Initial public offerings have picked up across the country so far this year, with 120 companies raising $35 billion in the first half, the highest level since 2014, according to Dealogic.
With quarterly filing activity also hitting a three-year high, that momentum should continue into the third quarter, IPO data firm Renaissance Capital recently said in a report.
The reasons for the recent surge are many, from strong IPO pricing and performance to increased M&A activity that encourages companies to go public to growing uncertainty about what new trade tariffs and the midterm elections might mean for markets.
Whatever the reasons, the strong IPO market is good news for Texas securities lawyers, who had been muddling through with other capital markets work during what had been a drought of new issues.
IPO’s are starting to pop up again in The Texas Lawbook’s weekly deal review. A California oil and gas explorer and producer recently filed for an IPO in which Texas lawyers are involved. And last week a big Texas computer maker announced a deal that will take it public again – and make its billionaire CEO even richer.
Overall last week (with a few deals dribbling in from the previous week), there were 16 M&A, capital markets and private equity transactions worth $11.2 billion. That value level was 60 percent higher than the previous week but still 45 percent below the 2018 record of $20.4 billion hit in May. The deals involved 74 lawyers and 15 law firms with a Texas presence, versus 81 lawyers and seven firms the previous week.
Dell to go public again by buying VMware tracking stock for $9B
Silver Lake-backed computer company Dell Technologies confirmed rumors July 2 that it’s looking to go public again with a deal to buy out the holders of a stock that tracks majority-owned VMware for $9 billion.
Class V stockholders will have the option to receive new Dell shares or $109 per share in cash, a 29 premium over the stock’s closing share price before the announcement. That value implies a market capitalization of $21.7 billion for Class V stockholders.
Dell will finance the offer’s cash component with a one-time $11 billion special dividend that VMware will pay out to its shareholders.
The parties expect to close the deal by year-end if it clears shareholders of the tracking stock, including investor activists Carl Icahn and Elliott Capital Management.
Dell’s in-house team on the deal included Rich Rothberg, general counsel and secretary; Janet Bawcom, senior vice president and corporate, securities and finance counsel; Robert Potts, vice president of corporate legal; Ed Gray, vice president of corporate legal; and Kim Erlanson, James Williamson, Aubree Corallo, Rob Montgomery, Alyssia Bernazal, Robert Frink, Chris Janisch and Tyler Cotton, all corporate legal.
The company hired lawyers at Simpson Thacher & Bartlett in New York and California for assistance. Latham & Watkins advised the special committee of Dell’s board.
Morrison & Foerster represented VMware with a team based in San Francisco. Gibson Dunn & Crutcher advised VMware’s special committee.
Rothberg joined Dell in 1999. His roles have included vice president of legal supporting the company’s businesses in Europe, Middle East and Africa, the Asia-Pacific and Japan region and North America and Latin America. He also was lead counsel for sales and operations in the Americas and for the enterprise solutions, software and end-user computing business unit and led the government affairs organization worldwide.
Before Dell, the Columbia University-trained lawyer spent nearly eight years at Caterpillar Inc. in senior legal roles in Nashville and Geneva, Switzerland. He also was an attorney for IBM Credit Corp. and Rogers & Wells.
Silver Lake took Dell private in a $24.9 billion deal in 2013. Three years later, Dell bought EMC for $67 billion, issuing the tracking stock in VMware to fund its purchase.
Chairman Michael Dell owns 72 percent of Dell’s shares and Silver Lake holds 24 percent. Holders of the tracking stock will end up with 20.8 percent of Dell if the $9 billion cash choice is exhausted, which would give Michael Dell 54 percent of the company.
If the transaction goes through, which is widely expected, Michael Dell and Silver Lake will get the bulk of a roughly $10 billion windfall based on the difference between VMware’s recent price of around $158 and the $109 per share deal value for the tracking stock, Barron’s estimates.
Analysts say Dell’s strategic review was prompted by its $40 billion debt load, which was limiting its ability to make acquisitions. Buying VMware’s tracking stock will give it another currency to make purchases without having to increase its debt, which it hopes to pay down enough to return to an investment grade-rated company.
Latham advises Hess, CNX on JV sale to Ascent for $800M
Hess Corp. and CNX Resources Corp. agreed to sell their 50-50 Ohio Utica joint venture assets to Ascent Resources-Utica for $800 million in cash.
Latham & Watkins partner Robin Fredrickson counseled Hess and CNX along with associates Sean McKinley and Corey Allen. Porter Hedges counseled Ascent with a lawyer out of its Oklahoma City office.
