t o d ay ’ s t o p s t o r i e s f r o m T h e D e a l P i p e l i n e
MONDAY
JULY 20, 2015
VOLUME 26 ISSUE 137
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2 the daily deal Monday J u ly 20 2015
INDEX
TOP STORY
Capital calls
Activism
Exit Ramp: Emdeon
page 23
Halliburton’s play for Baker Hughes would set the combined
entity up for a price rebound, but it must clear the DOJ as regulators get tough on strategic deals. The signs look good for the
review but finding suitable buyers for divested assets could be a
problem page 5
In the latest edition of the Confidential Insurgent, our experts
discuss whether there is too much policing of joint action
by activists. What constitutes a group? What is a plan? How
about an agreement? page 7
National Oilwell Varco is a company in transition and shareholders will be pay close attention to how a new CEO navigates
a difficult business environment page 9
Large-cap Target of the Week: Skyworks Solutions page 9
The Watch List: A roster of companies that might soon rank
among the top targets pages 10-11
THE crosshairS
The Deal’s weekly ranking of the top 10 most likely potential
activist targets pages 12-13
Second-Quarter Bankruptcy league tables
Peace in a dispute over a refinery has come to the Sargeant family, but bankruptcy professionals say low oil prices will exact
pain on others in the energy industry just like them page 14
After being jilted by GE Capital, Ares has found a new partner.
The question is whether the new collaboration—with AIG and
Oak Hill—will provide the same benefits as its alliance with the
buyout lending champion
page 22
private briefing
Private equity investors have played an oversized role in the
consolidation of government services providers over the past 10
years. And the business has only gotten more competitive
page 24
safe harbor
J. Travis Laster, the Delaware Chancery Court’s boldest judge,
rejects a big settlement that was offered in exchange for global
release. If other jurists follow his lead, merger lawsuits would be
significantly reduced
page 25
sense of the markets
Delta Air Lines, which recently suffered a labor setback and
is under increasing regulatory scrutiny, has some high-profile
hedge funds among its shareholders
page 26
movers & shakers
Rankings of the top firms and professionals in the bankruptcy
business pages 14-18
Personnel changes at Inland Securities, Australia and New
Zealand Banking, Orix USA and other firms
page 27
m&a
feedback
Auction news from Victor Jets, Oculus VR, C&S Wholesale
Grocers, Mindtree, Albany Molecular Research and
IAC/InterActiveCorp page 19
company index
page 29
private equity
Founded by Telx veteran Hunter Newby, Allied Fiber doesn’t
offer network services, just space on a planned nationwide fiber
loop. It’s an enticing model, but Allied Fiber is facing off against
some big rivals
page 20
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The Deal Pipeline
Links to current content page 3
the daily deals
For a summary of current risk arbitrage situations, click here
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3 the daily deal M onday J uly 20 2015
THE DEAL PIPELINE
More intelligence is available to you in
The Deal Pipeline at www.thedeal.com/pipeline
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or contact customer service at 1-888-667-3325
Top M&A deals
in the past week
Exclusive video
The Deal speaks with Crowe
Horwath
The Deal’s Rhonda Schaffler
speaks with Marc Shaffer, an
M&A transaction advisory
partner with Crowe Horwath.
Target:
MarkWest Energy Partners LP
Acquirer: MPLX LP
Deal value: $18.9 billion
Announced: July 13
Target: Receptos Inc.
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Acquirer: Celgene Corp.
Deal value: $7.3 billion
Announced: July 14
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Target:
Getrag International GmbH
Acquirer: Magna International Inc.
Deal value: $2.7 billion
Announced: July 16
Target:
RKI Exploration & Production LLC
Acquirer: WPX Energy Inc.
Deal value: $2.4 billion
Announced: July 14
Target: Shred-It International Inc.
Acquirer: Stericycle Inc.
Deal value: $2.3 billion
Announced: July 15
Source: The Deal
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Most Recent Auctions
•El Paso Children’s Hospital Corp.
- 07/16/2015
•NextVR Inc. - M&A Opp. 07/16/2015
•Accretive Health Inc. - M&A Opp.
