© 2018 The Texas Lawbook.
By Claire Poole
(March 19) – Spring break in parts of Texas is typically pretty slow in the deal-making world, and this past week was no exception.
There were only 17 transactions we could come up with worth $5.8 billion for the week. However, that was up from the 15 deals from the previous week valued at $3.3 billion. At least someone was working.
It was also a secretive bunch this past week, with nine transactions out of the 17 not revealing values and several companies not willing to share their deal counsel. Come on, give these poor vacationing lawyers some credit.
Apache and Western Gas Partners managed to line up new funds, the former with a new credit facility and the latter with a notes offering. There also were two chemical transactions, including a $350 million one by bigwig Huntsman, and a $200 million-plus asset sale by Pioneer Natural Resources and Indian partner Reliance Industries in South Texas’ Eagle Ford Shale that bodes well for future deals in the area.
The other deals of the week were in refrigeration, apparel, dry cleaning, gaskets, natural gas trading, auto loans, cybersecurity and leisure – something hard-working Texas attorneys probably earned this past week.
Bracewell advises Apache on new $4B revolver
Bracewell said March 15 it counseled Houston oil and gas explorer Apache on its new $4 billion revolving credit facility, which closed the day before.
The team was mostly in the firm’s London and New York offices but included counsel J. Eric Holland in Houston.
Apache’s general counsel is Anthony Lannie, who has been in the top legal seat since 2009 after serving as president of Kinder Morgan Power and Coral Energy Canada. Previously, the Vanderbilt-trained lawyer was also general counsel of Coral Energy, an affiliate of Shell Oil and Tejas Gas, as well as Tejas Gas before it merged with Coral in 1994.
JP Morgan Chase Bank was the administrative agent for the revolver. Merrill Lynch, Citigroup, RBC Capital Markets, HSBC Securities, the Bank of Tokyo-Mitsubishi UFJ, Wells Fargo, Goldman Sachs, TD Securities and Mizuho Bank were co-lead arrangers.
The new credit agreement, which has a maturity date of March 14, 2023, includes the option to increase the credit line by up to $1 billion.
Combined with its U.S. dollar revolving credit facility and British pounds letter of credit facility, the new facility is expected to support Apache’s worldwide business, including its North Sea operations.
The stage is set for Apache to return to a growth profile after purposefully reducing production internationally over the past few years, Raymond James analyst John Freeman wrote in a note last week.
Latham counsels underwriters on Western Gas’ $1.1B notes offering
Latham & Watkins said March 13 it represented the underwriters on Western Gas Partners’ $1.1 billion notes offering, which closed March 2.
Partner Sean Wheeler and associate Nick Dhesi led the matter. The book-running managers included Mizuho Securities, Credit Suisse, MUFG Securities and TD Securities.
Vinson & Elkins advised Western Gas, including partners David Oelman and Alan Beck, counsel Dan Spelkin and associates Austin March, Jackson O’Maley, Eryn Roberts and Michael Pascual.
Philip Peacock is general counsel of Western Gas, which he joined in 2012 after working as a partner in the corporate and securities practice at Andrews Kurth. He has a law degree from the University of Virginia.
Western Gas priced the offering on Feb. 21. The issue included $400 million in 4.50 percent senior notes due 2028 at 99.435 percent of their face value and $700 million in 5.30 percent senior notes due 2048 at 99.169 percent of their face value.
The partnership plans to use the net proceeds to repay amounts outstanding under its revolving credit facility and for general partnership purposes, including to fund capital expenditures.
Western Gas was formed by oil and gas explorer and producer Anadarko Petroleum in 2007 to own, operate, acquire and develop midstream energy assets.
Kirkland aids Huntsman on $350M purchase of Sun Capital’s Demilec
Kirkland & Ellis aided The Woodlands-based chemical company Huntsman on its $350 million purchase of Sun Capital-backed Demilec, which was announced March 13.
M&A partner Doug Bacon in Houston led the deal team, which included associates Erik Shoemaker and Paul Knowlton on the corporate side, partner Chad McCormick on tax and lawyers in the firm’s New York office on antitrust matters.
Lawyers in Morgan Lewis’ Philadelphia and Pittsburgh offices assisted Sun Capital/Demilec.
Huntsman general counsel David Stryker led the in-house work with support from senior corporate counsel Rachel Muir, corporate counsel Valerie Jorez and associate general counsel Troy Keller.