Pittsburgh-based CNX expects to book a non-cash gain of $135 million in the third quarter as a result of the sale.
The assets, in the wet natural gas areas of Belmont, Guernsey, Harrison and Noble counties, consist of 39,000 net acres, including 26,000 net undeveloped ones. Net production is forecast to average 14,000 barrels of oil equivalent per day this year from 50 net producing wells, 70 percent of which are expected to be residue gas, Hess said.
CNX said aside from five recently completed wells expected to begin generating sales in July, future activity on the assets wasn’t part of its five-year plan. The acres sold weren’t dedicated to CNX Midstream Partners so won’t impact future dropdown opportunities.
CNX plans to use the proceeds to pay down debt, continue its share repurchase program, invest in ongoing activities in Appalachia or make bolt-on acreage acquisitions.
Hess expects to use proceeds to invest in higher return growth opportunities in Guyana and the Bakken and fund its share repurchase program. It’s still trying to sell its 61.5 percent operated interest in the South Arne field in Denmark after initial bids didn’t meet expectations.
Weil advised Orix on acquisition of Peak Utility Services Group
Weil, Gotshal & Manges said it advised Orix Capital Partners, a unit of Dallas-based financial services firm Orix Corp USA, on its acquisition of CIVC Partners-backed Peak Utility Services Group.
Terms weren’t disclosed, but Japanese newspaper Nikkei reported that the price amounted to several hundred million dollars.
The Weil team included partner David Gail in Dallas. Kirkland & Ellis counseled Peak, which used Harris Williams as its financial adviser.
Previously known as Track Utilities, Denver-based Peak provides maintenance, repair, upgrade and installation services for the telecom, electric and natural gas infrastructure markets in the Pacific Northwest and Intermountain West regions.
Its operating units SiteWise, Track Utilities and Kelly Cable serve customers through 22 locations.
Orix CEO and president Terry Suzuki said in a statement that Peak’s services are in high demand as U.S. infrastructure ages and demand increases for broadband investment. Senior Managing Director Chris Suan also worked on the deal.
Peak CEO Lee Wilkerson, a senior corporate adviser at CIVC, will remain at the company in an advisory role as he transitions to retirement, succeeded by 35-year utility veteran Kristine Schmidt.
Chicago-based CIVC Partners said it worked with Peak management to expand organically and through acquisitions, growing headcount from 200 to nearly 1,000 and tripling EBITDA in less than four years. CIVC partner John Compall helped manage the investment.
Orix Corp. USA is a unit of Japan’s Orix Corp., a publicly traded international financial services company with operations in 38 countries. It’s made four private equity investments related to U.S. infrastructure since 2016, Nikkei said, including purchasing providers of road safety and water infrastructure services.
Baker Botts represents LGI Homes on $300M senior notes offering
Baker Botts said it represented LGI Homes Inc. on its private offering of $300 million worth of unsecured 6.875 percent senior notes.
The team was led by partner Tim Taylor and associates Lakshmi Ramanathan and Gita Pathak.
Specialists included finance partner Lyman Paden; employee benefits partner Rob Fowler and associate Stephanie Jeane; environmental partner Scott Janoe and associate Laura Williams; and real estate partner Connie Simmons Taylor and associate Sarabeth Westwood.
The notes will mature on July 15, 2026. They will be guaranteed by the company’s units that guarantee its obligations under its revolving credit facility.
LGI Homes intends to use the net proceeds from the offering to repay part of its borrowings under its revolver.
Baker Botts aids El Paso Electric on $190M notes offering
Baker Botts worked on another senior notes offering, this time for El Paso Electric Co. in the amount of $190 million.
The team included partner Tim Taylor, senior associate Carina Antweil and associate Emmie Proctor as well as finance partner Rachael Lichman and associate Josh Espinosa.
On June 28, El Paso Electric completed a private placement of $125 million in 4.22 percent senior notes due August 15, 2028 to institutional investors and affiliate Rio Grande Resources Trust II completed a private placement of $65 million in 4.07 percent senior guaranteed notes due August 15, 2025 to institutional investors.
Rio Grande is a Texas grantor trust through which El Paso Electric finances its portion of fuel for the Palo Verde nuclear power plant in Arizona.
The trust and El Paso Electric will pay interest on the notes on February 15 and August 15 of each year until maturity, which begins on February 15, 2019.
The proceeds from the notes issued by the trust will primarily be used to repay outstanding short-term borrowings under its revolver to finance nuclear fuel purchases. The proceeds from the notes issued by El Paso Electric will mostly be used to repay outstanding short-term borrowings under the revolver and for working capital and general corporate purposes.
