© 2018 The Texas Lawbook.
By Claire Poole
Tax reform euphoria and, perhaps more importantly, a rise in oil prices made it a busy week for Texas attorneys, with 129 of them from 15 different firms and in-house teams working on 19 transactions worth $9.4 billion. That was up considerably from the previous week when 49 Texas lawyers worked on 10 transactions worth $6.28 billion.
Observers say the surge in activity portends a good year for M&A, capital markets and private equity deals for the rest of the year.
The deals announced this past week were predominantly in the energy sector, from two private equity fundraisings to a $1.8 billion compression acquisition to a $350 million private placement to several initial public offerings in the works. There was also a pair of high-tech investments out of Austin and a real estate-related investment in Dallas by none other than retired New York Yankee Alex “A-Rod” Rodriguez. Below are the highlights.
T&K advises EnCap Flatrock Midstream on $3.25B fund
Private equity firms focused on the energy sector have continued to raise money for bigger and bigger investment funds, and EnCap Flatrock Midstream is no exception. The San Antonio entity said Jan. 18 it raised $3.25 billion for its fourth fund, $250 million over its initial target and its previous fund.
Thompson & Knight advised EnCap Flatrock with a team led by partner Michael Pierce in Houston. He was assisted by partners Anna Marie Dempsey and Mitch Gibbons and associates Nathan Stone, Dasha Hodge and
Cesar Leyva, all of Houston.
Other T&K attorneys who helped out were Houston partner Roger Aksamit and Dallas partner Todd Keator and Houston associate Murtuza Hussain and Dallas partner John Cohn, all on tax; Dallas partner Jason Loden and Fort Worth associate Jessica Morrison on ERISA matters; and Austin and Houston partner Jim Morriss on environmental issues.
The closing brings EnCap Flatrock’s institutional capital commitments to nearly $9 billion from more than 300 investors.
EnCap Flatrock, a partnership between EnCap Investments and Flatrock Energy Advisors founded by managing partners Bill Waldrip, Dennis Jaggi and Billy Lemmons, provides growth capital to management teams in the midstream sector of the North American energy industry.
Haynes and Boone assists banks in $2B in debt recovery from Noble Americas
Haynes and Boone said Jan. 16 it represented the Bank of Tokyo-Mitsubishi UFJ as administrative agent to a group of international commodity finance banks in recovering more than $2 billion in debt owned by Noble Group unit Noble Americas as part of an out-of-court workout.
The bankruptcy team was led by partner Charles A. Beckham Jr. in Houston and the commodity finance team was led by partner Javier Martinez in Dallas with help from the firm’s New York office. Arsalan Muhammad in Houston was the lead associate advising the bankruptcy team.
Haynes and Boone said its attorneys worked closely with restructuring advisers and transaction counsel for the original financing to negotiate several amendments and waivers to avoid “events of default” and develop the restructuring plan that resulted in the sale of Noble Americas.
Hong Kong-based Noble Group announced Jan. 15 that it closed the sale to Swiss commodity trading conglomerate the Vitol Group for $400 million in net proceeds. The sum was 30 percent less than initially thought when the deal was announced in October, mostly due to operating losses since then. Noble originally thought the deal would bring in $1.42 billion, or $580 million after repaying debt.
According to the October release, Andrews Kurth Kenyon counseled Vitol, which received tax advice from Skadden, Arps, Slate, Meagher & Flom out of Washington, D.C. AKK wouldn’t reveal the attorneys on the deal but those involved believe partner Chris Richardson out of New York – who is thought to be moving to White & Case – led the group.
Vinson & Elkins also advised Vitol with a Houston team that included energy transactions and projects partner Kaam Sahely, commercial and business litigation partner Chris Popov and energy transactions and projects associate Katherine Becherer. They had assistance from the firm’s Washington office. Davis Polk advised Noble out of New York.
V&E, Locke Lord, Latham, Kirkland aid on $1.8B USA Compression deal
Natural gas compression services provider USA Compression Partners announced Jan. 16 that it was acquiring Energy Transfer Partners’ compression unit CDM Resource Management for around $1.8 billion, doubling the size of its fleet. The complex deal required a lot of lawyers, primarily in Texas.
As the Texas Lawbook wrote in its story Jan. 17, Vinson & Elkins advised Austin, Texas-based USA Compression with a team led by partners Milam Newby in Austin and Ramey Layne in Houston with assistance from senior associate Doug Lionberger and associates Aaron Carpenter and Raleigh Wolfe.
