© 2018 The Texas Lawbook.
By Claire Poole
M&A and capital markets activity slowed this past week, with only 13 firms and 100 Texas lawyers working on 15 deals worth $5.5 billion.
That’s down from the previous week, when 17 firms and 157 Texas lawyers advised on 23 deals worth $7.1 billion.
The transactions were all over the map, with the largest coming from the chemicals sector followed by a large oil and gas purchase in the Gulf of Mexico in conjunction with a bankruptcy and an infrastructure-related merger just as the Trump administration announced its $200 billion plan to pump money into public works projects.
There also were two notes offerings in the oil and gas sector, another initial public offering that squeaked through despite continued volatility in the capital markets and a bank acquisition, along with the funding of a medical device company and a real estate deal. Check out the week’s highlights below.
LyondellBasell goes out of state on $2.2B Schulman purchase
Houston chemical and refining giant LyondellBasell announced Feb. 22 that it agreed to buy Ohio plastics company A. Schulman for $2.25 billion.
Unfortunately for law firms in Texas, LyondellBasell went with counsel outside of the state, this time Shearman & Sterling with attorneys in New York led by global corporate head George Casey, who also has represented Dow Chemical on deals.
However, Shearman will soon have a presence in the Lone Star State with offices in Houston and Austin, as The Texas Lawbook has reported.
Skadden, Arps, Slate, Meagher & Flom was Schluman’s legal counsel on the deal with lawyers in New York, not Houston. Financial advisers were J.P. Morgan and Dyal for LyondellBasell and Citigroup for Schluman.
LyondellBasell associate general counsel Andrew Gratz led the deal in-house. He has worked at the company since 2008, starting as a senior attorney and then moving to lead compliance counsel in 2015. He became lead counsel for strategic transactions in May of last year and then associate general counsel this past November. The University of Houston-trained lawyer previously was an associate at Baker Botts and Gardere Wynne Sewell.
The buyer’s chief legal officer is Jeffrey Kaplan, who has been at the company eight-plus years, first as deputy general counsel and then in his current post beginning in 2015. Before that, the University of Texas Law graduate was assistant general counsel of Chevron Phillips Chemical Co. for eight-and-a-half years. He is also current chair of the Texas General Counsel Forum.
If the deal goes through, it will double LyondellBasell’s speciality plastics business and will boost its overall sales to $4.6 billion and its EBITDA to $446 billion. It expects to capture $150 million per year in synergies two years after closing.
Weil, Willkie aid on Fieldwood bankruptcy, Bracewell on Noble asset sale
Riverstone Holdings-backed Fieldwood Energy announced Feb. 15 that it was seeking bankruptcy protection while also agreeing to purchase Noble Energy’s oil and gas assets in the deepwater Gulf of Mexico for $710 million.
It’s an unusual pairing but appears to benefit both companies. The prepackaged Chapter 11 plan, filed in U.S. Bankruptcy Court for the Southern District of Texas in Houston, involves a debt-for-equity swap that will eliminate $1.6 billion in debt from Fieldwood’s books and a purchase of assets complementary to its own that will allow it to generate cash flow going forward.
The acquisition will be funded by a $525 million equity rights offering. Fieldwood also has obtained a $60 million debtor-in-possession financing facility to ensure it has adequate funds to operate during the restructuring process.
The transaction also helps Noble, which plans to use the $480 million in net cash proceeds from the sale and its projected cash flow growth to repurchase $750 million in shares over the next two years to boost stockholder returns.
The sale represents the last major step in the transformation of Noble’s portfolio, which is now focused on its oil and gas properties on the U.S. onshore and in the Eastern Mediterranean.
Noble’s outside legal counsel was Bracewell, which has assisted it with previous asset sales. The team included partners J.J. McAnelly, Trey Wood and Jason Cohen and associates Molly Butkus and Jonathan Seliger, all of Houston.
Noble’s general counsel Arne Johnson resigned in November after 16 years with the company (deputy general counsel Aaron Carlson has been running things).
On the bankruptcy, Weil, Gotshal & Manges is advising Fieldwood with a team consisting of Houston partner Alfredo Perez, Dallas partner Courtney Marcus, Houston associate Brenda Funk and Dallas associates Candice Carson and Veronica Bonhamgregory. Evercore is its financial adviser and Opportune is its restructuring advisor.
The first lien group is using O’Melveny & Myers as its legal counsel and Houlihan Lokey Capital as its financial adviser. The reserve-based lending group tapped Willkie Farr & Gallagher, including partner Mike Niebruegge in Houston, as its legal counsel and RPA Advisors as its financial adviser.
The cross-holder group has engaged Davis Polk & Wardwell as its legal counsel and PJT Partners as its financial adviser while
Riverstone engaged a Vinson & Elkins team out of New York as its legal counsel and Perella Weinberg Partners as its financial adviser.