El Paso Electric is a regional electric utility providing generation, transmission and distribution service to 418,000 retail and wholesale customers in a 10,000 square mile area of the Rio Grande valley in west Texas and southern New Mexico.
Latham, Akin counsel on Mammoth Energy’s $152.8M secondary
Latham & Watkins said last week it advised the underwriters on Mammoth Energy Services Inc.’s $152.8 million secondary offering.
The transaction was led by partners Michael Chambers and David Miller.
Akin Gump Strauss Hauer & Feld represented Mammoth. Corporate partner Seth Molay led the team, which included senior counsel Irina Maistrenko, corporate associates Katie Dinett and John Sager and tax partner Alison Chen and counsel Brandon Morris.
The offering of 4 million shares priced June 26. The underwriters had a 30-day option to purchase up to 600,000 more shares. Mammoth won’t receive any proceeds for the sale of the shares by the selling stockholders, which include Wexford Capital and Gulfport Energy Corp.
Credit Suisse is lead book-running manager and representative of the underwriters for the offering. Barclays Capital Inc. is book-running manager.
Oklahoma Citiy-based Mammoth serves onshore North American oil and gas companies and utilities through its energy infrastructure services division. Its services and products include pressure pumping, infrastructure, natural sand and proppants and contract land and directional drilling.
Latham, Akin, V&E aid on CNX Midstream’s $118.9M secondary
Latham & Watkins, Akin Gump and Vinson & Elkins advised on CNX Midstream Partners’ upsized underwritten public offering of 6.5 million common units at $18.30, or $118.9 million.
CNX enlisted the help of Latham while the selling unitholder tapped Akin and the underwriters used V&E.
Latham’s group included partners Bill Finnegan and Dave Miller and associate Nick Dhesi while V&E’s team included partner Thomas Zentner and associates Raleigh Wolfe, Andrew Schulte, Jane Ehinmoro and Jordan Fossee.
The Akin group included oil and gas partner John Goodgame, counsel Cynthia Mabry and associates Matt Turner and Paul Monsour with support from oil and gas partner Chip Cowell.
The units are being sold by NBL Midstream, a unit of Noble Energy. The selling unitholder granted the underwriters a 30-day option to purchase up to 975,000 more common units at the public offering price.
Citigroup and Barclays are acting as joint book-running managers for the offering.
CNXM owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia.
V&E, Gibson Dunn work on $100M IPO for Berry Petroleum
Bakersfield, Calif.-based Berry Petroleum Corp. filed for an initial public offering with a $100 million placeholder.
Vinson & Elkins partners Douglas McWilliams and Sarah Morgan are counseling the company and Gibson, Dunn & Crutcher partner Gerald Spedale is assisting the underwriters, which include Goldman Sachs, Wells Fargo and BMO Capital.
Other Gibson Dunn attorneys involved were partner Shalla Prichard, tax partner James Chenoweth and associate Harrison Tucker, all of Houston.
Founded in 1909, Berry Petroleum owns oil and gas properties mostly in the San Joaquin Basin in California and generated sales of $357 million for the 12 months ending March 31. It plans to list on the Nasdaq under the symbol BRY.
Linn Energy bought Berry in 2013 for $2.5 billion. Linn later filed for bankruptcy in 2016 and Berry emerged as a standalone company in February of last year. It also owns assets in the Uinta Basin in Utah, the Piceance Basin in Colorado and the East Texas Basin in East Texas.
V&E advises Covenant Transportation on $98M Landair purchase
Vinson & Elkins said it advised Covenant Transportation Group Inc. on its acquisition of Greeneville, Tenn.-based Landair Holdings, parent of Landair Transport Inc. and Landair Logistics Inc.
The deal closed July 5 for $98.5 million, including $83 million in cash and $15.5 million in debt that Covenant refinanced.
The V&E corporate team was led by partner Alan Bogdanow, counsel Lanchi Huynh and associates Michael Gibson and Alex Turner. Lincoln, Nebraska-based Scudder Law Firm counseled Landair.
Landair is a dedicated and for-hire truckload carrier and supplier of 3PL transportation, warehousing and logistics inventory management services.
Chattanooga-based Covenant funded the deal with cash on hand of $45.5 million accumulated from positive operating cash flows since the end of February and $53 million of previously unencumbered used revenue equipment financing. The deal will push its net balance sheet debt-to-Ebitda to 1.9 to 2 times versus 1.5 times in March.
Landair is expected to be immediately accretive to Covenant’s earnings and John Tweed will continue to lead the business as president.