Also advising from V&E were partners Shane Tucker and Brian Bloom, senior associate Heather Johnson and associate Christen Romero on executive compensation/benefits; partners Ryan Carney, Glen Rosenbaum and Wendy Salinas, senior associate Laura Gieseke and associates Curt Wimberly and Jen Maul on tax; partner Sean Becker and senior associate Christie Alcala on labor/employment; counsel Dan Spelkin and associates Connor Long, Jonathan Sapp, Jane Ehinmoro and David Lassetter on corporate issues; and partner Devika Kornbacher and associate Sean Hill on intellectual property.
V&E had help on finance from its New York office and tax, regulatory and environmental issues from its Washington, D.C. office.
Locke Lord represented USA Compression Holdings with a team that included partners Joe Perillo, Michael Blankenship and Bill Swanstrom, all of Houston, with support from its New York office.
Richards Layton & Finger acted as legal counsel to USA Compression Partners’ conflicts committee. USA Compression Partners’ general counsel is Christopher Porter.
Latham & Watkins represented Dallas-based Energy Transfer Partners and Energy Transfer Equity in the transaction with a corporate deal team led by partners Debbie Yee and Bill Finnegan that included associates Thomas Verity, Chad Smith, Daniel Harrist, Taylor Anthony, Caroline Ellerbe and Max Fin, all of Houston.
Also weighing in were partner Tim Fenn with associate Bryant Lee on tax matters; partner Joel Mack on environmental matters; and partner Craig Kornreich, counsel Pamela Kellet and associate Bryce Kaufman on finance matters. All are in Houston. The firm also tapped its Washington, D.C., Los Angeles, San Francisco offices for help on environmental, benefits/compensation and antitrust issues.
Potter Anderson & Corroon counseled Energy Transfer Partners’ conflicts committee. Energy Transfer Partners’ general counsel is Tom Mason.
The Kirkland team included corporate partners John Pitts and Samuel Peca; capital markets partners Julian Seiguer and Justin Hoffman; and debt finance partner Mary Kogut.
Latham counsels Mountain Capital on $645.76M debut fund
Another private equity fundraising was revealed in January, this time a debut one from Houston-based Mountain Capital Management.
Latham & Watkins partner Sean Wheeler advised Mountain Capital with help from an attorney in the firm’s San Diego office.
The $645.76 million fund – which has backing from Harvard University’s endowment – is focused on investing in the North American energy sector. It was founded and is led by Sam Oh, a former senior partner and one of the original founding members of Apollo Management’s private equity natural resources group.
Latham’s Wheeler previously did work for Apollo, including advising portfolio company Athlon Energy when it was sold to Encana in 2014 for $7.1 billion (Oh was on Athlon’s board at the time).
Oh told The Texas Lawbook that a little over half of the fund is already invested, all of it in oil and gas exploration and production companies. But he noted that the fund’s mandate is broad, so it also could invest in companies further downstream. Its typical investment size ranges from $50 million to $150 million.
The fund’s investments include Bedrock Energy Partners, whose primary assets are in North Texas’ Barnett Shale; Compass Production Partners, which owns and operates conventional oil and natural gas properties in North Louisiana and West Texas’ Permian Basin; Escondido Resources, which aims to acquire and develop conventional and unconventional reserves in South Texas; and Talon Resources, which is focused on acquiring and developing conventional assets in the Permian’s Central Basin Platform.
Gibson Dunn, Kirkland work on SemGroup’s $350M private placement
Tulsa, Okla.-based SemGroup said Jan. 16 it entered into an agreement for the private placement of $350 million of newly authorized convertible preferred shares to Warburg Pincus, CIBC Atlantic Trust and Tortoise Capital Advisors.
Gibson Dunn & Crutcher counseled SemGroup on the placement with a group led by Dallas corporate partner Rob Little. Associates in the firm’s Denver and Washington, D.C. offices assisted. SemGroup used Evercore as its financial adviser.
Kirkland & Ellis led by Houston corporate partners Adam Larson and Jhett Nelson represented Warburg Pincus. Others helping out were associates Leon Johnson, Fernanda Langa and Chi Ewusi; capital markets partner Justin Hoffman and associate Bryan Flannery; and tax partner Mark Dundon.
Warburg managing director John Rowan will join SemGroup’s board as a non-voting observer.