Stryker has been at the company since 2013 after being general counsel at BASF and associate general counsel at Siemens. Before that, the Indiana University-educated lawyer was a partner at Kirkland in New York and Chicago.
Demilec is one of the top makers and distributors of spray polyurethane foam insulation systems for homes and businesses. It generates $170 million in annual sales and has manufacturing facilities in Arlington and Boisbriand, Quebec.
Huntsman is funding the all-cash deal from available liquidity. It said the purchase price represents a multiple of 11.5 times expected EBITDA for this year, 7.5 times including expected synergies. It expects the deal to close by the end of the second quarter.
Tony Hankins, president of Huntsman’s polyurethanes unit, said in a statement that Demilec has delivered strong double-digit growth, which he expects to continue as the company expands in North America and international markets.
CEO Peter Huntsman said the bolt-on acquisition is part of the company’s strategy to move downstream. He expects the integration of Demilec into Huntsman’s polyurethanes business to bring synergies and higher and stable margins, including 25 percent EBITDA margins and double digit growth.
Sundance buys Eagle Ford properties from Pioneer, Reliance for $221.5M
Australia’s Sundance Energy announced last week that it bought 22,000 net acres in South Texas’ Eagle Ford Shale from Pioneer Natural Resources and India’s Reliance Industries for $221.5 million.
Outside counsel on the deal couldn’t be ascertained by press time.
Pioneer’s general counsel is Mark Kleinman, who joined the Irving-based company in 2005 as chief compliance officer and worked his way up to the top legal spot in 2014. The UT Law grad began his career as an associate with Jackson Walker in Dallas and later served as assistant general counsel of Sterling Software until its 2000 purchase by Computer Associates International. He also was general counsel of Inet Technologies, which was bought by Tektronics in 2004.
Analysts at Tudor, Pickering, Holt said the package represents the 10,500 net acres that Pioneer has marketed for a year and is separate from the 59,000 net acres in DeWitt, Karnes and Live Oak Counties for which data rooms will open this year. “[It’s] good to see this level of undeveloped value as we carried no value for this acreage,” they said.
The analysts added that the sale is a positive read-through for other divestitures in the basin, including BHP Billiton and Devon Energy’s position and potentially SM Energy’s acreage “further down the road.”
Jones Day aids Lennox on refrigeration divestitures to Beijer Ref
Jones Day said March 15 it advised Dallas heating, air conditioning and refrigeration giant Lennox International on the sale of its Australia and Asia businesses to Sweden’s Beijer Ref for an undisclosed sum.
The firm’s team included partner Jim O’Bannon in Dallas along with counsel in the firm’s Australia office. O’Bannon also represented Lennox on its $350 million notes offering in 2016.
Jones Day said it’s also advising Lennox on the sale of the South American business, which is expected to be concluded in the second quarter.
Lennox’ chief legal officer is John Torres, who has served in that post since 2008. He previously was general counsel at Freescale Semiconductor, which was originally part of Motorola, where he worked as senior counsel and general counsel for the semiconductor business. Before Motorola, the University of Chicago-trained lawyer served 13 years in private practice in Phoenix specializing in commercial law.
The transaction, which Lennox announced March 15, should close in the second quarter.
Lennox said the businesses being divested contributed $187 million in sales and $6.4 million in profit to the company’s refrigeration segment last year and should bring in $110 million in net proceeds.
Lennox still expects 3 percent to 7 percent sales growth this year and earnings from continuing operations of $9.75 to $10.35 per share. The company also raised its 2020 margin target for the refrigeration segment to a range of 14 percent to 16 percent versus a previous 12 percent to 14 percent.
Lennox chairman and CEO Todd Bluedorn said in a statement that the divestitures will help the company focus even more on North America and Europe, where the company has opportunities and strong market positions.
Outdoor Voices raises $34M from Alphabet venture unit GV
Athletic apparel start-up Outdoor Voices, which moved to its headquarters Austin from New York last year, said March 13 it raised $34 million in a series C round led by GV, formerly known as Google Ventures.
Outside counsel couldn’t be determined by press time and founder Tyler Haney didn’t respond to requests for comment.
The round brings the company’s total funding to nearly $57 million. General Catalyst and Forerunner Ventures, which previously backed Warby Parker and Dollar Shave Club, led previous rounds.
