acquirers with an investment size of $25 million to $75 million. Its focus is oil and gas exploration and production in established onshore basis in the U.S. Its past investments have included BoomTown Oil.
V&E advises Devon on $553M asset sale in the Barnett Shale
Vinson & Elkins said March 8 it advised Devon Energy on the sale of the southern portion of its Barnett Shale position in North Texas to an unnamed buyer for $553 million.
The V&E corporate team was led by partner Mingda Zhao with partner John B. Connally, associate Michael Zarcaro and senior associate Emery Choi. Also advising were partner Todd Way and senior associate Julia Pashin (tax) and partner Larry Nettles (environmental).
Devon announced the sale March 7 and expects to close it next quarter. J.P. Morgan provided financial advice with Mark Deverka in Houston leading the deal team.
Marathon sells Libyan assets to Total for $450M
Houston-based Marathon Oil said March 2 it had signed and closed on the sale of its unit Marathon Oil Libya Ltd. – which holds the company’s 16.33 percent interest in the Waha concessions in Libya – to a unit of France’s Total for $450 million in cash, completing its exit from the country.
Marathon’s outside counsel couldn’t be ascertained by press time. But its general counsel is Reggie Hedgebeth, who joined the company this past April. Before that he was general counsel at Spectra Energy, which was purchased by Enbridge last year for $28 billion. He previously worked in retail as general counsel at Circuit City Stores and Home Depot.
The Harvard-trained attorney began his legal career as an associate at King and Spalding and before law school held various finance and commercial real estate positions at GE Capital.
Marathon CEO Lee Tillman said in a statement that the company sold its Libya interests at an attractive valuation – 9 times this year’s estimated free cash flow at strip pricing – and that the divestiture continues the simplification and concentration of its portfolio to high margin, high return U.S. resource plays.
Marathon has exited seven countries since 2013 and generated proceeds of $4 billion in the last two years while boosting its U.S. production mix to 70 percent.
Winstead, T&K aid on Mettle’s $100M funding from Pearl, NGP
Newly formed Mettle Midstream Partners said March 5 it raised $100 million in funding from Pearl Energy Investments and Natural Gas Partners, a unit of NGP.
Mike Freeman, a partner at Winstead in Dallas, advised Mettle while Holt Foster, a partner at Thompson & Knight in Dallas, assisted Pearl and NGP.
Mettle aims to develop solutions that meet the growing demand for midstream infrastructure across North America. Those services would include natural gas gathering, processing, compression and treating; crude oil and condensate gathering and stabilization; produced-water gathering and disposal; and product marketing.
CEO Matthew Innamorati was previously a founding partner, CFO and head of corporate development at Tailwater Capital-backed Align Midstream Partners, which was sold to Enable Midstream last year for $300 million. President and chief commercial officer Drew Bredthauer previously spent 11 years at EnLink Midstream leading operations in various basins across the U.S.
Bill Quinn leads Pearl, which has $1.1 billion under management. Tony Weber is managing partner at NGP, which has attracted $17 billion in equity commitments.
Oceaneering buys Ecosse Subsea for $69M
Houston-based Oceaneering International said March 5 it bought Scottish offshore renewable services provider Ecosse Subsea for $69 million.
The company’s outside counsel couldn’t be determined by press time. But its general counsel is David Lawrence, who joined the company in 2005. Before that, the University of Houston-trained lawyer was senior counsel at Cooper Industries for six years.
Oceaneering CEO Roderick Larson said in a statement that the Ecosse acquisition offers Oceaneering the opportunity to expand its services and its market position and provide its customers with tools to optimize installation projects. The deal is expected to boost the company’s cash flow and earnings.
Willkie, DLA Piper aid on CapStreet’s $65.7M Gulf Stream sale to Logistec
The CapStreet Group said March 6 it completed the sale of its investment in Gulf Stream Marine to Canada’s Logistec.
CapStreet didn’t reveal terms, but Logistec said March 1 that the purchase price was $65.7 million.
Willkie Farr & Gallagher advised Gulf Stream with a team that included Houston corporate partners Bruce Herzog (who also offices out of New York) and Angela Olivarez; tax partner Robert Jacobson; and associates Garrett Johnston, Jennifer Johnson, Colin Mize and Yaniv Mize (tax).
DLA Piper assisted Logistec, including Houston partner Jason Whiteley and associates Jibin Luke and Jiha Ko. BB&T Capital Markets was Gulf Stream’s financial adviser.