Fieldwood’s general counsel is Richard Black, who previously was assistant general counsel at Apache for 18 years and is a graduate of the University of Oklahoma’s law school.
Latham, Jones Day advise on Layne’s $565M sale to Granite
Latham & Watkins and Jones Day snagged a medium-sized merger in the infrastructure sector this week, Granite Construction’s $575 million stock purchase of water management, construction and drilling provider Layne Christensen. The deal is expected to close in the second quarter.
Latham is advising the Woodlands-based Layne with a team led by partner Ryan Maierson with associates Nick Dhesi, Joshua Petersen and Daniel Harrist, all of Houston.
Houston partner Tim Fenn and Houston associates Bryant Lee and Michael Rowe pitched in on tax matters and Houston partner Joel Mack on environmental matters. Attorneys from the firm’s Los Angeles and Washington, D.C. offices also helped out on tax, benefits, environmental and antitrust issues.
Stinson Leonard Street out of Kansas City, Missouri, is also representing Layne, whose general counsel is Steve Crooke. Crooke has been at Layne since 2001, having previously served as chief legal officer at Hutamaki Van Leer. He has his law degree from the University of Kansas.
Jones Day partner Alain Demarkar in Dallas led the team advising Watsonville, California-based Granite. Perella Weinberg Partners is Granite’s financial adviser while Greentech Capital Advisors is Layne’s financial adviser.
Andrews Kurth Kenyon represented the C suite executives at Layne on executive compensation and 280G, or golden parachute, matters related to the Granite acquisition. The team included partner Tony Eppert in Houston and associates Emily Cabrera in The Woodlands and Carolyn Exnicios in Houston.
Latham, Akin Gump work on Sanchez’ $500M notes offering
Latham said Feb. 15 it advised the underwriters on Sanchez Energy’s private offering of $500 million in senior secured first lien notes, which was upsized from a previous $400 million. Partners Michael Chambers and David Miller led the matter out of the Houston office.
Akin Gump Strauss Hauer & Feld counseled Sanchez, including partners David Elder and Patrick Hurley and associate Jacob Johnson in Houston; Dallas partner Alan Laves, Houston partners Chip Cowell and Eric Munoz, Dallas partner Matt Bivona, Dallas associates Lech Wilkiewicz and Justin Wood and Houston counsel Kate Huggins on finance; and Houston partner Alison Chen on tax. The firm had help from attorneys in its Washington, D.C. office.
Sanchez’ general counsel is Greg Kopel, who joined the company in 2015 after working in the legal departments at Breitburn Energy Partners, Occidental Petroleum and Linn Energy. The University of Houston-trained lawyer began his legal career working at two international law firms.
The 7.25 percent senior secured first lien notes are due 2023. Sanchez intends to use the net proceeds to repay about $95 million in outstanding borrowings and accrued interest and fees under its $350 million revolving credit facility and for general corporate purposes.
As part of the deal, Sanchez intends to amend and restate its credit facility to reduce its size from a $300 million to a $25 million commitment to provide primarily for letters of credit and working capital, among other things.
Baker Botts, Latham aid on Jones Energy’s $450M notes offering
Baker Botts said Feb. 15 it represented the issuers on Jones Energy’s $450 million senior secured first lien notes offering.
The team included partners Mollie Duckworth and Mike Bengtson, senior associate John Kaercher and associates Robert Goodin and Leah Davis, all in the corporate department in Austin (Bengtson also has an office in New York).
Also helping were Houston partner Andrew Thomison and associate Sarah Christian on finance; Dallas partner Steve Marcus on tax; and Austin senior associate Paulina Williams on environmental.
The 9.25 percent senior secured first lien notes are due 2023 and the proceeds will be used to repay all but $25 million of Jones’ outstanding borrowings under its senior secured revolving credit facility, to fund drilling and completion activities and for other general corporate purposes.
As part of the move, Jones amended and restated its existing revolver to reduce the borrowing base from $350 million to $50 million and suspend testing of the senior secured leverage ratio until March of next year.
Houston-based Latham partners Michael Chambers and David Miller counseled Jones Energy.
V&E, T&K advise on EnCap’s $400M commitment to Lotus Midstream
Vinson & Elkins said Feb. 13 it advised Lotus Midstream on its initial capital commitment of $400 million from EnCap Flatrock Midstream and Lotus management.
The V&E corporate team was led by senior associate Matthew Falcone with assistance from associate Brittany Smith.
Thompson & Knight assisted EnCap Flatrock, including partner Sarah McLean, who offices out of Austin and Houston, as well as tax partner Todd Lowther in Houston and Dallas associate Mitchell Griffith.
