By Claire Poole and Natalie Posgate
Texas’s deal attorneys must have gone on vacation this week. Even though they advised on nine deals worth $4 billion, it was a 30 percent drop in dealflow from the previous week. Some firms still formed some biggies, though. Details here.
Gibson Dunn, V&E aid on EnerVest’s $2.66B asset sale to TPG Pace Energy
Gibson, Dunn & Crutcher represented EnerVest on the sale of its Eagle Ford and Austin Chalk assets last week to special purpose acquisition company TPG Pace Energy Holdings, or TPGE, for $2.66 billion in cash and stock.
The team was led by oil and gas partners Michael P. Darden and Justin T. Stolte with assistance from corporate partner Gerry Spedale, tax partner James Chenoweth, finance partner Shalla Prichard and oil and gas associates Matt Savage, David Cias, Graham Valenta and Jordan Silverman, all from the Houston office. Attorneys from the firm’s Washington, D.C. and Denver offices also pitched in.
Vinson & Elkins represented TPGE with a team led by partners Keith Fullenweider in Houston and John Grand in Dallas. They had help from partners Doug McWilliams, David Wicklund and Mark Brazzil and associates Danielle Patterson, Benji Barron and Robert Hughes.
TPGE’s financial adviser was Credit Suisse and its capital markets advisers were Deutsche Bank and Goldman Sachs. Citigroup was EnerVest’s financial adviser. Senior partner Michael MacDougall led the deal from private equity firm TPG.
Stolte said he and Darden have good relationships with EnerVest general counsel Andy West and CEO John Walker, respectively. Stolte also knows EnerVest’s development team from his days at Apache’s business development group.
Before becoming general counsel, West was associate general counsel with his primary focus on the acquisition and divestiture of EnerVest’s upstream oil and gas assets and other commercial transactions. Before joining EnerVest in 2014, the Duke-trained lawyer was senior counsel at HighMount Exploration & Production and practiced at Baker Botts and Simpson Thacher & Bartlett in Houston.
As part of the transaction, TPGE and EnerVest are partnering to create Magnolia Oil & Gas, which will trade on the New York Stock Exchange in place of TPGE. EnerVest will keep a large ownership stake in Magnolia and continue to operate the properties under a long-term services agreement.
Magnolia will be led by TPGE chairman and CEO Steve Chazen, who was previously CEO of Occidental Petroleum, and CFO Christopher Stavros, another Occidental veteran.
The deal is expected to close in the second quarter if it clears TPGE shareholders.
TPG Pace Group, which sponsors special interest acquisition companies, known as SPACs, and Chazen formed TPGE in early 2017 to build a large scale, focused oil and gas business with a meaningful production base, strong free cash flow and a disciplined financial return philosophy. It went public in May.
Chazen said in a statement that assuming moderate commodity prices, the company aims to invest less than 60 percent of cash flow to fund a drilling program that consistently delivers more than 10 percent production growth per year.
The transaction is valued at five times this year’s EBITDA, which is expected to reach $513 million. It will largely be equity financed as TPGE anticipates $300 million of funded debt at closing alongside a $550 million undrawn credit facility.
EnerVest will receive around $1.2 billion in cash at closing and will keep roughly 120 million shares of stock. TPGE has entered into agreements to raise $330 million through a private placement of roughly 33 million shares of Class A common stock.
The placement was anchored by certain funds and accounts managed by Fidelity Management & Research, Davis Selected Advisers and funds managed by Capital Research and Management and other institutional investors. Chazen and TPG executives agreed to participate with a $25 million investment on the same terms.
The public float after the private placement is expected to be $1 billion, with EnerVest owning 51 percent of Magnolia, and TPGE public investors holding 43 percent and TPG carrying the rest. EnerVest may earn up to 17 million more shares if certain operating and stock price targets are achieved.
Magnolia will have a seven-person board, which will include Steve Chazen as chairman, two appointees each from TPGE and EnerVest and two additional independent directors.
Baker Botts, Latham aid on Helix Energy’s $125M notes offering
Baker Botts said March 20 it advised Helix Energy on its $125 million notes offering.