Gulf Stream has cargo handling, stevedoring and marine terminal operations in the U.S. Gulf Coast region. Houston-based CapStreet said it enhanced operations over its six-year hold, including expanding into two new terminals, deploying technology and improving processes.
Jones Day assists Great Elm Capital on $61M office building purchase
Jones Day said March 7 it advised Great Elm Capital Group on its purchase of a majority interest in two office buildings in Fort Myers, Florida, from CRIC2 Funds for $61 million.
Dallas partner Alain Dermarkar led the deal team. Dain Torpy in Boston counseled the seller.
The deal, Great Elm’s first as part of its real estate platform, involves buying an 80.1 percent stake in CRIC IT Fort Myers, which owns the Gartner I and Gartner II office buildings, for $3 million in cash and $57.5 million in debt assumption. The properties are leased to Gartner until 2030.
Great Elm said its real estate strategy is to build a diversified portfolio of high-quality, income-producing properties that are leased to credit-worthy tenants such as Gartner. It estimates that the investment will generate an internal rate of return of more than 20 percent.
Waltham, Massachusetts-based Great Elm is a publicly traded holding company seeking to create long-term shareholder value by building a business in investment management, real estate and operating companies. It’s led by CEO Peter Reed.
Diamond McCarthy aids on $47.5M sale of the Statesman
New Media Investment Group, parent of GateHouse Media, announced March 6 that it agreed to acquire the Austin American-Statesman and its niche publications and companion websites from Cox Media Group for $47.5 million.
New York City-based New Media handled the deal primarily in-house. But it did tap partner Charles Rubio of Diamond McCarthy in Houston on real estate matters.
Environmental and benefits issues were handled by Harter Secrest & Emery with attorneys in Rochester and Buffalo, New York, and union matters were tackled by Proskauer out of Boston. Cox used Eversheds Sutherland with an attorney in its Atlanta office.
Atlanta-based Cox put the Statesman on the block in October to focus on its newspapers in Atlanta and Dayton, where it also has TV and radio stations. Hearst – which owns the Houston Chronicle and the San Antonio Express-News – was also thought to be bidding.
The Statesman has a daily circulation of 85,000 and its websites average 13 million page views per month. It will be become one of New Media’s largest newspapers.
New Media cited Austin as an attractive market given that it was named the 2017 Best Place to Live in America by U.S. News and World Report and is home to Whole Foods, Dell and IBM, a thriving technology community and such large institutions as the University of Texas, South by Southwest, Austin City Limits and the Texas state legislature.
New Media hopes to close the transaction early in the second quarter, paying for it with cash from its balance sheet. It expects the newspapers’ operations will immediately add to its free cash flow.
New Media claims to be one of the largest publishers of locally-based print and online media in the U.S. with 142 daily publications. As of December 31, it operated in 565 markets across 38 states, reaching 22 million people on a weekly basis and serving 215,000 business customers.
Last year it bought the Amarillo Globe News and the Lubbock Avalanche-Journal from Morris Communications for undisclosed terms and began handling print page design and layout for the Dallas Morning News through its GateHouse production center in Austin. It’s known for reducing staff at its acquired newspapers.
AKK advises Just Energy on $14M EdgePower acquisition
Andrews Kurth Kenyon said March 9 it was U.S. counsel to Just Energy (U.S.), a unit of Canada’s Just Energy Group, on its acquisition of EdgePower for $14 million.
The deal was announced Feb. 5 and closed Feb. 28.
The AKK team included partnerScott Olson in The Woodlands, partners Phil Haines, Tom Ford and Robert McNamara in Houston, partner Thomas Popplewell in Dallas and associates Amanda Thienpont, Oliver Fankhauser and Jocelyn Tau, all of Houston. The firm had assistance from lawyers in its New York office.
Kastner Gravelle aids M.io on $5.75M capital raise
Evan Kastner at Kastner Gravelle in Austin advised Austin, Texas, messaging network developer M.io on a $5.75 million capital raising led by Goldcrest Capital, Eniac Ventures and Two Sigma Ventures.
M.io has now raised $8.25 million from investors, including Khosla Ventures, Y Combinator and Capital Factory.
Tom Hadfield and James Cundle founded the company as message.io in 2016. It links workplace messaging apps together, including Slack, Spark and Stride, to let businesses talk across platforms with customers and collaborators.