Analysts at Seaport Global Securities expect SemGroup to use the $343 million in net proceeds along with cash from its previously announced sale of its stake in the Glass Mountain pipeline and its Mexican asphalt business to pay down the second installment of the Houston Fuel Oil Terminal acquisition completed last year.
The preferred shares would pay interest in cash/payment-in-kind at a rate of 7 percent. They would be convertible into common shares at $33 per share after 18 months at the purchasers’ discretion or after three years at the issuer’s discretion. The shares will pay dividends that may be paid in more preferred shares, at SemGroup’s option, for any quarter ending on or before June 30, 2020. The transaction is expected to close by the end of January.
Kastner Gravelle advises WP Engine on $250M Silver Lake investment
Austin-based WP Engine – which bills itself as the world’s leading WordPress digital experience platform – said Jan. 4 it attracted at $250 million investment from Silicon Valley technology investment giant Silver Lake.
WP Engine general counsel Chad Costello said the company used Austin-based Kastner Gravelle and Weil Gotshal & Manges as outside legal counsel. He didn’t give the names of the individual attorneys. RBC Capital Markets was WP Engine’s financial adviser.
Costello, who earned a law degree from the University of Texas, has been in the top legal seat at WP Engine since October 2015. He previously was in-house counsel at social media marketing and management software provider Spredfast, brand analytics provider Dachis Group (which was acquired by Sprinklr in 2014) and network asset storage provider AlterPoint. He started his legal career at Hays & Owens.
WP Engine, which is led by CEO Heather Brunner, said it’s generating more than $100 million per year in revenue and has 75,000 customers globally, up 30 percent year-over-year. It hopes Silver Lake’s investment will help it accelerate innovation on its digital experience platform and fuel future growth internationally.
Silver Lake managing partner Greg Mondre in New York and managing directors Lee Wittlinger and Mark Gillett in Silicon Valley will join WP Engine’s board.
Gardere advises Exco on bankruptcy filing, $250M DIP
Struggling oil and gas explorer Exco Resources filed for Chapter 11 on Jan. 15 in the U.S. Bankruptcy Court for the Southern District of Texas in Houston and Gardere Wynn Sewell is helping it through the process.
The team includes partner Marcus Helt in Dallas and associate Michael Riordan in Houston.
Kirkland & Ellis had been counseling it on restructuring negotiations with attorneys out of Chicago and New York and Exco said the firm will continue to advise it.
PJT Partners is Exco’s financial adviser and Alvarez & Marsal North America is its restructuring adviser.
Dallas-based Exco said it was able to line up $250 million in debtor-in-possession financing from some of its lenders, including Fairfax Financial Holdings, Bluescape Resources and affiliate Cove Key Management and JPMorgan Chase. It list its debt at $1.35 billion.
The company said it plans to explore strategic options, including the sale of almost all of its assets. Its properties are in Appalachia and the Haynesville and Eagle Ford shale regions.
Exco at one time had ties to one-time billionaire private equity investor Wilbur Ross, who bought a stake in the company in 2010 with the hope of turning it around.
Ross stepped down from Exco’s board after the U.S. Senate confirmed him as the Trump Administration’s commerce secretary in February of last year and sold his stock in the company in May at around $6 per share. The company’s shares fell to around 6 cents per share in December after it missed a debt payment.
Eversheds Sutherland assists Shell on $217M solar purchase
Solar energy power plant developer Silicon Ranch said Jan. 15 that oil and gas giant Royal Dutch Shell had bought 43.83 percent of the company from private markets investment manager Partners Group for $217 million.
Shell has the option to increase its position in Nashville-based Silicon Ranch after 2021. Partners Group will continue to support Silicon Ranch through a newly issued junior debt financing simultaneous with the sale’s closing.
Eversheds Sutherland advised Shell with a team led by partner Ram Sunkara, who offices out of Houston and Atlanta. He was assisted by Houston associate Joshua Belcher on environmental issues and onetime Houston associate Stephany Olsen-LeGrand, who left the firm earlier this month after eight years to work at Shell.
Silicon Ranch used Bradley Arant Boult Cummings out of Nashville. Milbank Tweed Hadley & McCloy advised Partners Group out of its New York office.
The transaction is expected to close this quarter if it clears regulators.
Silicon Ranch said the transaction will help it accelerate its growth strategy by developing new projects, entering new markets and expanding product offerings across its portfolio and provides Shell a platform to establish a global solar business.