The team included Houston partners Gene Oshman and Travis Wofford, senior associate Eileen Boyce and associates Jennifer Gasser and Ieuan List, all of Houston. They were assisted by Houston partner Andrew Thomison on finance and Dallas partner Josh Mandell and Houston associate Jordan Hahn on tax.
Helix’s in-house counsel included general counsel Alisa Johnson, compliance officer Ken Neikirk and counsel Greg Sergesketter.
Latham & Watkins partner Ryan Maierson was the lead lawyer for the underwriters, which included Wells Fargo and Merrill Lynch.
Before joining Helix in 2006, Johnson was general counsel for the generation group at Dynegy, where she worked for more than 15 years. Before that, the University of Houston-trained lawyer was an associate at Webster and Sheffield and Brodsky and Ketchand.
The offering includes 4.125 percent convertible senior notes due 2023. Helix plans to use the $121.2 million in net proceeds after fees and expenses to repurchase $59.3 million in 3.25 percent convertible senior notes due 2032 and repay borrowings under its term loan.
V&E advises Delek on $72M asset sale to World Energy
V&E said March 20 it advised Delek US Holdings on its sale of AltAir Paramount and its Paramount, California, refining and pipeline assets to an affiliate of Boston-based World Energy for an undisclosed sum.
The V&E corporate team was led by partners Chris Collins and Gillian Hobson with assistance from associates Jing Tong and Serena Ross, all of Houston.
Also advising were partner Jason McIntoshand associate Liz Snyder (tax); senior associate Matt Dobbins (environmental); counsel Scot Dixon (real estate); partner Sean Becker (labor/employment); senior associate Kimberley McCoy (litigation); partner Guy Gribov and associate Brittany Simington (finance); and associates Jane Ehinmoro, Mariam Boxwala and Jordan Fossee (corporate). All are in Houston except for McCoy, who is in Dallas.
World Energy used Farella Braun & Martel in California.
Brentwood, Tenn.-based Delek announced the deal March 19. CEO Uzi Yemin said in a statement that the company has been focused on deriving value from its non-core assets in California as they are outside of its geographic footprint and their disposal will help it cut costs. The company previously sold five West Coast asphalt terminals for $75 million and has its Long Beach and Bakersfield assets on the block.
Helix said it might use the cash proceeds from this and future transactions to return cash to shareholders.
Vandewater Capital Holdings, the lead investor and controlling shareholder of AltAir Fuels until Delek acquired a controlling stake in 2015, brought it from concept to a refinery of renewable fuels with such customers as the Department of Defense, United Airlines and UPS.
Bechtel makes $50M investment in Tellurian
Houston LNG project developer Tellurian said March 21 that an affiliate of Bechtel Oil, Gas and Chemicals made a $50 million zero coupon preferred equity investment in the company.
The deal came at an implied share price of $8.16 per share. Its stock closed at $6.94 per share on that same day.
Tellurian’s outside counsel couldn’t be ascertained at press time. But its general counsel is Daniel Belhumeur, who joined the company in 2016. Pillsbury Winthrop Shaw Pittman partner Dillon Ferguson in Houston sits on the company’s board.
Before Tellurian, the University of Kansas-trained Belhumeur was general tax counsel at Cheniere Energy, which was previously led by Tellurian co-founder and chairman Charif Souki.
Tellurian CEO Meg Gentle said in a statement that Bechtel and Tellurian management have constructed 55 million tons per year of liquefaction capacity on various projects.
The company expects to break ground on its Driftwood LNG facility near Lake Charles, Louisiana, in 2019. It also has acquired natural gas-producing properties in the area.
Bechtel claims that production on the facilities it has built accounts for about one-third of global LNG capacity.
Kastner advises Mythic on $40M funding from SoftBank, others
Artificial intelligence chip company Mythic said March 20 it raised $40 million in Series B funding.
SoftBank Ventures led the round of investors, who included existing investors DFJ, Lux Capital, Data Collective and AME Cloud Ventures and new investors Lockheed Martin Ventures and Andy Bechtolsheim.