The Sugar Land-based company said it’s focused on the development of midstream infrastructure and services needed to transport crude oil and condensate from the wellhead to market, including crude gathering, transportation and storage. It’s also pursuing strategic acquisitions.
Lotus is led by CEO Mike Prince, chief commercial officer Emily Baker and COO Jen Fontenot, who worked together for five years as members of the business development team at Sunoco Logistics Partners, now Energy Transfer Partners, where they executed projects and acquisitions worth more than $2 billion.
EnCap Flatrock Midstream managing partner Greg King will join Lotus’ board.
San Antonio-based EnCap Flatrock Midstream, a partnership between EnCap Investments and Flatrock Energy Advisors, is currently making commitments to new management teams from its $3.25 billion EFM Fund IV.
Locke Lord, V&E involved in WildHorse’s $217M asset sale
A Locke Lord team led by partner Hunter Summerford in Houston represented WildHorse Resource Development on the sale of its North Louisiana assets to a third party for $217 million and potential contingent payments of up to $35 million.
Other team members included partners Greg Heath, Jerry Higdon, Terry Radney, Ed Razim, Buddy Sanders and Mitch Tiras and associate Kerstie Moran, all of Houston.
V&E represented the third party with partner John B. Connally IV leading the charge.
Kirkland advises Linn Energy on its $120M West Texas asset sale
Kirkland & Ellis said Feb. 15 it represented onetime bankrupt Linn Energy on the sale of its interest in mature oil and gas fields in West Texas to an undisclosed buyer for $119.5 million.
The Kirkland team was led by corporate partners Rahul Vashi and Anthony Speier and associates Lindsey Jaquillard and RJ Malenfant, all of Houston. Linn’s general counsel is Candice Wells.
The unnamed buyer used in-house counsel.
RBC Richardson Barr and Jefferies were Linn’s co-financial advisers.
The divested properties consist of 28,000 net acres that produced net production last year of 6,300 barrels of oil equivalent per day and annual cash flow of $29 million. Linn said it sold the assets to focus on its oil and gas developments in Oklahoma.
Latham aids Buckhorn on $95M sale to Tallgrass Energy
Latham & Watkins said Feb. 15 it represented Buckhorn on the sale of Buckhorn SWD Solutions and Buckhorn Energy Services to BNN Water Solutions, a unit of Tallgrass Energy Partners, for $95 million.
The matter was led by partner Ryan Maierson with associates Angela Herrington, Cassy Romano and Felicia Alexander.
Also working on the deal were partner Catherine Ozdogan with associates Matt Jones, Mitch McClellan, Allison Childs and Jack Traylor on finance matters; partner Tim Fenn with associate James Cole on tax matters; and partner Joel Mack on environmental matters. They had help from the firm’s Washington, D.C. office.
Holland & Hart in Denver assisted Tallgrass.
The two companies own 10 salt water disposal wells and 39 miles of produced water gathering infrastructure. The system services 133,000 dedicated acres for multiple Bakken producers, including XTO Energy.
Tallgrass expects that BNN will spend an additional $45 million this year to further expand the system to accommodate increased dedicated water volumes resulting from expected new drilling and completions. Once that’s completed, Tallgrass expects the total investment will approximate a five times cash flow multiple.
With this acquisition, BNN now owns and operates more than 230 miles of water supply and gathering pipelines in addition to other water supply, storage, recycle and disposal assets, making it one of the largest independent operators of water infrastructure in the industry.
AKK advises underwriters on $92.6M Quintana Energy IPO
Another IPO of an energy-related company managed to get out of the gate despite continued volatility in the capital markets, that of Quintana Energy Services.
However, the 9.2 million stock issue was priced late Feb. 8 at $10 per share, less than its hoped-for $12 to $15, and ended up raising $92.6 million versus its previous estimate of $125 million.
Andrews Kurth Kenyon said Feb. 13 it advised the IPO’s underwriters, who were led by Merrill Lynch and Piper Jaffray.
The group was co-led by partner Mike O’Leary and associate Taylor Landry in Houston. They had help from partners Henry Havre and Tom Ford in Houston, counsel Tom Popplewell in Dallas, partner O’Banion Williams in Houston, partner Lisa Shelton in Austin, partner Matt Grunert in Houston and associates Mike Hoffman, Erin Juvenal, Leslie Slaughter and Jocelyn Tau, all of Houston.
The Texas Lawbook reported back in September that the AKK team included transactional partner George Vlahakos and tax partner Will Becker. But Vlahakos lateraled to Sidley Austin in November and Becker moved to Locke Lord in February.
V&E partners Sarah Morgan and Gillian Hobson in Houston counseled Quintana.
Quintana’s general counsel is Max Bouthillette, who previously was general counsel at Archer Ltd. and president of Archer’s operations in South and North America. Before Archer, the University of Houston-trained lawyer was deputy general counsel for BJ Services and a partner at Baker Hostetler and worked in the legal department at Schlumberger.