Shell’s vice president of solar is Marc van Gerven. Silicon Ranch is led by co-founder Matt Kisber.
Silicon Ranch said it’s doubled its operating portfolio for three years and has 880 megawatts of photovoltaic systems contracted, under construction or operating in 14 states from New York to California. It also has close to 1 gigawatt of projects in its development pipeline.
Nine Energy prices IPO, three others file plans for issues
Activity for energy-related initial public offerings was busy this past week, indicating that investors are beginning to become more enthusiastic for such issues.
On Jan. 18, SCF Partners-backed oilfield services provider Nine Energy Service priced its initial public offering of 7 million shares at $23 per share, the high-end of the range, raising $161 million. Its shares jumped 13.5 percent on their first day of trading to close at $26.10.
Vinson & Elkins partner Sarah Morgan in Houston and counsel Lanchi Huynh in Dallas advised Nine Energy, along with associates Raleigh Wolfe, C.J. Murray and Josh Teahen, all of Houston. Kirkland & Ellis partners Matthew Pacey and Justin Hoffman counseled the underwriters, which included J.P. Morgan, Goldman Sachs and Wells Fargo.
Ted Moore became general counsel of Nine Energy in April of last year. The Tulane-trained lawyer spent the previous six years as general counsel of C&J Energy Services, which he helped take public, and before that was an attorney at Vinson & Elkins in Houston for almost nine years.
Three other energy-related companies filed plans to go public in the future.
One is Cactus, a Cadent Energy Partners-backed oilfield services provider. The Houston company filed its issue with the Securities and Exchange Commission on Jan. 19 with a $100 million placeholder.
Vinson & Elkins is advising Cactus with attorneys in its New York office (partners Mike Rosenwasser and Adorys Velazquez, who are said to be moving to Baker Botts). Houston partners J. David Kirkland Jr. and A.J. Ericksen at Baker Botts are representing the underwriters, which include Citi, Credit Suisse and Simmons.
Fort Worth-based fracking company Vista Proppants and Logistics also revealed plans for an IPO on Jan. 12 with a $100 million placeholder.
Simpson Thacher out of Washington, D.C. is advising the company but Ryan J. Maierson and Thomas G. Brandt at Latham & Watkins in Houston are assisting the underwriters, which include Citi, Credit Suisse and Simmons.
Finally, Ipsco Tubulars, a unit of Houston-based TMK Ipsco (which is owned by Russian pipe maker OAO TMK), filed for an IPO on Jan. 12 with a $100 million placeholder.
Latham & Watkins’ Maierson and fellow partner John M. Greer in Houston are advising the company while Hillary H. Holmes and Gerald M. Spedale at Gibson, Dunn & Crutcher are assisting the underwriters, which include BofA Merrill Lynch, Morgan Stanley and J.P. Morgan.
Ryan Chadwick has been general counsel of TMK Ipsco in Houston for four-and-a-half years. The University of Houston Law Center graduate previously was associate general counsel at Eaton and Cooper Industries and a partner at Jackson Walker.
K&E, Winstead aid on $150M Warburg Pincus commitment to Stronghold
Kirkland & Ellis said Jan. 19 it advised Warburg Pincus on its $150 million equity commitment to Stronghold Energy II Holdings, a Midland-based oil and gas exploration and production company focused on the Central Basin Platform of West Texas’ Permian Basin.
The Kirkland team was led by corporate partner Adam Larson and associates Jeannie Poland, Leslie Vaughn and Michelle Williamson and included tax partner Mark Dundon, all of Houston.
Stronghold was advised by Winstead, including partners Andrew Rosell in Fort Worth and Mike Freeman in Dallas.
David Habachy led the deal from Warburg out of Houston.
Stronghold is headed by Steve Weatherl, an Exxon-trained geologist with experience in the Permian. As vice president of exploration at Mayne & Mertz, he built a Wolfcamp position that ultimately spanned 50,000 acres in the southern Midland Basin that was eventually sold to EOG Resources. He previously worked at EOG, Pioneer National Resources and EnerQuest Oil & Gas.
Vela Wood advises Defi Solutions on $50M Bain investment
Defi Solutions, a Grapevine, Texas-based provider of software to auto lenders, said Jan. 19 it attracted a $55 million investment from Bain Capital Ventures.
Vela Wood partner Kevin Vela in Dallas advised Defi while Ropes & Gray assisted Bain out of Boston. Financial Technology Partners was Defi’s financial adviser.