Kastner Gravelle partner Ryan Gravelle and counsel Michael Vaughn in Austin represented Mythic.
Chris Moran led the deal from Lockheed Martin Ventures while JP Lee did so from SoftBank. Rene Haas, president of the intellectual product group at processor designer Arm in the U.K., has been appointed to Mythic’s board.
Austin- and Redwood, Calif.-based Mythic was co-founded by Mike Henry and Dave Fick and incubated at the University of Michigan.
The company said its chips perform computation inside memory cells using analog currents and flash memory to perform the arithmetic of artificial intelligence inference on a massive scale, leading to server GPU performance at 1/100th of the power draw and cost.
Mythic claims the technology will bring the compute power of a datacenter to embedded devices and smart machines, including robots, cars, phones, drones and augmented reality/virtual reality, without the inconvenience of going to the cloud.
The company said it’s working with the top players in high-end consumer electronics, augmented reality/virtual reality, gaming, auto, drones and robotics. It plans to deliver the first product samples at the end of this year and ship in volume early next year.
Gibson Dunn represents SK E&P on Longfellow acquisition
Gibson Dunn worked on another deal this past week, representing SK E&P America, a unit of South Korea’s SK Innovation, on its agreement to acquire private oil and gas explorer and producer Longfellow Nemaha. SK announced the deal March 20.
The team includes Houston partner Justin Stolte and associates Dave Cias, Matthew Savage and Graham Valenta. Gardere partner Tim Spear in Houston counseled Longfellow.
Stolte said he worked with SK’s lead commercial executive, Gerald Pyle, when he was in Apache’s business development group.
“Perhaps it’s a sign of things to come, as I’ve seen references in many articles to other foreign players considering re-entering the U.S. unconventional playground,” he said.
Longfellow Nemaha has assets in the Stack play of Oklahoma. SK Innovation owns assets in oil and gas production, refining, chemicals, lubricants and batteries.
SK said the transaction, which is expected to close in the second quarter, represents a significant expansion of the company’s focus area in the U.S. Mid-Continent region.
Taewon Kim, president of SK E&P America, said in a statement that SK initially invested in the U.S. oil & gas upstream market in 2014 and continues to build a portfolio of conventional and unconventional assets.
SK previously acquired oil and gas assets in Oklahoma (SK Plymouth) and Texas (SK Permian).
Moelis was SK’s financial adviser. Hall Estill in Oklahoma also provided outside legal advice to the company.
Paul Hastings aids GI Partners on purchase of two eDiscovery businesses
San Francisco private equity firm GI Partners said March 21 it agreed to acquire two eDiscovery businesses — Consilio of Washington, D.C. and Advanced Discovery of Austin — and merge them. Terms weren’t disclosed.
Shamrock Capital Group is selling Consilio while Trivest Partners is selling Advanced Discovery.
Paul Hastings partner Lindsay Sparks in Houston handled the debt commitments/financing on the deal for GI Partners. She was joined on the deal by partners in the firm’s Orange County, California, office. Latham lawyers out of New York counseled Shamrock.
Jefferies was GI Partners’ financial adviser, while BlackArch Partners assisted Advanced Discovery and Harris Williams aided Consilio.
GI said the combination will create the second-largest eDiscovery services provider with 2,500 employees and 60 offices spanning 11 countries.
Consillo CEO Andy Macdonald will continue as CEO of the combined company and Advanced Discovery CEO Jim Burke will become a director on the company’s board.
The acquisition of Advanced Discovery is expected to close in late March with the merger to close in the second quarter.
The deal is the fourth platform investment of GI Partners Fund V, which raised $2.8 billion last year. The firm is led by Hoon Cho and Jeff Sheu.
Bracewell advises East Texas medical center in sale to Ardent Health Services
A group of Bracewell attorneys led by Dallas partner Janis Davis said Friday they closed East Texas Medical Center’s sale earlier on March 1 to Ardent Health Services.
