Thanks to continuing consolidation of the midstream sector, deals last week hit a high mark for the year at $20.4 billion spread over 15 transactions worked by 63 Texas lawyers.
The total surpassed the previous high of $16.5 billion during the first week of January and was well over last week’s $4.7 billion in 15 deals.
There were two big midstream transactions last week and another in the works (Cheniere Energy’s proposal to purchase what it didn’t own of Cheniere Energy Partners). The recent deals have been fueled by regulatory changes that could harm pipeline master limited partnerships, as discussed below.
Other deals during the period were in the restaurant, grain, healthcare, construction and real estate industries. There also was a debt offering, a stock offering and a deal that came out of a bankruptcy filing. Details below.
Gibson Dunn, Baker Botts advise on $10.5B Williams MLP purchase
Gibson, Dunn & Crutcher represented natural gas pipeline operator Williams Cos. on its $10.5 billion acquisition on May 17 of the units of master limited partnership Williams Partners it didn’t already own.
Bakers Botts advised the conflicts committee of Williams Partners. That group included partners Josh Davidson and Travis Wofford in Houston, associate Jennifer Wu in Austin, associate Hayley Hervieux in Houston and associate Ty’Meka Reeves-Sobers in Austin.
Baker Botts partner Michael Bresson helped out on tax matters along with special counsel Chuck Campbell, both of Houston. The firm tapped its Washington, D.C. office on regulatory matters.
Morgan Stanley provided financial advice to Williams Cos. and Evercore assisted the conflicts committee.
The deal involves exchanging 1.494 of a Williams Cos. share for each Williams Partners unit, which works out to a 6.4 percent premium over Williams Partners’ closing price the previous day. If approved by Williams stockholders, the transaction will close this fall.
While the premium is on the low side of analysts’ expectations (Raymond James had anticipated a 1.56-to-1 exchange), the move should boost Williams Cos.’ cash flow, which in turn can be used to finance new growth projects.
The deal has long been expected. Williams Cos. originally agreed to buy Williams Partners back in 2015 for $13.8 billion, but then called it off when it agreed to be acquired by Energy Transfer Equity for $37.7 billion. That deal later fell apart when a Delaware judge ruled that Energy Transfer Equity could back out because of unfavorable tax consequences, and analysts expected that Williams Cos. would someday resurrect the purchase.
This past March, the Federal Energy Regulatory Commission reversed a previous policy statement that allowed MLP interstate oil and gas pipelines to include an income tax allowance in their cost-of-service rates. MLP stocks plunged on the news and Williams Cos. and Williams Partners said they might restructure the companies because of the development.
V&E advises Enbridge on $8.9B in simplification transactions
Canadian pipeline company Enbridge jumped on the MLP-buying bandwagon, saying May 17 it was acquiring four of its entities, including Spectra Energy Partners, for $8.9 billion in shares.
McCarthy Tetrault and Sullivan & Cromwell were Canadian and U.S. legal advisers to Enbridge on the transaction, but Vinson & Elkins assisted on tax matters.
BofA Merrill Lynch and Scotiabank were Enbridge’s financial advisers.
Enbridge didn’t offer a premium for Spectra Energy Partners, which disheartened stockholders and analysts.
Jefferies analyst Christopher Sighinolfi said while the move will simplify Enbridge’s structure and may mitigate some of the risks, it’s a reversal from the firms’ previous comments about the FERC policy’s impact on MLP’s and rare to see an all-stock, no premium deal.
“[It’s] a disappointing outcome for SEP unitholders,” he said.
V&E advises purchasers of Neptune Energy’s $550M notes offering
Vinson & Elkins said May 15 it counseled the initial purchasers of the Neptune Energy Group’s $550 million offering of 6 5/8 percent senior notes.
London attorneys led the V&E team. But three Texas attorneys also pitched in: partner Wendy Salinas on tax matters and partner Larry Nettles and associate Travis Hunt on environmental matters.
Neptune boosted the size of the offering to $500 million, which was indicated at launch on April 23. The offering closed May 11 and the company intends to use the gross proceeds to partially repay drawn commitments under its reserves-based lending facility.
Neptune bought the exploration and production business of the Engie group in February for $5.8 billion, giving it properties in the North Sea, North Africa and Asia Pacific.