Bain’s investment includes primary and secondary capital. Defi said the primary capital will be used to accelerate the development of existing and emerging products, expand resources and facilities and expand its number of employees by nearly 50 percent this year across all teams, including client support, technology services, and sales and marketing.
Led by founder and CEO Stephanie Alsbrooks, Defi claims it’s experienced more than than 70 percent compounded annual growth rate since inception.
DuBois Bryant & Campbell advises Petros on $10M A-ROD investment
Alex Rodriguez was known as a power hitter when he played baseball for the New York Yankees. Now he’s becoming known for his investments in up-and-coming companies, including those in Texas.
On Jan. 18 Petros Pace Finance said it closed on a $10 million equity round led by Rodriguez’s investment firm, A-Rod Corp.
Bryan Lee at DuBois Bryant & Campbell in Austin advised Petros on the investment while Holland & Hart out of Wyoming assisted A-Rod.
Petros said the investment marks its largest single funding round to date and will be used to fund the continued nationwide expansion of its business, which provides long-term capital for energy efficiency, renewable energy, water conservation and seismic upgrades to commercial, multifamily and industrial properties in the U.S.
Petros is led by co-founder and CEO Mansoor Ghori.
Rodriguez has invested in commercial and residential real estate since 2004. His portfolio includes the ownership and management of more than 10,000 multifamily apartment units in 10 states.
Locke Lord advises Silver Creek on Merit pipeline purchase
Locke Lord said Jan. 12 it advised Tailwater Capital-backed Silver Creek Midstream on its acquisition of the 530-mile Red Butte Pipe Line in the Rockies from Merit Energy. The deal closed Dec. 28 but wasn’t announced until Jan. 12. Terms weren’t disclosed.
Locke Lord’s team for Irving-based Silver Creek was led by Houston’s Bill Swanstrom (partner) and Ann Williams (senior counsel). Additional assistance was provided by Houston partners Pat Beaton, Ben Cowan, Eric Larson, Sara Longtain, Paul Pruett, Terry Radney and Ed Razim; Houston senior counsel Michelle LeBlanc; Houston associates Jeannie Diep, Elizabeth Genter, Emily Hejl, Kerstie Moran and Sarah Roark; and Dallas partner Van Jolas. The team also had assistance from the firm’s Washington, D.C. office.
Dallas-based Merit Energy handled the deal in-house with general counsel Chris Hagge and corporate counsel Kathryn “Kat” Lyles working the details.
Hagge has been general counsel at Merit since 2004 after working as an associate at then-Locke Liddell & Sapp. He has his J.D. from the University of Tulsa College of Law and an LL.M. in taxation from New York University School of Law.
Lyles joined Merit in 2014 after working as an attorney at Meadows, Collier, Reed, Cousins, Crouch & Ungerman in Dallas for almost six years. She earned a J.D. at Samford University’s Cumberland School of Law and an LL.M. in taxation from New York University School of Law.
Silver Creek CEO Patrick Barley said in a statement that the pipeline is its first acquisition since its formation in October with $150 million in funding from Tailwater.
Jason Downie is managing partner at Dallas-based Tailwater, which has executed 65 energy transactions in the upstream and midstream sectors representing $16.6 billion in value. The firm currently manages $2.1 billion in committed capital, $700 million of which is available for new investments.
AKK advises Cantor Fitzgerald, Ashford, Ihiji on deals
Andrews Kurth Kenyon announced last week its work on a trio of transactions.
On Jan. 17 the firm said it represented remote home management services provider Ihiji of Austin on its acquisition by Salt Lake City-based Control4 for an undisclosed sum. The team included partner Matt Lyons and associate Jae Kim in Austin and the deal closed Dec. 22.
Then, on Jan. 19, the firm said it represented issuer Ashford on an at-the-market equity program with an offering price of up to $20 million in common stock. That team included partner Brooks Antweil in Houston, counsel Tom Popplewell in Dallas and associates Brooke Milbauer in Houston and Stephanie McDermott in Dallas. B. Riley FBR was the sales agent.
Finally, also on Jan. 19, AKK said it represented sales agent Cantor Fitzgerald on Guggenheim Strategic Opportunities Fund’s at-the-market equity program for the offer and sale of 5.7 million common shares. The team included Houston partner Phil Haines and associate Amanda Thienpont with help from the firm’s New York office. That deal closed Jan. 16.
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