GV, the venture capital arm of Alphabet, previously invested in such well-known companies as Jet.com and Blue Bottle Coffee.
Haney, who started the company in 2014, told CNBC that the company is focused on building the number-one digital active brand.
Outdoor Voices plans to use its new funds to expand its retail stores to all 50 states. It currently has seven outlets, including two in New York, two in California, two in Texas (Austin and Dallas) and one in Colorado. The company hopes to open five more by year-end.
Mickey Drexler, former CEO of J.Crew and Gap, is chairman of Outdoor Voice’s board, which also includes Sweetgreen salad chain founder Nicolas Jammet.
Kastner, DLA Piper advise on TurnKey’s $31M funding from Adams
TurnKey Vacation Rentals, an Austin manager of vacation rental properties, said March 12 it raised $31 million in Series D funding.
Current investor Adams Street Partners led the round with existing investor Altos Ventures also participating along with two new unnamed institutional investors.
Kastner Gravell represented TurnKey, including Ariana Zikopoulos in Austin. DLA Piper associate Justin Bowes in Austin assisted Adams Street Partners.
The round brings TurnKey’s total funding to $72 million, which is being used to fuel market expansion, new technology and hospitality brand presence. Silverton Partners also is a backer.
TurnKey said that in the five years since its launch, it’s grown to provide full-service property management to 3,500 vacation rental homes in top U.S. travel destinations. It claims that technology and management processes enables it to charge an industry-low commission rate, typically half the 35 percent to 50 percent by most vacation rental property managers.
CEO T.J. Clark said the company has doubled its growth each year since 2013 while expanding into 55 top markets across the U.S.
Jeff Diehl is managing partner and head of investments at Chicago-based Adams Street Partners.
Jones Day, JW assist on EDIT Texas’ $18M MW Cleaners purchase
Jones Day said March 15 that Houston partner Arthur Nathan advised newly formed management-led buyout group EDIT Texas on the acquisition and financing of Tailored Brands unit MW Cleaners for $18 million.
The seller was represented by Vorys out of the firm’s Columbus, Ohio, office. The lender is Green Bank, which was represented by Jackson Walker partner Bill Johnson in Houston.
Fremont, Calif.-based Tailored Brands announced the sale March 14, saying it closed March 3.
Tailored Brands CEO Doug Ewert said in a statement that the sale was part of the company’s commitment to optimize its portfolio, focus on its core businesses and unlock cash flow.
At the time of the transaction, MW Cleaners operated 38 retail dry cleaning, laundry and heirlooming facilities in Austin and Houston.
George Zimmer, founder of Tailored Brand’s predecessor company the Men’s Wearhouse (made famous by his television pitch, “You’re going to like the way you look, I guarantee it”), was fired as chairman in 2013. In 2016, he said he was talking with private equity groups about winning back control of the company but nothing seemed to come of it.
Tailored Brands, which also owns Jos. A. Bank, has experienced setbacks in the recent years, including losing the uniform supply business for American Airlines, a failed tuxedo partnership with Macy’s and difficulties integrating Men’s Wearhouse and Jos. A Bank, which merged in 2014.
Willkie, Chamberlain aid on CapStreet’s American Packing purchase
Willkie Farr & Gallagher said March 13 that it advised the CapStreet Group on its purchase of American Packing & Gasket, or APG, with members of senior management for undisclosed terms.
Partners Bruce Herzog and Scott Miller in Houston led the Willkie team. Chamberlain Hrdlicka tax partner Barry Adkins in Houston was APG’s legal counsel.
Founded in 1943, APG is a distributor and maker of gaskets, packing material, O-rings and industrial hose couplings used in the manufacturing and process industries for maintaining and repairing industrial equipment.
Ed Solymosy Jr., who has been with APG since 1995, will continue to lead the business under the APG name as president and CEO. Tom Caughlin led the deal from CapStreet, whose other investment team members were Walker Kahle and Connor Peska.
APG is the fifth investment for CapStreet IV, which has $340 million in committed capital. It focuses on industrial distribution and manufacturing and diversified business service companies.
JW represents Castleton on acquisition of Avangrid unit Enstor
Jackson Walker said March 14 it represented Castleton Commodities International on its acquisition of gas trading business Enstor Energy Services from Avangrid unit Avangrid Rnewables for an undisclosed sum. The deal closed March 1.