Landair was founded in 1981 by Scott Niswonger and Ed Sayler. It operates 430 trucks and 900 trailers and manages 12 distribution facilities covering 1.8 million square feet of warehouse space. It generated $121 million in sales last year.
Bracewell aids Evercore on Blueknight $90M asphalt sale to Ergon
Bracewell said July 5 it represented Evercore, which advised the conflicts committee of Blueknight Energy Partners’ general partner on the sale of asphalt terminals in Lubbock and Saginaw, Texas, and Memphis, Tennessee to Ergon Asphalt & Emulsions for $90 million in cash.
The team included partner Will Anderson and associate Andrew W. Monk.
Potter Anderson in Delaware counseled Blueknight’s conflicts committee and Watson Heidelberg in Mississippi represented Ergon Ashalt.
Shackelford aids MHS on motor home sale to RV Retailer
Doug and Sharon O’Banion announced last week that they sold their family-owned RV dealership, Motor Home Specialist, or MHS, to RV Retailer for an undisclosed sum.
Daniel Hoops of Shackelford, Bowen, McKinley & Norton advised them.
Located outside of Fort Worth, MHS is a high-volume RV dealership with 15 brands and 115 product lines. It sold 2,200 RV’s in 2017, generating more than $275 million in sales, and has 145 associates.
The sale included inventory of 1,400 motor homes and 80 acres of real estate and improvements.
The O’Banions’ son Donny O’Banion will remain a shareholder and lead MHS along with other existing personnel.
Holland & Knight partners James Baker and Jonathan Riley in Dallas were part of the team that counseled RV Retailer, which is led by Jon Ferrando. Mark Weibel of Thompson & Knight in Dallas assisted in the real estate acquisition.
Haig Partners in Fort Lauderdale was MHS’ financial adviser and Crowe was its accounting adviser.
RV Retailer was founded this year to create a top recreational vehicle retailer in the U.S. It’s backed by Redwood Capital Partners, whose vice president is Patrick Sissman.
Doherty aids Lonestar on sale to Kinderhook-backed Intergulf
Intergulf Corp., a LaPorte company backed by Kinderhook Industries, has acquired Pasadena-based Lonestar Ecology, an operator of a centralized wastewater treatment plant.
Casey Doherty of Doherty & Doherty in Houston represented Lonestar along with Megan Metcalf Williams. Kirkland & Ellis advised Kinderhook with lawyers out of New York.
Intergulf said June 29 that Lonestar represents its first add-on acquisition and is Kinderhook’s 34th purchase in the environmental services sector.
Intergulf specializes in procuring, blending, treating and processing petroleum, petrochemical products and waste streams along the Houston Ship Channel.
Lonestar’s plant handles a range of hazardous material. its hazardous waste treatment capabilities include wastewater treatment, bulking, compacting and consolidating.
Brandon Velek leads Intergulf as CEO while Will Wilson is president of Lonestar. Rob Michalik is managing director at Kinderhook, which manages $2 billion in committed capital.
ConocoPhillips buys BP Alaska assets; BP picks up U.K. interests
ConocoPhillips said last week it’s acquiring acreage in northern Alaska owned by BP, which is picking up more of its position in the U.K. portion of the North Sea. Terms weren’t disclosed.
ConocoPhillips general counsel Janet Langford Carrig said the company’s in-house team in Alaska worked on the deal.
Carrig joined Houston-based ConocoPhillips in 2006 as deputy general counsel and corporate secretary after working as a partner at Zelle, Hoffman, Voelbel, Mason and Gette and an adjunct professor at Northwestern University School of Law.
The Yale-educated attorney previously was Kmart’s chief compliance officer, Kellogg’s general counsel and Sara Lee’s general counsel. She began her career as a law clerk for a judge in the Third Circuit Court of Appeals and was later an associate at Wachtell, Lipton, Rosen & Katz and a partner at Sidley Austin.
The deal involves BP’s 39.2 percent interest in the greater Kuparuk area in northern Alaska, which expands ConocoPhillips along Alaska’s Northern Slope, and BP’s 38 percent interest in the Kuparuk Transportation Co.
BP is picking up a 16.5 percent interest in the Clair oilfield west of Scotland’s Shetland Islands from ConocoPhillips, which is keeping a 7.5 percent stake. The deal gives BP a 45.1 percent ownership position in the offshore oilfield.
The Clair oilfield stake sale has to clear regulators while the Kuparuk acquisition is subject to co-owner pre-emption rights and regulatory approval.