Hercules sells 12 liftboats to Phoenix MMEER III for $5.5M
Hercules Offshore said March 5 that three of its units – Hercules Offshore Nigeria, Hercules Liftboat and Hercules Oilfield Services – sold 12 liftboats and related assets to Phoenix MMEER III for $5.5 million.
Hercules general counsel Beau Thompson in Houston didn’t respond to requests for outside counsel on the sale. Simmons & Co. International was Hercules’ financial adviser.
Hercules filed for bankruptcy in 2015 with Baker Botts as its legal counsel. It emerged three months later but filed for a second time in 2016 with Akin Gump Strauss Hauer & Feld as its legal adviser. Its intent the second time, as part of HERO Liquidating Trust, was to sell its assets to repay shareholders and wind down operations.
Thompson has been Hercules’ top legal executive since 2012, having joined it in 2007 as associate general counsel. Before that, the University of North Carolina-trained lawyer was at Thompson & Knight focusing on mergers and acquisitions.
Phoenix MMEER III is an investment group led by Mike Mullen Energy Equipment Resource and is focused on international offshore assets. MMEER previously founded Millennium Offshore Services in 2007, developing it into a seven-rig offshore accommodation service company domiciled in the United Arab Emirates. The company was sold in 2014.
MMEER has interests in other offshore accommodation rigs and vessels, including three liftboats in the Middle East acquired from Hercules. The acquisition of the remaining 12 vessels brings MMEER’s ownership in former Hercules liftboats to 16, having been the counter-party on three of four Hercules liftboat divestitures.
Kastner Gravelle aids Smarter Sorting on $5M in seed funding
Austin hazardous waste reuse developer Smarter Sorting said March 8 it raised $5 million in seed funding from investors, including $2.5 million from New York-based RTP Ventures.
Smarter Sorting said it relied on in-house counsel as well as Kastner Gravelle, with a team led by Rachel High. RTP used an associate in the New York office of Goodwin Proctor.
Charlie Vallely and Chris Ripley founded the company in 2015. It uses machine-learning technology that identifies, categorizes and sorts products that contain chemicals to help cities, retailers and waste management companies reuse the chemicals instead of incinerating them.
Its product is being utilized by 15 municipalities in the U.S., including Austin, Portland, Oregon, Salt Lake City, Boulder, Colorado, and Tempe, Arizona. Canadian retailer Canada Tire is the company’s largest retail customer.
Kirkland advises CIG Logistics on Sandstorm purchase from Tycrop’s Propell
Energy Capital Partners-backed CIG Logistics has acquired the Sandstorm product suite from Propell Oilfield Equipment, a unit of Tycrop, for undisclosed terms.
Kirkland & Ellis partner Bill Benitez advised ECP and CIG along with associate Allan Kirk and partner Mark Dundon on tax, all of Houston. They had help from a technology partner in the firm’s Chicago office.
Simmons & Co. International’s Sanjiv Shah in Houston provided financial advice to Propell and Tycrop, which used Mogan Daniels Slager in Canada for outside legal advice.
CIG, which is based in Fort Worth and led by CEO Jonathan Green, said Sandstorm is a last-mile fracturing sand logistics and well site storage solution that increases well-site efficiency, automation, capacity, safety and quality while reducing transportation costs and environmental impact.
CIG said the acquisition will help it expand its service offering to become an end-to-end logistics solution for its customer base of oil and natural gas exploration and production companies, oilfield services providers and proppant producers.
Webster-backed BayMark purchases Canadian addiction treatment centers
Lewisville, Texas-based BayMark Health Services said March 2 it bought Canadian Addiction Treatment Centres for an undisclosed sum.
BayMark general counsel Susan Meyercord tapped non-Texas counsel, including Goodwin Proctor out of Boston and Stikeman Elliott in Canada. The seller was represented by Canadian counsel Torys.
Meyercord joined MedMark Services as general counsel in 2010 and after the 2015 merger with BayMark continued in the same capacity. Before MedMark, she was a trial attorney with the U.S. Department of Labor Office of the Solicitor, where she prosecuted a variety of cases in federal and administrative courts. The UT law grad also previously worked in regulatory compliance for a large dental benefits company.
Canadian Addiction Treatment Centres is the largest opioid addiction treatment provider in Canada. The acquisition includes 72 opioid treatment programs, 19 pharmacies and one residential treatment center in Ontario.
The acquisition positions BayMark as the largest provider of opioid addiction treatment in North America with 167 locations in the U.S. and Canada.
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