The group from JW was led by partners Jesse S. Lotay in San Antonio and Christina M. Lyons in Houston.
The two had assistance from Austin environmental partner Leonard H. Dougal, San Antonio partner employment partner Richard G. Garza, Dallas M&A partner Kevin A. Jones and Houston intellectual property partner Brit Nelson, Houston associate Emily K. Quiros, Houston tax partner John M. Ransom, San Antonio research attorney Eve M. Searls, Houston associate Jeremy I. Sheng and Fort Worth counsel Paul E. Vrana.
Latham & Watkins advised Avangrid with a lawyer in its Washington, D.C. office.
Avangrid announced the deal Jan. 31 with the hopes of closing it in March. It said the sale came as the result of a strategic review and didn’t include Enstor’s gas storage business.
Avangrid is an Orange, Conn.-based diversified energy and utility company with $32 billion in assets and operations in 27 states.
Castleton is one of the top natural gas marketers in the U.S. It also trades electric power, natural gas liquids, refined products, crude oil fuel oil, freight, base metals and petrochemicals.
Vela Wood advises Scoreboard Ventures on launch
Frisco-based entrepreneurs Brian Dick and Nahid Giga announced March 13 the creation of Scoreboard Ventures, which is focusing on investments in early-stage companies that need capital along with access to Scoreboard’s network of partners, industry relationships and experience to grow and scale.
Co-founder Dick said Kevin Vela with Vela Wood in Dallas advised Scoreboard. Vela also recently advised Grapevine auto lender software developer Defi Solutions on its $55 million investment from Bain Capital.
Scoreboard’s investments include LaunchPad City, Big League Creative, 1GNITE, Zigatta, EcoVet, ShowerPill and Cosmunity. It plans to announce new deals in sports, digital media and eSports soon.
Tritium invests undisclosed sum in RateGenius through recap
RateGenius, an Austin online auto loan refinance origination and marketplace platform, said March 15 it completed a growth investment and recapitalization by private equity firm Tritium Partners.
Outside counsel couldn’t be determined by press time.
Jim Potts is general counsel of RateGenius, which he joined in 2015 after working as associate general counsel of pawn store chain EZCorp. for three years. Before that, he was corporate counsel at BBVA Compass and an associate at Hughes Watters Askanase, both in Houston.
The principals of Austin-based Tritium, including co-founders David Lack and Phil Siegel, were the primary investors in online marketplaces HomeAway, RetailMeNot and CreditCards.com.
Founded by Chris Brown in 1999, RateGenius said the investment will allow it to meet the growing demand for its solutions, which help consumers reduce the monthly expense of their auto loans.
The company is currently partnered with 160 lenders nationwide and saves the average consumer between $70 and $100 per month on their auto loan payments.
Silvermark Partners advised RateGenius on the transaction and Investors Bank provided debt financing.
MW, Decker Jones aid on Urban Air investment by MPK, AHR
Urban Air Adventure Park said March 9 that MPK Equity Partners and AHR Growth Partners made a strategic investment.
Urban Air co-founder and CEO Michael Browning Jr., his management team and other owners also participated in the investment, whose terms weren’t disclosed.
AHR used McGuireWoods, including partners Jon Finger and Jeffrey Brooker in Dallas. Urban Air worked with Decker Jones partner Adam Fulkerson in Fort Worth.
Urban Air Adventure is a Grapevine-based operator and franchisor of active family entertainment centers. Its parks have climbing walls, obstacle/ninja warrior courses, trampolines, zip line coasters, virtual reality experiences, indoor go karts and indoor skydiving.
Founded in 2011, the company has 45 locations nationwide. It plans to use the new funding to double its size by year-end.
Dallas-based MPK is led by Patrick McGee, Ross Perot Jr. and Doug Kennealey. Kennealey and AHR managing partner John Bahr will join the company’s board.
Kirkland & Ellis counsels Mach on Bayou City Energy partnership
Kirkland said March 16 it advised Mach Resources in an alliance with private equity firm Bayou City Energy Management to form BCE-Mach, which plans to acquire, explore and develop oil and gas assets across Oklahoma and Kansas.
Corporate partner John Pitts and associates David Thompson and Brandon Bishoff in Houston led the deal team. Other members included corporate partner Anthony Speier and associates Chris Heasley and Adam Whitehouse; debt finance partner Andy Veit and associates Jordan Roberts and Angel Torres; tax partner Mark Dundon; and associatesBill Dong and Melanie Rosin.
