With only eight deals worth a reported $6.3 billion announced last week, Texas lawyers seemed to lose some of the momentum that was building when 13 deals worth $14.5 billion were announced the previous week.
Eight law firms and 96 Texas lawyers were involved in dealmaking activity, compared with 10 law firms and 88 Texas lawyers in the previous period.
Energy deals seemed to hog the action, with oil and gas properties, infrastructure and oilfield services among the types of assets being traded around. There also was a chemicals deal and a franchise transaction. The types of deals ranged from asset sales to sales of whole companies to an initial public offering to a debt offering and an equity offering by the same company.
Asset sales may rule the day going forward, as changes to the U.S. tax code are ushering in a period of increased divestiture activity and more dynamic resource reallocation, according to a new report by consulting firm McKinsey & Co.
Tax rates on divestitures – which have gone down by about 40 percent – will motivate companies to consider shedding assets that lack scale for spinning off, the firm said. And complex deal structures – such as joint ventures, master limited partnerships and real estate investment trusts – may be used less often if the tax benefits from these deal types become less attractive, the firm added.
V&E, Latham advise on Devon’s $3.12B sale of EnLink interests to GIP
As reported last week by The Texas Lawbook, Texas attorneys from three different firms were involved in Devon Energy’s surprise sale of all of its interests in publicly traded entities EnLink Midstream Partners LP and EnLink Midstream LLC to Global Infrastructure Partners for $3.12 billion.
Vinson & Elkins advised Oklahoma City-based Devon with a team led by partner Ramey Layne with assistance from senior associate Crosby Scofield and associates Nettie Downs, Nick Griffin, Mariam Boxwala and Todd Hartis.
Also advising were partners Ryan Carney and Jim Meyer on tax and partner David D’Alessandro and associate Steven Oyler on executive compensation/benefits. They had help from attorneys in the firm’s Richmond, Virginia, Washington, D.C., and New York offices.
Latham & Watkins assisted Global Infrastructure Partners, known as GIP, with a group led by Charlie Carpenter, who offices out of New York and Houston, along with a partner in the firm’s New York office. Associates lending support were Kevin Richardson, Jing Bian, Bryan Ryan and Jack Traylor in Houston.
Houston partner Tim Fenn and associate Bryant Lee worked on tax matters; Houston partner Robin Fredrickson and associates Corey Allen and Betsy More worked on oil and gas issues; and Houston partner Joel Mack worked on environmental matters with an associate in Washington, D.C.
Finance, regulatory, benefits/compensation and antitrust matters were handled out of the firm’s New York and Washington offices.
Simpson Thacher & Bartlett advised Goldman on the financing, including Houston partner Robert Rabalais, counsel Jason Hwang and associate Zach Banks with support from an associate in the firm’s Washington, D.C. office.
Goldman Sachs advised Devon on the transaction and J.P. Morgan provided a fairness opinion to Devon’s board.
Devon expects to close the transaction in July and use the proceeds to boost the size of its stock repurchase program by $3 billion to $4 billion, or about 20 percent of its shares outstanding.
Analysts expect Devon to sell more assets, including its oil and gas properties in West Texas’ and New Mexico’s Permian Basin and possibly those in South Texas’ Eagle Ford shale, which could generate more work for V&E.
Baker Botts aids SI Group on reported $1.5B sale to SK Capital
Baker Botts said June 4 it advised performance additives developer SI Group on its sale to SK Capital.
Terms weren’t disclosed but AltAssets reported that the transaction has an enterprise value of between $1.5 billion and $2 billion, citing an unnamed source.
Bloomberg said in February that SI was exploring a potential sale that could approach $1.5 billion, citing unnamed sources.
The Baker Botts team included partner Geoffrey L. Newton and associates Michael Young, Michelle Matthews, Ian Lurie, Cale L. Curtin and Sumair Sangha, all of Dallas.
The firm tapped lawyers in Washington, D.C. and Brussels on antitrust matters and in New York on finance and intellectual property issues but on employee benefits and labor used partners Eric Winwood and Jennifer Trulock and associate Marian Fielding, all of Dallas.
Partner Aileen M. Hooks and special counsel Paulina Williams counseled on environmental matters out of Austin while Dallas senior associate Patrick Matthews helped on real estate and partner Stephen Marcus and associate Jordan Hahn of Dallas assisted on tax.
Latham & Wakins lawyers in Washington, D.C., counseled SK, which used HSBC Securities (USA) Inc. for financial advice. Debt financing was provided by HSBC as well as JPMorgan Chase, Deutsche Bank and Bank of America.
Headquartered in Schenectady, New York, SI operates 20 manufacturing facilities on five continents and has more than $1 billion in annual sales and 2,800 employees. SK is acquiring the company from the descendants of W. Howard Wright, a onetime General Electric chemist who founded the company in 1906.
At the close of the transaction, SK will combine SI and portfolio company Addivant, a global supplier of additives including antioxidants, antiozonants, inhibitors, polymer modifiers and UV stabilizers that improve the production and performance of polymers, plastics and rubbers. SK has owned Addivant since 2013.