Some companies are waiting until the markets calm to take themselves public. IPSCO Tubulars, which had hoped to raise $500 million, said Feb. 8 that it decided to postpone its IPO due to adverse market conditions. Latham & Watkins was advising the company on that one and Gibson Dunn & Crutcher was assisting the underwriters.
Parrott Sims advises Bank of River Oaks on $85M sale to Hilltop
Another bank merger emerged last week: Hilltop Holdings’ purchase of The Bank of River Oaks in Houston for $85 million in cash.
Dallas-based Hilltop – headed by Dallas billionaire Gerald J. Ford – is the publicly traded holding company for PlainsCapital Bank.
Parrott Sims McInnis & Foster in Houston advised Bank of River Oaks, including firm members Steve Parrott and Kevin McInnis. Performance Trust Capital Partners was its financial adviser.
Hilltop Holdings used Wachtell, Lipton, Rosen and Katz.
Hilltop’s general counsel is Corey Prestidge, who has been in the job since 2008. Before that he was assistant general counsel at Mark Cuban Companies and an associate in the corporate and securities practice group at now-defunct Jenkens & Gilchrist.
The Bank of River Oaks operates three full-service branch locations in Houston and had assets of $454 million, loans of $344 million, deposits of $406 million and equity capital of $46 million at the end of last year.
Hilltop co-CEO Jeremy Ford said in a statement that the acquisition fits well with the company’s stated strategy of using cash to acquire commercially focused banks in key Texas markets such as Houston, where it would like to expand further.
PlainsCapital entered Houston in 2013 and last year opened its new flagship office in the Upper Kirby District. It now has five locations in the Bayou City.
The transaction has to clear Bank of River Oaks shareholders and regulators but is expected to close in the third quarter.
Blaney, T&K counsel on $16M investment in Procyrion
Procyrion, a clinical-stage medical device company in Houston, raised $16 million in Series C funding led by an affiliate of Fannin Partners. Returning investors include Scientific Health Development, the State of Texas and an undisclosed strategic investor.
Michael Blaney of Blaney & Associates in Houston counseled Procyrion while Thompson & Knight partner Geoffrey Long represented Fannin.
Procyrion has raised more than $29 million in funding. It plans to use the latest proceeds for clinical development of its Aortix heart pump, the first catheter-deployed, intra-aortic pump designed for ambulatory use.
Leo Linbeck III is chairman of Fannin, an early-stage biomedical development group in Houston focused exclusively on commercializing medical technologies.
Jones Day aids Andeavor affiliate on ConocoPhillips facility purchase
Jones Day said Feb. 13 that partner Jeff Schlegel in Houston led the team advising Andeavor Logistics affiliate Trans-Foreland Pipeline on its acquisition of a liquefied natural gas facility in Kenai, Alaska, from ConocoPhillips.
ConocoPhillips used in-house counsel, including senior counsel John Evans in Alaska. Janet Langford Carrig is ConocoPhillips’ general counsel.
Terms weren’t disclosed on the moth-balled facility, but the Anchorage Daily News reported the purchase price as $10 million. Neither company would confirm. The plant and land are assessed at $55 million for tax purposes, according to the paper.
Andeavor owns a crude oil refinery near the Nikiski plant, which is expected to provide it with low-cost fuel.
V&E advises Apollo on Tidewater Logistics acquisition
V&E said Feb. 15 it advised funds affiliated with Apollo Global Management on its acquisition of a majority interest in Tidewater Logistics, a Fort Worth provider of frac sand supply chain solutions. Terms weren’t disclosed.
The V&E team included Dallas senior associate Thomas Laughlin, Dallas associate Abby Branigan, Houston partner Jason McIntosh, Dallas associate Lauren Meyers, Houston partner Stephen Jacobson, Houston partner Sean Becker, Houston associate Kristy Fields and Dallas associate Matt McClellan. The firm’s New York office also pitched in.
The capital will fund the company’s pipeline of new customer and expansion opportunities. Tidewater is led by founder and president Scott Spence and newly hired CEO Scott Prince, who previously was CEO of Pilot Thomas Logistics. Michael Jupiter led the deal from Apollo.
Jones Day advises Mill Creek on apartment sale
Jones Day said Feb. 12 it advised Mill Creek Residential Trust on its sale of the Modera Morningside Apartments in Georgia to an unnamed buyer in Massachusetts for an undisclosed sum. The deal closed Feb. 1.
Leading the team was Dallas partner Susan Cox, who has advised Mill Creek before on acquisitions and divestitures. In December she worked on the trust’s sale of the Modera Uptown family complex in Dallas to the Ergas Group of Canada, also for undisclosed terms.
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