As summer began, deal-making activity among Texas lawyers began to slack, at least in terms of total values, with $8.8 billion worth of transactions last week versus $14.2 billion the previous week.
However, there were 15 deals — two more than the prior week – and 97 lawyers involved, versus 80 the previous week. Thirteen firms were represented versus 14 in the prior period.
The transactions ran the gamut from large private equity buyouts in the retail and apparel industries to a $322 million sale of a previously bankrupt – and still troubled – oil and gas explorer.
Two of the deals have famous names affiliated with them: Billionaire Ray Hunt and U.S. Energy Secretary and former Texas governor Rick Perry.
There were also two senior notes offerings in the energy sector, private equity firms raising new funds to invest in real estate and energy, smaller company sales and asset divestitures and several upstarts attracting funding, all signs that the economy is continuing to hum along.
Winston advises Rent-A-Center on $1.365B sale to Vintage
Winston & Strawn’s Dallas office – which opened last year – was involved in a big deal this past week, counseling Plano-based Rent-A-Center on its sale to an affiliate of Vintage Capital Management for $1.365 billion.
The transaction, which was announced June 18, will take the company private.
The three partners on the Winston team were Thomas W. Hughes, who joined from Norton Rose Fulbright; Todd J. Thorson, who lateraled from Locke Lord; and Jeff Cole, who came Squire Patton Boggs. The associates included Melissa D. Kalka, who came from Jones Day; and Josh Merrill, who jumped from Greenberg Traurig.
Sullivan & Cromwell advised Rent-a-Center’s board. Wilson Sonsini Goodrich & Rosati counseled Vintage with attorneys out of its Palo Alto office.
Christopher Korst has been Rent-a-Center’s general counsel since 2014, having previously worked in operations. He went to Creighton University School of Law in Omaha.
Rent-A-Center tapped JP Morgan as its financial adviser. B. Riley FBR was Vintage’s financial adviser and Guggenheim Corporate Funding was its administrative agent and joint lead arranger.
The transaction doesn’t have to clear any financing conditions. B. Riley Financial and its affiliates have committed to serve as equity and debt participants in the transaction.
The deal came after investors pressured the company to sell itself after disappointing financial results.
The offer amounts to $15 per share in cash, or $801.3 million, a 49 percent premium over the company’s closing stock price before its board initiated a strategic review process a year ago.
This past fall Rent-A-Center rejected Vintage’s $13 per share offer to buy the company and earlier this month said it would stay independent. But it later reversed course and said it would consider Vintage’s sweetened $14 per share bid, which the private equity firm said was its best and final offer.
The parties expect to close the deal by year-end if it clears stockholders and regulators.
Rent-a-Center CEO Mitch Fadel said in a statement that Vintage is a natural partner for Rent-A-Center given the investment firm’s deep knowledge of the rent-to-own industry.
Vintage is the controlling shareholder of Buddy’s Home Furnishings, a rent-to-own operator and franchisor. Vintage founder and managing member Brian Kahn is chairman of Buddy’s.
Charlesbank’s Varsity Brands sold to Bain for reported $2.5B
Another private equity buyout happened in Dallas this past week, Varsity Brands’ sale to Bain Capital Private Equity.
Terms weren’t disclosed, but one report put the price tag at $2.5 billion, which would represent a $1 billion profit for Varsity Brands’ owner, Charlesbank Capital Partners, over a four-year period.
The transaction has to clear regulators but is expected to close in the third quarter.
Both sides went with out-of-state counsel, including Boston attorneys at Goodwin Procter for Varsity Brands/Charlesbank and Chicago and Boston attorneys at Kirkland & Ellis for Bain.
Burton Brillhart has been Varsity Brands’ chief legal officer, general counsel and chief of staff since 2015. Before that he was a member/equity partner at McGlinchey Stafford for five years. Earlier in his legal career, the St. Mary’s University-trained lawyer was an equity partner at Godwin Gruber (now Godwin Bowman & Martinez), serving as chairman of its labor and employment section.
Jefferies was lead financial adviser to the sellers while Goldman Sachs and Peter J. Solomon were co-advisers. PwC provided the sellers with accounting advisory services and was the buyer’s accounting adviser.
Founded in 1972, Varsity Brands’ highly profitable business includes BSN Sports, the largest team sports equipment and apparel distributor in the U.S.; Varsity Spirit, which sells cheerleading uniforms and hosts educational camps, clinics and competitions; and Herff Jones, which provides graduation and educational products and services.