The company is backed by China Investment Corp., known as CIC, the Carlyle Group and CVC Capital Partners.
Fertitta’s Landcadia Holdings buys Waitr for $308M
Tilman Fertitta, the billionaire Houston restaurateur, star of reality TV show “Billion Dollar Buyer” and owner of the Houston Rockets, finally picked up a company for his special purpose acquisition company Landcadia Holdings.
Landcadia announced May 16 that it agreed to pay $308 million for Waitr, a Lake Charles, La.-based restaurant platform for online ordering and on-demand food delivery in the southeastern U.S.
Landcadia tapped Winston & Strawn as its outside counsel out of New York. But inhouse counsel included general counsel Steven Scheinthal and deputy general counsel Dash Kohlhausen.
Cara Stone counseled Waitr while Wells Fargo was its financial adviser.
Jefferies was Landcandia’s financial and capital markets adviser. Deutsche Bank Securities also provided capital markets advice.
Landcadia intends to change its name to Waitr Holdings and will continue to trade on the Nasdaq.
Waitr partners with local independent restaurants and regional and national chains in underserved markets. It has 5,000 restaurant partners in 200 cities in the southeast.
The deal includes a minimum of $50 million in cash to the equity holders of Waitr at closing and the rest in the combined company’s stock. The parties expect to close the transaction later this year.
Waitr expects to use the net cash proceeds in excess of those distributed to Waitr’s equity holders to fund its growth in current and new markets and pursue acquisitions to grow its U.S. footprint.
Fertitta will be a director of the combined company and Waitr founder and CEO Chris Meaux will stay in his position and be board chairman. Scheinthal also will be on the board.
The entities that fall under Fertitta’s management include the Golden Nugget, the 600-restaurant holding company Landry’s and Fertitta Entertainment.
Gibson Dunn, Latham work on Matador Resources’ $226.6M stock offering
Gibson Dunn & Crutcher said it represented Matador Resources Company on an offering of 7 million shares of common stock at $32.3731 per share, or $226.6 million. The offering closed May 17.
The team was led by partner Doug Rayburn and associate Eric Pacifici in Dallas. Houston partner James Chenoweth provided assistance on tax matters with help from an associate in the firm’s New York office while a lawyer in its Washington, D.C. office aided on environmental matters.
Latham & Watkins partner Sean Wheeler represented the underwriters, which included RBC Capital Markets.
Analysts at Raymond James said the offering diluted the share count by 6 percent, leading them to lower their target price on the company’s stock by $1 to $41 per share. They said the proceeds will be used to fund the company’s recent property acquisitions in the Delaware Basin.
Bracewell, Locke Lord aid on Apache $100M pipeline deal with ARM Energy
Bracewell said May 16 it advised Apache and Apache Midstream on the formation of SCM Alpline, which will develop a $100 million natural gas pipeline system with ARM Energy Holdings.
Locke Lord partner Mitch Tiras advised ARM with partner John Arnold on regulatory matters. Both are in Houston.
SCM Alpine is developing a natural gas liquids header system that will have a capacity of 445,000 barrels per day. Apache Midstream has an option to acquire a 50 percent stake in the company.
ARM Midstream Management will build, manage and operate the system, which will consist of two pipeline segments. One will begin at the Salt Creek processing facilities in Reeves County, Texas, and the other that will begin at the Apache Midstream processing facilities in Reeves County. The $100 million project is supported by 10-year commitments from Salt Creek and Apache.
The companies expect the project to begin operating in the first quarter of next year.
Last month ARM Energy announced a strategic partnership with Ares Management to develop Salt Creek. Salt Creek and SCM Alpine are both owned by funds managed by the Ares Private Equity Group and ARM.
Kirkland counsels Savage on merger with Bartlett
Kirkland & Ellis is counseling Salt Lake City logistics provider Savage Cos. on its merger with grain and milling firm Bartlett and Co. in Kansas City, Missouri, for undisclosed terms. The new entity will be called Savage Enterprises.
The team was led by corporate partners Bill Benitez and Andrew Calder in Houston and a lawyer in the firm’s Chicago office. Associates Leon Johnson and Allan Kirk and tax partner Mark Dundon of Houston assisted.