The parties expected the transaction to close in the second half of this year.
Paul Hastings, Kirkland advise on Osprey’s Royal purchase from Blackstone
The Lawbook also reported last week that the Houston office of Paul Hastings served as special oil and gas counsel on Osprey Energy Acquisition Corp.’s purchase of properties in South Texas’ Eagle Ford shale from Blackstone-backed Royal Resources for cash and shares, creating a renamed company valued at $894 million.
The team was led by energy M&A partner Jimmy Vallee – who has known Osprey’s management for around 12 years and worked with them on about 15 transactions – and energy M&A associate Isaac Griesbaum. Others who worked on the deal were partners Lindsay Sparks and Greg Nelson and associates Monica Diddell and Stephen Perry.
Kirkland & Ellis’ Houston office represented Blackstone Energy Partners and Blackstone Capital Partners. That group was led by corporate partners Rhett Van Syoc – who has advised Blackstone on past deals – and associate David Thompson along with a partner in the firm’s New York office.
Kirkland Capital markets partners Matt Pacey and Michael Rigdon, debt finance partner Andy Veit and tax partner Mark Dundon also pitched in.
Wachtell Lipton Rosen & Katz was overall legal counsel to Osprey and Ledgewood in Philadelphia also served as its special oil and gas counsel.
Blackstone will contribute the Royal Resources assets – which represent all of the private equity firm’s mineral interests in the Eagle Ford – in exchange for $400 million in cash and 40 million shares of the newly named company, Falcon Minerals Corp.
The private equity firm may earn up to 10 million more shares if Falcon’s stock trades at $12.50 per share for 30 days on a volume-weighted average basis and another 10 million if the stock trades above $15 per share for 30 days on a volume-weighted average basis.
Blackstone’s return on the sale approached 3 times on paper, although it will probably exceed that level as the stock appreciates and dividends are paid out, according to a source.
Senior managing director Angelo Acconcia in New York led the deal from Blackstone.
The transaction includes a $115 million PIPE, or private investment in public equity, commitment. It was completed pre-signing for new common stock at $10 per share from unnamed investment firms.
Credit Suisse was capital markets adviser to Osprey and sole placement agent on the PIPE. Citi was financial and capital markets adviser to Blackstone and lead arranger and administrative agent on a fully underwritten reserves-based lending facility, which amounted to $500 million with an initial borrowing base of $115 million.
Osprey shareholders have to approve the deal, which is expected to close in September or October.
SPAC deals have been on the rise recently as these entities have raised money in initial public offerings and have to use it within a set time period – usually between 18 and 24 months – or be forced to dissolve and return the proceeds to shareholders.
Haynes and Boone aids Callon on $400M notes offering, $288M stock offering
Haynes and Boone said that it represented Callon Petroleum Co. on its $400 million private offering of 6.375 percent senior unsecured notes due 2026. The issue closed June 7.
The firm also advised Callon on its previously announced public offering of 25.3 million shares of its common stock. That offering closed May 30 and generated $288.6 million in net proceeds after deducting underwriters’ discounts and commissions and estimated offering expenses.
Houston partner Bill Nelson led the Haynes and Boone team representing Callon on the transactions. He was assisted by Houston partner Kristina Trauger, Dallas partners Paul Amiel and Monika Sanford and Houston associates Simin Sun and Janna Mouret.
Kirkland, Latham advising on AFG Holdings IPO
Onetime bankrupt oilfield services provider AFG Holdings filed for an initial public offering on June 1 with a $100 million placeholder and Texas lawyers from two different firms are working on it.
Kirkland & Ellis partners Matthew Pacey and Michael Rigdon are advising Houston-based AFG. Latham & Watkins partner Ryan Maierson is assisting the underwriters, which include Goldman Sachs, Credit Suisse, Simmons & Co., Barclays, Citi, Evercore ISI and Wells Fargo Securities.
AFG plans to trade on the New York Stock Exchange.
AFG’s general counsel is Thomas E. Giles, who joined the company, known as AFGlobal, in 2011. The University of Texas law graduate has 45 years of experience in the oil and gas and power generation markets.
Previously known as Ameriforge Group Inc., the company filed for Chapter 11 in April of last year and reemerged in June with a prepackaged recapitalization that reduced its funded debt by about $680 million.
The company’s backers, which include the Carlyle Group, Eaton Vance, First Reserve and Stellex Capital Partners, also injected it with $120 million in new capital.
First Reserve bought a majority interest in Ameriforge from Tanglewood Investments in 2012 for an undisclosed sum.
AFGlobal specializes in pressure pumping and managed pressure drilling systems. It was founded in 1996 and earned $7.5 million on sales of $170 million in the first quarter.
In June AFGlobal bought Canada’s Advanced Measurement Inc. from Key Energy Services Inc. for $4 million, according to the filing. And in October it acquired the Axon pressure pump technology and product line from Amkin Technologies for an undisclosed sum.
V&E, Kirkland aid Double Eagle on DoublePoint formation, acquisition
Vinson & Elkins said June 5 it advised Fort Worth-based Double Eagle Energy Holdings III on the formation of new company DoublePoint Energy with FourPoint Permian of Denver.