Latham & Watkins partners Ryan Maierson and Mike King and associates Lauren Anderson and Chris Bennett in Houston counseled Bayou City.
BCE-Mach will focus on acquisition opportunities of producing properties with strong cash flow generation and drilling inventories.
Led by Will McMullen and Mark Stoner, BCE is a private equity firm founded in 2015 to focus on the upstream oil and gas sector.
Mach was founded early last year with a preference toward low-risk, conventional asset development. It’s headed by Chesapeake Energy co-founder and former SandRidge Energy CEO Tom L. Ward.
McMullen said the Mid-Continent region has excellent risk-adjusted upstream investment returns and the partnership plans to be aggressive in consolidating and redeveloping select undercapitalized regions of the upstream sector.
Critical Start buys Advanced Threat Analytics for undisclosed sum
Critical Start said March 15 it agreed to buy Plano-based security analytics platform Advanced Threat Analytics for an undisclosed amount of cash and stock. The acquisition should close in 30 days.
DLA Piper advised Dallas-based Critical Start with a lawyer in its northern Virginia office.
The acquisition is expected to close in 30 days.
IDC forecasts that the market for security-related hardware, software and services will reach nearly $120 billion by 2021. Managed security services represent the largest and fastest growing technology category with a compound annual growth rate of 14.3 percent.
Led by CEO Rob Davis, Critical Start claims to be the largest cybersecurity company in Texas. Alin Srivastava is president of Advanced Threat Analytics.
Platte River’s MFG Chemical acquires Gulf Bayport Chemicals
Platte River Equity-owned MFG Chemical said March 15 it acquired Houston-based Gulf Bayport Chemicals, or GBC, for an undisclosed sum.
The parties didn’t respond to requests for outside legal counsel.
Based in Dalton, Georgia, MFG makes polymers, surfactants and esters used in the oil field, water treatment, mining, coatings and agricultural markets. Denver-based Platte River bought the company last year.
GBC makes maleic anhydride-based chemicals for the epoxy curing, food starch additives, consumer goods, paper and oilfield industries. It also provides contract manufacturing, warehouse and transportation services for third parties out of its Pasadena, Texas, facility.
MFG CEO Keith Arnold said in a statement that the acquisition expands the company into the Gulf Coast and gives it a top chemical facility in a good location near the Houston Ship Channel with direct rail access and utility infrastructure in which to expand.
GBC CEO John Nowland said GBC’s capabilities and customer and supplier relationships will complement MFG’s strong position in the specialty chemicals market.
Platte River typically invests $20 million to $100 million in lower middle market operating companies with enterprise values generally between $40 million and $250 million. Its sector focus is aerospace and transportation, energy and power, agriculture and chemicals and metals and minerals. Platte River has raised funds with committed capital of more than $1.3 billion.
Encore Consumer Capital acquires minority stake in Supergoop
Encore Consumer Capital said March 13 it bought a minority stake in San Antonio skincare brand Supergoop, which is focused on UV protection.
Supergoop said it also has continued support from earlier investors, including JMK Consumer Growth, Circle Up, Grace Beauty, Green Park and Golf.
Supergoop founder Holly Thaggard didn’t respond to requests for outside legal counsel and a Supergoop spokeswoman declined comment.
But Kevin Murphy, who led the deal from San Francisco-based Encore Consumer, said both sides went with counsel outside the state, including partner Gino Maurelli at Brownstein Hyatt Farber Schreck in Denver for Encore and partner Roy Goldman at Norton Rose Fullbright in New York for Supergoop.
Brownstein Hyatt Farber Schreck in Denver has advised Encore Consumer on deals in the past, including its exits from Mesa Foods, FreshKO Produce Services and Zuke’s and its acquisition of Fantasy Cookie. Partner Ali Fidler Metzl didn’t respond to requests for confirmation of her involvement on the deal.
© 2018 The Texas Lawbook. Content of The Texas Lawbook is controlled and protected by specific licensing agreements with our subscribers and under federal copyright laws. Any distribution of this content without the consent of The Texas Lawbook is prohibited.
If you see any inaccuracy in any article in The Texas Lawbook, please contact us. Our goal is content that is 100% true and accurate. Thank you.