Savage and Bartlett together have 180 years of experience providing transportation, logistics and materials management services for customers across several industries with a focus on energy and agriculture. The two family-owned companies claim the combination will be a leading single-source provider of supply chain and industrial services.
The parties expect to close the merger in August. The businesses will continue to operate under the Savage and Bartlett names.
Bartlett chairman James Hebenstreit will join Savage’s board and become its vice chairman. Bill Fellows will continue to lead Bartlett as president and CEO and will also join the board. Savage CEO and president Kirk Aubry will be president and CEO of the newly formed parent company.
The 100-year-old Bartlett employs 760 at 30 facilities in the U.S. and Mexico. It has $2 billion in annual sales and claims to be a leading exporter of U.S. grain to Mexico.
Savage was founded in 1946 and has 4,000 employees in 250 locations in the U.S., Canada, Mexico and Saudi Arabia. It’s thought to generate $1.2 billion in annual sales and have one of the largest cattle-feeding businesses in the U.S.
The deal is the latest in a spate of consolidation in the agriculture sector, which has been hurt in recent years by low crop prices. Bartlett competes with grain giants Archer Daniels Midland and Cargill.
Kirkland, V&E assist on Red Rocks asset purchase from Titanium Exploration
Kirkland lawyers in Houston worked on another deal this past week, counseling Fortress Investment Group-backed Red Rocks Energy Partners on its purchase of conventional oil and gas properties in Oklahoma’s SCOOP play from investment firm Titanium Exploration Partners for an undisclosed sum.
Vinson & Elkins advised Titanium, including partner John Grand, senior associate Thomas Laughlin and associate KJ Pedersen in Dallas with help from an associate in the firm’s New York office.
The sale, which closed May 9, consisted primarily of Titanium’s interests in operated and non-operated wells and certain unit rights in associated shallow and deep conventional horizons. Red Rocks also acquired all right, title and interest in the McLemore and Maddux units in the SCOOP.
Cooley advises Silverton Partners on $108M fund
Austin venture capital firm Silverton Partners has closed its fifth fund at $108 million.
General partner Morgan Flager said the firm used Cooley special counsel Casey Schulte, who is based in Austin but also offices in Palo Alto.
Silverton also said it’s realized five full or partial exits representing more than $1.1 billion in market capitalization since the beginning of this year, including in Austin-based WP Engine, SpareFoot, Watermark, Favor and YouEarnedIt.
Silverton manages more than $250 million in capital. CB Insights says it’s the most active venture capital firm in Texas.
Its other investments have included Convio, SailPoint, Silicon Labs, TurnKey, The Zebra, AlertMedia, SpyCloud, Convey, Aceable, Billie, Restream.io and SourceDay. This past fall it invested in Rollick Outdoor.
Locke Lord represents JPMorgan Chase on Trammell Crow building financing
Locke Lord said it represented JPMorgan Chase and a syndicate of other banks, including Wells Fargo, on the Trammell Crow Block 71 construction financing in downtown Austin.
The team included partners Brad Hawley and Jeff Hubenak and associate Nicole Olvera, all of Austin.
Block 71, ground leased from the University of Texas System, will include office, restaurant and retail space. The 709,000-square-foot office building and repurposed 25,000-square-foot historic post office building on the site are expected to be completed in 2021. Indeed, Inc. will occupy the top ten floors of the office building.
Last year Locke Lord represented JPMorgan on the construction financing of an 11-story office building at the Domain in north Austin, which will be occupied by Indeed when completed.
Walker Eisenbraun advises Emex on sale to O2 Investment Partners
O2 Investment Partners said May 4 that it invested an undisclosed sum in energy services provider Emex.
Honigman Miller Schwartz and Cohn advised Bloomington, Michigan-based O2 Investment with an attorney out of Detroit. Emex used Raymond B. Walker III, managing partner of Walker Eisenbraun in Houston.
Founded in 2007, Houston-based Emex runs an online buying and selling platform for gas and electricity. It’s led by president Dan Marzuola, a former executive at Hudson Energy, Direct Energy, CDM Management and TXU Energy.
DLA advises Tricity Pain Associates on Spindletop recap, investment
Austin healthcare buyout firm Spindletop Capital Management has recapitalized and invested in San Antonio-based Tricity Pain Associates and Interventional Pain Management for undisclosed terms.