Weil advises Stonegate on asset sale to unnamed company
Weil, Gotshal & Manges said July 6 it advised Stonegate Production Co. on its sale of certain operated oil and gas assets to an unidentified private oil and gas exploration, production and development company. Terms weren’t disclosed.
The lead partner was Rodney Moore, who advised Stonegate on its agreed-to sale of some of its non-operated oil and gas assets to Stonehold Energy Corp. last year.
Stonegate is a Houston-based independent exploration and production company with operations in several southwest and south central U.S. states. It was a pioneer in South Texas’ Eagle Ford Shale and at one time was backed by private equity firm Pine Brook Partners.
Kirkland advises KKR/Venado Oil on Eagle Ford acquisition
Kirkland & Ellis said it counseled private equity firm KKR and Venado Oil and Gas on their acquisition of operated assets in the Eagle Ford oil window of South Texas from an unnamed buyer for an undisclosed sum.
The Kirkland team was led by corporate partners David Castro and Anthony Speier in Houston.
The assets include 22 wells that produced 4,500 net barrels of oil equivalent in the second quarter, almost three-fourths of which was oil, and resource development potential across 23,000 net acres. The properties are next to operated assets Venado and KKR already own in Atascosa and Frio counties.
Venado CEO Scott Garrick said in a statement that the assets are a natural addition to its existing assets and considerably increase its future drilling inventory.
KKR principal David Rockecharlie said the investment marks its third asset acquisition in partnership with the Venado team in less than 18 months. The two bought properties from Cabot Oil & Gas in March for $765 million.
Once the latest deal closes, the Venado and KKR partnership will manage 136,000 net acres producing 43,000 barrels of oil equivalent per day in the area.
The Venado and KKR asset partnership is principally funded by KKR’s Energy Income and Growth Fund.
Greenberg Traurig, LSS counsel on Tritium’s investment in DCS
Dallas healthcare software provider DCS Global said in late June it received an undisclosed growth investment from Austin private equity firm Tritium Partners.
Kyle Fox, a shareholder at Greenberg Traurig in Austin, counseled Tritium on the investment. Don Lan at Lan Smith Sosolik in Dallas assisted DCS.
DLA Piper associate Joseph Fore has advised Austin-based Tritium in the past, including its growth equity investment in RateGenius in March.
Tritium chief operations partner Terry Browne is responsible for the finance, legal, administrative and investor relations functions of Tritium.
The Boston University-trained lawyer previously was chief operations officer at Amherst Holdings and Amherst Securities and interim CEO and CFO and general counsel of Covega Corp. He also served as general counsel of Bank of Montreal unit Partners First Holdings and was an associate at Mayer Brown and a senior attorney at the Federal Reserve System.
DCS said the investment will help it increase the availability of its admission and financial-clearance software for healthcare providers looking to accelerate reimbursements, reduce denials, enhance the patient experience and increase pre-service collections.
CEO Manoj Chhabra and COO Babita Jain will remain with the company. Matt Bowman and David Lack led the investment from Tritium, which has deployed $800 million in equity capital into companies for more than a decade.
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AT&T announced June 21 that it sold its internet data center colocation operations to Brookfield Infrastructure and its institutional partners for $1.1 billion.
Outside lawyers on the deal hadn’t been revealed, but The Texas Lawbook has learned that King & Spalding counseled Brookfield, a new client for the firm.
The K&S team included Houston partner Jeff Malonson, who originated the relationship with Brookfield Infrastructure, a unit of $286 billion (assets) Brookfield Asset Management.
Baker Botts partners Felix Phillips and Jonathan Bobinger in Houston represented AT&T, whose general counsel is David McAtee.
In-house counsel for the deal were assistant vice presidents and senior legal counsel Wesley Terrell of Dallas and Elizabeth Ferrell of Houston.
Regulators have to clear the deal, which is expected to close in six to eight months.
AT&T plans to use the proceeds from the sale to pay down debt. At closing, customer contracts, employees supporting the colocation operations, fixed assets and leased and owned facilities will transfer to Brookfield.
The business delivers services to customers in 18 internet data centers in the U.S. and 13 outside the U.S. They serve 1,000 companies across the technology, financial, industrial, media, retail and other sectors worldwide.
The Texas Lawbook previously reported that Sheppard Mullin partner Evan Williams in Dallas was part of the team that represented private equity firm Aretex Capital Partners on its agreement to acquire energy infrastructure indices and market intelligence provider Alerian for an undisclosed sum.
Aretex said July 2 that Intermediate Capital Group Strategic Equity and Goldman Sachs Asset Management provided $325 million in capital commitments to fund the Alerian buy as well acquire a portfolio of assets that previously were managed by Aretex professionals.