The Bracewell deal team also included Dallas partners Brock Bailey, Kevin Schutte and Robert Sheeder; Houston partners Christy Edwards, Todd Greenwalt, Brian Teaff, Timothy Wilkins (also of Austin) and Edmund Robb; Dallas counsel Quitman Stephens, Robert Baird and Ian Brown; Dallas associates Nigel Wheeler, Christie Latimer, Doug Monkhouse, Lauren West , Josh McNulty, Andrea Broyles and Cheyenne Rogers; Houston associates Paige Abernathy, Karthika Perumal and Jackie Coleman; and attorneys from the firm’s New York and Washington, D.C. offices.
The deal has an undisclosed value, but an Ardent press release says the company and co-purchaser University of Texas Science Center at Tyler will invest $125 million in the new health system over five years to support operations and fund improvements.
The price tag must have been steep, considering everything Ardent/UT got from the transaction. The assets sold included a network of nine hospitals, 39 clinics, two inpatient facilities, the Olympic Plaza Tower, 13 regional rehabilitation facilities, physician clinics, two freestanding emergency centers, regional home health services covering 41 counties, a behavioral health center, a comprehensive seven-trauma center care network and an EMS fleet of more than 45 ambulances and four helicopters.
Kirkland, Sidley represent GenOn and Stonepeak in $390M electric deal
New Jersey-based GenOn Energy said Friday that it agreed to sell Canal 1 and 2, electricity generating facilities with a combined capacity rating of 1,112 megawatts, to a subsidiary of Stonepeak Infrastructure Partners.
Total proceeds are expected to be approximately $390.3 million, which includes a $320 million purchase price, estimating working capital of $32.5 million, an anticipated refund of $13.5 million from NRG and an estimated $24.3 million of post-closing excess fuel inventory payments.
GenOn, which is in Chapter 11 bankruptcy, turned to a Houston-based deal team from Kirkland & Ellis to handle the deal. The team included corporate partners Kim Hicks, Andy Calder and Shubi Arora and associates Brandon Bishoff and Jenna McCord.
Stonepeak turned to a group of lawyers from Sidley Austin led by Houston corporate partner Tim Chandler. Others on the Sidley deal team included Houston counsel Daniel Allison, Houston associate Adam Prestidge and attorneys from the firm’s Boston and New York offices.
Credit Suisse and Rothschild served as financial advisors for GenOn. Davis Polk provided legal advice to the ad hoc group of GenOn noteholders, while Ducera Partners provided their legal advice. Quinn Emanuel and Ducera provided legal and financial advice, respectively, to the ad hoc group of GenOn Americas Generation noteholders.
The transaction is expected to close early in the third quarter.
Baker Botts represents U.S. Silica in $750M purchase of EP Minerals
Maryland-based sand supplier U.S. Silica Holdings said Friday that it has agreed to purchase EP Minerals, a Reno-based performance materials supplier, from San Francisco private equity firm Golden Gate Capital for $750 million in cash.
EP Minerals is a global producer of engineered materials derived from industrial minerals including diatomaceous earth, clay and perlite. U.S. Silica said it will finance the transaction and refinance its current debt through a new seven-year, $1.28 billion committed Term Loan B credit facility and an expanded $100 million revolving credit facility.
U.S. Silica turned to Baker Botts corporate partner Efren Acosta in Houston to lead its end of the deal. Acosta received assistance from Houston associates Laura Katherine Mann, Bill Pritchett, Jennifer Gasser, Josh Gonzales and Gita Pathak.
Other Houston attorneys on the deal included partner Scott Janoe and Harrison Reback (environmental), partner Ron Scharnberg and Katie McEvilly (tax), partner Robinson Vu and associates Amy Bergeron and Lindsey Volpenheim Cutié (intellectual property), special counsel Chris Pratt and associate Gaby Alvarez (employee benefits), and partner Chris Wilson and associates Nina Culotta and Sarabeth Westwood (real estate). Austin special counsel Paulina Williams also advised on environmental matters.
The firm turned to some of its Washington, D.C. attorneys to advise on antitrust aspects of the deal.
For financial advice, U.S. Silica turned to Centerview Partners.
EP Minerals and Golden Gate Capital turned to Nob Hill Law Group and Kirkland, respectively, for legal advice.
The transaction is expected to close in the second quarter.