Terms weren’t disclosed, but DoublePoint will be a pure-play Midland Basin company with 70,000 acres in the core areas of the oil-rich, multi-pay zones in Midland, Glasscock, Martin, Howard, Upton and Reagan Counties, Texas.
The V&E team was led by partners Shay Kuperman and Shamus Crosby, senior associate Tan Lu and associate Michael Marek with help from a partner in the firm’s New York office.
The group had assistance from senior associate Matt Falcone on M&A and private equity, associate Brittany Smith on M&A and capital markets, partner David Peck and associate Brian Russell on tax, partner Stephen Jacobson and associate Kristy Fields on executive compensation and benefits and partner Sean Becker on labor and employment.
V&E also advised DoublePoint on its acquisition of assets from undisclosed sellers.
That team was led by lawyers in the New York office along with senior associate Thomas Laughlin on M&A and private equity with assistance from Peck, Russell, Jacobson, Fields and Becker.
Also pitching in were V&E associate Matt Hortenstine, partner Larry Nettles on environmental and natural resources and partner Matt Stammel on commercial and business litigation.
Kirkland & Ellis advised FourPoint Energy and its investors, Quantum Energy Partners and GSO Capital Partners. Kirkland also represented Magnetar Capital on its investment in Double Eagle.
The team that counseled FourPoint on its investment in DoublePoint included partners John Pitts and Andrew Calder and associates Kyle Watson, Sanjay Bapat and JP Lopez; oil and gas partner Anthony Speier and associates Chris Heasley and Hannah Craft; and debt finance partner Mary Kogut and associate Roxanne Walton.
The Kirkland lawyers that represented some of Quantum’s investors on their investment in FourPoint included corporate partners Doug Bacon and Jhett Nelson and associates Erik Shoemaker and Hannah Marshall.
The attorneys that represented GSO on its debt financing of DoublePoint consisted of Kirkland debt finance partners Will Bos and Andy Veit and associate Scott Reid.
The team that represented Magnetar on its investment in Double Eagle included Kirkland capital markets partner Matt Pacey and corporate partners Bill Benitez and Samuel Peca.
The assets of the new company are a combination of Double Eagle’s existing Midland Basin acreage and production along with additional assets that were recently acquired from undisclosed sellers.
DoublePoint will continue to consolidate its position in its core areas through bolt-on acreage acquisitions and acreage trades while investing more capital in an active drilling program.
Double Eagle has one rig running and plans to ramp up drilling and development over its largely undeveloped footprint once field and drilling operations are transitioned to the combined company.
Double Eagle III was formed last year with $1 billion in backing from funds managed by affiliates of Apollo Global Management, Magnetar Capital and management. Its previous incarnation sold its assets to Austin-based Parsley Energy for $2.8 billion.
FourPoint Energy was formed last year with $525 million in equity from Quantum Energy Partners, funds managed by GSO Capital Partners and other investors.
John Sellers and Cody Campbell will serve as co-CEO’s of DoublePoint and George Solich will be executive chairman.
The teams of both companies plan to continue to build and develop one of the last largely undeveloped positions in the core Midland Basin.
Jones Day represents Riverside/TDG on sale of Dwyer to Harvest
Jones Day said June 4 that it represented the Riverside Co. and TDG Group Holding Co. on the sale of the Dwyer Group to Harvest Partners for an undisclosed sum.
Dallas partner Michael Weinberg led the deal team, having advised Riverside on its acquisition of Dwyer from TZP Partners in 2014. He also counseled Dwyer on its later acquisitions of Five Star Painting, Real Property Management and Service Brands International, owner of Molly Maid, Mr. Handyman and ProTect Painters.
White & Case in New York counseled Harvest Partners. Harris William and William Blair provided financial advice to Riverside.
Waco-based Dwyer is a holding company of 20 consumer brands, 17 of which are franchised service brands focused on residential and light commercial services.
Riverside first invested in the company in 2003 and helped it complete and integrate 11 add-ons, expanding its franchise network to 3,200 franchisees operating in the U.S. and five European countries. Dwyer’s Ebitda increased more than 125% during Riverside’s ownership.
Suzy Kriscunas is managing partner at Riverside, which focuses on making control and non-control investments in growing businesses valued at up to $400 million.
Since its founding in 1988, Riverside has invested in 530 transactions and its international portfolio includes more than 80 companies.
Jones Day aids Children’s Health Texas on sale of pediatric clinic to Familia Care
Jones Day said June 8 it represented Children’s Health System of Texas and its unit Children’s Health Pediatric Group on the sale of its pediatric primary care clinic assets to Familia Care Inc. for an undisclosed sum.
Dallas partner Todd Kelly led the transaction.
Familia Care does business as MD Medical Group and Topcare Medical Group Inc. MD Medical is based in Las Colinas and runs primary care clinics mostly in the Dallas-Fort Worth area but also in Houston and Beaumont.
The deal was announced May 23 and includes 13 pediatric clinics. Three more clinics will close and dozens of pediatricians will lose their jobs, according CBS-DFW.