DLA Piper counseled Tricity, including partner Steve Bartz in Dallas (who joined the firm from Thompson & Knight in January) and a partner in the firm’s Miami office. McDermott Will & Emery attorneys in Chicago provided legal counsel to Spindletop. The Bloom Organization was Tricity’s financial adviser.
Tricity physicians will remain significant shareholders in the recapitalized company.
Spindletop said the investment is the first in a series of acquisitions and new clinic openings in Texas and surrounding states to develop a top national provider of pain management services.
Tricity has eleven clinical locations and ambulatory surgery centers in San Antonio as well as New Braunfels, Corpus Christi, Austin and Dallas.
Evan Melrose, founding managing director of Spindletop, said chronic pain management has become one of the largest costs for the healthcare system. He believes there are opportunities to improve the quality of care and lower costs through minimally invasive procedures and leveraging non-opioid dependent care.
The deal is the third physician practice management platform Spindletop has invested in over the last year. The others were Sanova Dermatology and HNI Healthcare.
Bracewell counsels adhoc lenders of ExGen restructuring
Bracewell said May 17 it served as energy and regulatory counsel to the ad hoc lenders in the restructuring of ExGen Texas Power, which has been renamed TexGen Power.
The Texas lawyers included partners Sara Burgin, Brad Chin, Aaron Roffwarg, Whit Swift, Tom Tomlinson and Tim Wilkins; counsel Joe Hull; and associate Jessica Miller.
Bracewell also helped negotiate energy management agreements as well as operations and maintenance agreements. It said TexGen Power has engaged it to work on various ongoing matters.
The lenders include Fidelity Management and Research, Fortress Credit Advisors, GSO/Blackstone Debt Funds Management, Guggenheim Partners, OppenheimerFunds, PineBridge Investments and Avenue Capital Management.
ExGen owns four independent natural gas-fired generators in Texas. Under the restructuring plan, the lenders took equity shares in TexGen Power, which fully owns ExGen.
The U.S. Bankruptcy Court for the District of Delaware confirmed ExGen’s emergence from bankruptcy on April 17. ExGen was previously owned by Chicago utility giant Exelon, which filed the voluntary petition under Chaper 11 of the U.S. Bankruptcy Code last year.
Valero buys Pure Biofuels for undisclosed sum
Pegasus Capital Advisors, company management and minority shareholders have sold their equity interests in Pure Biofuels Del Peru to a unit of San Antonio refining giant Valero Energy for an undisclosed amount of cash.
Jones Day counseled Pegasus with attorneys out of New York and Cleveland. Valero’s outside counsel couldn’t be confirmed by press time and general counsel Jay Browning didn’t return requests for comment.
Browning joined Valero in 1993. Before that he was an associate in the corporate and securities practice of Akin, Gump, Strauss, Hauer & Feld in San Antonio and an attorney in the corporate/transactional practice of Baker Botts in Austin. Before attending law school at Texas Tech, he was a commercial loan officer with InterFirst Bank-Dallas.
Pure Biofuels Del Peru is the third largest fuels importer in the country and serves 500 customers, including retailers, miners and airlines. The deal also includes refined products terminals in Callao, near Lima, and in Paita, near Piura in northern Peru.
New York-based Pegasus and management purchased the equity of Pure Biofuels Del Peru in 2012. They deleveraged its balance sheet and infused capital to drive a ramp-up in its operational capacity and utilization, resulting in an increase from 24 million gallons in 2012 to 270 million in 2017.
Weil advises Aimbridge Hospitality on One Lodging purchase
Weil Gotshal & Manges said it advised Aimbridge Hospitality Holdings on its asset acquisition from One Lodging Management for an undisclosed sum.
Dallas partner David Gail led the deal team. Canadian law firm Lawson Lundell counseled One Lodging.
Dallas-based Aimbridge claims to be the largest independent hotel investment and management firm in the U.S. It’s backed by Lee Equity Partners and General Atlantic.
One Lodging Management manages all of the 115 hotels of American Hotel Income Properties REIT. As part of the deal, American Hotel Income Properties is terminating its agreement with SunOne Developments for hotel development.