The company generated an estimated $1.7 billion in sales last year and has 9,000 employees. It will continue to be led by CEO Adam Blumenfeld.
Ryan Cotton led the deal from Bain, whose other investments include Canada Goose, Toms Shoes and Blue Nile.
Andrew Janower led the investment from Charlesbank, which said it helped Varsity Brands close several acquisitions (including Newberry Sporting Goods and Lowe’s Sporting Goods), expand its sales force, cut costs and enhance the customer experience.
Baker Botts, V&E aid on EQT Midstream’s $2.5B notes offering
EQT Midstream, a natural gas transportation, processing and storage provider, is raising $2.5 billion in a public offering of senior notes and two Texas law firms advised on it.
Baker Botts counseled EQT Midstream with a team that included partners Mollie Duckworth in Austin and Josh Davidson in Houston with associates Jennifer Wu and Leah Davis, both of Austin.
Specialists included partner Mike Bresson and associate Jared Meier on tax; partner Matt Kuryla and associate Laura Williams on environmental matters; and partner Chris Wilson and associate Nina Culotta on real estate. Baker Botts lawyers in New York and Washington, D.C. helped on finance and regulatory issues.
Vinson & Elkins represented the underwriters, including partners David Oelman and Mike Telle with counsel Mike Harrington and Dan Spelkin and associates Anne Peetz, Bailey Murdock and David Lassetter.
Specialists included partners Wendy Salinas and Ryan Carney with associate Virginia Blanton on tax; counsel Larry Pechacek and associate Ross Woessner on environmental matters; and partner Jay Seegers and counsel Suzanne Clevenger on energy regulatory issues.
The offering included $1.1 billion in 4.75 percent senior notes due 2023, $850 million in 5.5 percent senior notes due 2028 and $550 million in 6.5 percent senior notes due 2048.
EQT Midstream plans to use the net proceeds to repay the amounts outstanding under its 364-day term loan facility and for general partnership purposes.
If its proposed merger with Rice Midstream Partners closes, EQT Midstream intends to use part of the net proceeds to repay the amounts outstanding under the target’s revolving credit facility.
The joint book-running managers included Merrill Lynch, Wells Fargo, Deutsche Bank, PNC Capital Markets, Credit Suisse, J.P. Morgan, MUFG Securities Americas, RBC Capital Markets, Scotia Capital, TD Securities and U.S. Bancorp.
Co-managers were SMBC Nikko Securities, Citizens Capital Markets, Huntington Investment and CIBC World Markets.
Sheppard Mullin aids Banner Oak Capital on $800M funds
Sheppard Mullin advised Dallas-based Banner Oak Capital – which has ties to billionaire Ray Hunt – on raising $800 million for two new real estate funds.
The lead partner was Evan Williams in the firm’s Dallas office, which just launched in April. Williams was previously at Hunton & Williams (now Hunton Andrews Kurth).
Banner announced the funds – Banner Oak Operating Co. Fund and Banner Oak Investment Fund – on June 19, saying they would provide equity capital to real estate operating platforms. Teacher Retirement System of Texas is an investor.
Patricia Gibson is Banner Oak’s CEO and Geoff Osborn is its president.
Banner Oak’s previous fund, Akard Street Holdings, placed more than $1 billion in equity capital with operating teams in the industrial, multifamily, senior housing, office and retail space totaling $3 billion in gross assets.
Banner Oak said it recently closed two more investment vehicles, Banner Oak Core and Banner Oak Enhanced Core, with commitments of $700 million. It also has two additional funding vehicles, Banner Oak Multifamily and Banner Oak Industrial, whose $600 million will enhance the capital allocation of its other platforms.
Banner Oak was launched in 2016 from its predecessor firm, Hunt Realty Investments, a private real estate investor since 1991. It has more than $1.3 billion in assets under management.
Cheniere buying remaining Cheniere Partners shares for $580M
In yet another move by a midstream provider to simplify its structure, Houston LNG facility developer Cheniere Energy said June 19 that it agreed to acquire the shares it didn’t own of Cheniere Energy Partners LP Holdings for stock valued at $30.93 per share, or $580 million.
The deal involves a fixed exchange ratio of 0.4750 of a Cheniere share for each outstanding Cheniere Partners share, which works out to a 2.1 percent premium. The offer was sweetened from a previous 0.45 of a Cheniere share, which represented a 1 percent premium.
The transaction is expected to qualify as a tax-free reorganization for Cheniere Partners’ shareholders.
Cheniere Energy used Sullivan & Cromwell for outside legal counsel with JP Morgan as its financial adviser. The conflicts committee of Cheniere Partners tapped Richards, Layton & Finger with Jefferies as its financial adviser.
The general counsel for both entities is Sean N. Markowitz, who has been in that post since September 2016. He joined Cheniere in October 2015 as assistant general counsel and was interim general counsel from June 2016 to September 2016.
Before joining Cheniere, Markowitz was general counsel at Sizmek and its predecessor company Digital Generation; chief legal counsel of commercial for Alon USA Energy; and counsel for corporate acquisitions and finance for Electronic Data Systems, which was acquired by Hewlett-Packard in 2008.
The UT law grad previously practiced at Fulbright & Jaworski, now part of Norton Rose Fulbright; Hughes & Luce, now part of K&L Gates; and Andrews Kurth, now part of Hunton Andrews Kurth.
Sidley, Locke Lord, Gibson aid on Cox Oil’s $322M purchase of Energy XXI
The Houston offices of three law firms were involved in Cox Oil’s agreed-to purchase of publicly traded Energy XXI Gulf Coast, or EGC, on June 18 for $322 million.
The price of $9.10 per share represents a 21 percent premium over EGC’s previous closing price.
The deal has to clear stockholders and regulators but is expected to close in the third quarter.
Sidley Austin counseled EGC. The team was co-led by partners Mark Metts and Katy Lukaszewski and included partner George Vlahakos and associates Angela Daniel, John Brannan and Jeff Kinney.
Locke Lord assisted Cox Oil, which tapped Houlihan Lokey as its financial adviser.
Gibson, Dunn & Crutcher represented Intrepid Partners as financial adviser to EGC. The firm’s team included corporate partner Hillary Holmes, corporate associate Justine Robinson and tax partner James Chenoweth.
Marguerite-Woung Chapman has been EGC’s general counsel since only February of this year. Before that, the Georgetown law school graduate was general counsel at EP Energy, where she worked for 26 years.
Led by fourth generation oilman Brad Cox, Cox Oil is an independent, privately held entity based in Dallas that owns and operates assets in the Gulf of Mexico.
EGC’s predecessor, Energy XXI, borrowed a lot of money before the oil industry downturn and filed for bankruptcy in 2016. It emerged eight months later with $3.6 billion less debt.
The company’s longtime chief John Schiller also was ousted after it was revealed that he borrowed money from a future board member and vendors, which was seen as a conflict of interest.
But the company continued to have financial difficulties after that. This past month it reached a deal to sell non-core assets and related asset retirement obligations to Orinoco Natural Resources, a move that would have eliminated $320 million of plugging, abandonment and decommissioning liability. But that deal is now off with the Cox transaction (Latham & Watkins was advising Orinoco on that deal).
EGC CEO Douglas E. Brooks said in a statement that the company sought to maximize shareholder value while addressing asset retirement obligations, liquidity challenges and financing needs, but the best course of action ended up being a transaction that provided stockholders with a cash premium and less execution risk.
Cox operates 35,000 barrels of oil equivalent per day, giving the combined entities production of more than 61,000 barrels of oil equivalent per day, Brooks said.
Latham, V&E work on Blue Racer’s $300M notes offering
Latham & Watkins said June 22 it aided the underwriters on Blue Racer Midstream’s $300 million senior notes offering.
The matter was led by partners Michael Chambers and John Greer with associates Eric Schoppe, Clayton Heery and Andrew Tengler-West.
Blue Racer’s counsel was Vinson & Elkins partner Sarah Morgan.
The notes will mature in 2026 and will pay an annual interest rate of 6.625 percent.
Blue Racer plans to use the net proceeds to repay borrowings outstanding under its revolving credit facility and for general corporate purposes.
Blue Racer is a joint venture between EnCap Flatrock Midstream-backed Caiman Energy II LLC and Dominion Energy. It operates natural gas pipelines in Appalachia’s Utica and Marcellus shale formations.
T&K advises Grey Rock on $232.5M third fund
Dallas private equity firm Grey Rock Energy Partners – which is led in part by the son of U.S. Energy Secretary and former Texas governor Rick Perry – said June 19 it closed its third fund at $232.5 million.
Thompson & Knight represented the firm with a team made up of partners Jeremiah M. Mayfield, James W. McKellar and Roger D. Aksamit and associate Tony Johnston.
All of the fund was raised through institutions, most of whom are repeat investors who participated in previous Grey Rock funds. The investors weren’t named, but in the past they have included the University of Michigan.
Grey Rock said it has $450 million in assets and committed capital under management. The firm acquires non-operated working interests in core unconventional oil and gas basins, either by buying directly from owners or providing joint venture capital to operators.
Its interests include 2,000 wells in core areas of the Permian Basin, Bakken, Eagle Ford, SCOOP and Haynesville plays.
Grey Rock is led by founding managing directors Kirk Lazarine, Matt Miller and Rick Perry’s son, Griffin Perry. Scott Eads is partner in charge of engineering, Thad Darden is partner in charge of investments, Eric Holley is vice president of accounting and finance and Adam Griffin is vice president of land.
Sidley aids American Midstream on $210M terminal sale to JPM
Sidley Austin said June 18 it advised American Midstream on the sale of its marine products terminals to institutional investors of JP Morgan Investment Management for $210 million in cash.
The transaction has to clear Hart-Scott-Rodino but is expected to close in the third quarter.
The Sidley deal team included partner Cliff W. Vrielink and associates Tommer Yoked, Shawheen S. Molavi and Jameson D. Miller, all of Houston.
JPM used an Allen & Overy attorney out of New York.
American Midstream’s general counsel is Christopher B. Dial, who joined the entity in January after stints as general counsel of Susser Holding II and associate general counsel of Susser Holdings and Sunoco. The University of Houston law grad began his career as an associate at Andrews Kurth, now Hunton Andrews Kurth.
Bank of America Merrill Lynch was American Midstream’s financial adviser.
The sale includes the Harvey and Westwego terminals in the Port of New Orleans and the Brunswick terminal in the Port of Brunswick in Georgia. The move is part of American Midstream’s program to sell non-core assets to pay down debt.
American Midstream said in a statement it was continuing to work to close its $815 million acquisitions of Southcross Energy Partners and certain assets of Southcross Holdings with the appropriate capital structure for the combined entity going forward.
Kastner, DLA Piper work on Convey’s $10M funding round
Austin software developer Convey raised $10 million in funding from Silverton Partners, Techstars Venture Capital Fund, RPM Ventures and NextGen.
Convey used Kastner Gravelle partner Jerry Galvan while Silverton tapped DLA Piper partner Sam Zabaneh, both out of Austin.
The round brought the company’s total funding to $25.75 million. The investment will be used to expand product portfolio capabilities and add staffing in sales, engineering and customer service.
Convey’s software helps companies resolve shipping issues before they impact customers. It’s led by co-founder and CEO Rob Taylor, who previously worked at startup accelerator TechStars, the Capital Factory and pricing analytics provider BlackLocus, which Home Depot bought in 2012.
The company’s customers include four of the world’s top 10 retailers, including Neiman Marcus and Walmart unit Jet.com, as well as several global carriers. It claims its software provides four-times faster issue resolution across 22,000 exceptions managed daily.
Morgan Flager led the investment from Silverton Partners.
V&E advises TPG, the Rise Fund on CLEAResult acquisition
Vinson & Elkins said June 18 it advised TPG Growth and the Rise Fund in an agreement to acquire energy efficiency software provider CLEAResult from private equity firm General Atlantic.
Terms weren’t disclosed on the transaction, which is expected to close later this year after regulatory approval.
The V&E corporate team was led by partners Keith Fullenweider and Lande Spottswood with assistance from associates Robert Hughes, Connor Long and Kathryn Hastings.
The firm’s specialists in Texas on the deal included partner John Lynch (tax); partner Jo Ann Biggs (energy regulatory); partners Devika Kornbacher and Craig Tyler (intellectual property); and counsel Sarah Mitchell (litigation).
Others were partner Tom Wilson and senior associate Christie Alcala (labor/employment); partner Stephen Jacobson (executive compensation/benefits); and senior associate Matthew Dobbins (environmental).
Paul Weiss Rifkind Wharton & Garrison in New York represented General Atlantic.
Goldman Sachs, UBS, Credit Suisse and KeyBanc provided the financing for the transaction.
KeyBanc and Robert W. Baird & Co. were TPG’s financial advisers while J.P. Morgan and Piper Jaffray were financial advisers to General Atlantic.
Led by CEO Aziz Virani, Austin-based CLEAResult partners with utilities and local governments to design, implement and maintain services and programs that provide energy optimization and efficiency to residential, institutional, commercial and industrial organizations.
It claims it provides energy efficiency solutions to hundreds of utility customers across the U.S., delivering 4,500 gigawatts of energy savings last year.
Rick Needham is energy sector lead for the Rise Fund out of California. Peter Munzig is a principal at General Atlantic.
Paul Hastings aids GI on sperm/egg, stem cell bank purchases
Paul Hastings said June 19 that Houston partner Lindsay Sparks was a part of the team that represented GI Partners on its acquisitions of California Cryobank and Cord Blood Registry for undisclosed terms.
Sparks, who moved to Houston from the firm’s Orange County office in 2015, also worked on the combination of the two businesses for GI Partners.
California Cryobank was purchased from healthcare investors Longitude Capital and NovaQuest Capital. Cord Blood Registry was acquired from publicly traded AMAC Pharmaceuticals.
California Cryobrank claims to be the world’s top donor sperm and egg bank and Cord Blood Registry claims to be the world’s largest stem cell collection and storage company.
Cain Brothers & Co., a unit of KeyBanc Capital Markets, provided financial advice to California Cryobank, which used Morrison & Foerster for legal counsel.
The transaction is expected to close in the third quarter if it clears regulators.
The combination represents the fifth platform investment of GI Partners V, a $2.8 billion fund raised in 2017.
Paul Hastings said it’s represented GI Partners in several acquisitions over the last 10 years, including IT infrastructure and cloud provider Peak 10, retail facilities management provider Keller Bergensons Services and Canadian healthcare IT company Logibec from OMERS Private Equity.
V&E, Sidley advise on McKenzie purchase by Clearlake’s Gravity
Gravity Oilfield Services, which is backed by Clearlake Capital Group, said June 21 it bought McKenzie Energy Partners for undisclosed terms.
Vinson & Elkins senior associate Thomas Laughlin advised Clearlake with assistance from Aaron Carpenter, Nick Griffin and Alex Turner.
Also advising Gravity were Darin Schultz, Ryan Hunsaker, Amr Jayousi and Joe Higdon on financing matters, Jason McIntosh and Christine Mainguy on tax, Stephen Jacobson and Amy Benford on executive compensation and benefits, Larry Nettles on environmental issues, Sean Becker on labor and employment, Russell Oshman on real estate and Peter Mims on intellectual property.
Sidley Austin represented McKenzie, including partner Jim Rice and associate Chris Folmsbee in Houston.
McKenzie provides water management solutions for oil and gas operators in the Rockies’ Bakken formation through a network of produced water gathering pipelines and water disposal wells. McKenzie president Jeff Kummer is staying on.
Clearlake co-founder and managing partner José E. Feliciano and partner Colin Leonard led the investment. Philip Wright is Gravity’s executive vice president.
Kastner, Pillsbury counsel on SitePro funding from Cottonwood
SitePro, a Lubbock-based digital oilfield water management company, has raised an undisclosed amount of funding from investors led by Cottonwood Venture Partners.
SitePro’s earlier investors also participated in the round, including members of the Lubbock Angel Network.
Evan Kastner at Kastner Gravelle in Austin advised Cottonwood while Pillsbury partner Andrew Gajkowski, also of Austin, assisted SitePro.
The company plans to use the funding to expand to other geographies and augment its platform to add increased value to its customers.
SitePro’s products and services help oil and gas operators to manage their water infrastructure. It’s led by co-CEO’s David Bateman and Aaron Phillips.
Water management has become of increasing importance in the oil and gas industry as water production soars and regulatory requirements mount, increasing operating expenses for operators, SitePro said.
Ryan Gurney led the investment from Cottonwood.
TCF Capital finances River Associates’ purchase of Quikserv
TCF Capital Funding, a unit of TCF National Bank, provided secured financing to back River Associates Investments’ acquisition of Houston-based Quikserv, a maker of drive-thru/pass-thru window and drawer systems.
The parties didn’t disclose terms on the deal, which was announced March 23.
Glynn D. Nance at Nance & Simpson in Houston counseled Quikserv on the deal along with Mike Adams. Quikserv also tapped Brown Gibbons Lang & Co. for advice.
River Associates was represented by Nashville-based firm Waller Lansden Dortch & Davis.
Quikserv said it’s installed 85,000 units at restaurants, pharmacies, convenience stores, gas stations, stadiums, municipal and government buildings, schools, healthcare facilities and banks.
The company aims to acquire similar businesses, including those operating in commercial and security/bullet resistant markets, with sales of more than $5 million.
Quikserv is led by CEO Jason Epps. The investment was led by River Associates vice president Stuart Vyule out of the firm’s seventh fund.