- 07/16/2015
Most Recent Bankruptcy
•Sabine Oil & Gas Corp. - Filing 07/15/2015
•1521 West Sherwin LLC - Filing 07/15/2015
•Walter Energy Inc. - Filing 07/15/2015
Most Recent Financings
•Signal International Inc. - DIP 07/13/2015
•Nelson Education Ltd. - Exit 07/06/2015
•JW Resources Inc. - DIP 07/02/2015
Most Recent M&A
•eBay Enterprise Inc. - 07/16/2015
•Enterprise Products Partners LP
- offshore pipeline and services
business - 07/16/2015
•Gadea Grupo Farmaceutico SI 07/16/2015
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5 the daily deal M o n day J u ly 20 2015
TOP STORY
Halliburton starts boxing out for an oil patch rebound
The company’s play for Baker Hughes must clear the DOJ as regulators get tough on strategic deals
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ing to take legal action against the transactions were Comcast Corp.’s (CMCSA) plan
to acquire fellow cable operator and broadband provider Time Warner Cable Inc.
(TWC) and the planned combination of
semiconductor fabrication equipment makers Applied Materials Inc. (AMAT) and
Tokyo Electron Ltd.
Judging by the outcome of those deals,
Halliburton’s plans would seem to face long
odds. Indeed, Baker Hughes demanded
strong antitrust protections in case regulators blocked the deal, which would combine the No. 2 and No. 3 oilfield services
providers. Their merger agreement called
for Halliburton to commit to making asset
divestitures representing up to $7.5 billion
in annual sales to resolve antitrust concerns
and to pay a steep $3.5 billion reverse termination fee if regulators block the deal.
But there are factors playing in Halliburton’s favor. The biggest is the downturn
in the oil business that has created excess
capacity among producers and companies
that help them draw oil out of the ground.
“The antitrust rules haven’t changed but
the context has,” said Bruce McDonald,
a partner in the energy practice at Jones
Day. “For the foreseeable future demand
for oilfield services will be down. There is
a lot of capacity and so the combination of
two existing players is less worrisome. They
can’t raise prices easily because others can
come in and buy up the slack.”
DESPITE HIS TARGET’S insistence on
steep antitrust protections, Lesar has maintained since the deal was announced in November that competition issues could be addressed through selective divestitures and
the DOJ opposition would not be a threat.
Nothing so far seems to have shaken his
confidence. On July 10, the companies announced a timing agreement with the DOJ
giving the agency up to three months to
continue reviewing the deal after they have
certified substantial compliance with the
DOJ’s second request for information. Under the agreement the companies will not
back
< Index >
BUSINESSJOURNAL
by Bill McConnell
From a business perspective it’s hard to
argue with the timing of Halliburton Co.
(HAL) chairman and CEO Dave Lesar’s
decision to make a play for oilfield services
rival Baker Hughes Inc. (BHI).
With per-barrel prices in a slump, their
customers—the major energy producers—
have been shutting down wells and otherwise reducing capacity. As a result, Halliburton, Baker Hughes and other providers
of rigs and drilling services to the producers
have been making massive cutbacks themselves. Lesar knows the downturn won’t
last forever and with the merger is positioning Halliburton to be a more efficient company with a broader platform of services on
which to ride the inevitable recovery.
How competition regulators view the
merger’s timing is a different matter. The
$27.5 billion combination, announced Nov.
17, is being reviewed amid a wave of strategic deals between competitors across a wide
range of industries and regulators, particularly in the U.S. and Europe, are subjecting
them to intense scrutiny.
The outcome of the merger review is
important to the oilfield services arena generally. M&A in the sector has been fairly
quiet because companies have been waiting
on the divestitures Halliburton and Baker
Hughes will need to make to gauge the valuations of their own assets.
In the first six months of this year, five
mergers have been terminated due to lawsuits filed by the Department of Justice and
the Federal Trade Commission or because of
the regulators’ threats to mount legal challenges. Deals dropped in the wake of court
action are Sysco Corp.’s (SYY) plan to acquire rival food services operator US Foods
Inc.; National CineMedia Inc.’s (NCMI)
proposed purchase of a competing provider
of on-screen ads to movie houses, private
equity-owned Screenvision LLC and the
proposed merger of medical sterilization
providers Steris Corp. (STE) and Synergy
Healthcare plc. Mergers terminated after
the regulators made it clear they were mov-
Halliburton ceo dave lesar
close the merger until the later of either Nov.
25, 2015, or 90 days after certifying substantial compliance. Under federal law, merging
parties may consummate a merger 30 days
after compliance is certified regardless of
whether antitrust officials have signed off.
It’s common for companies to enter agreements giving regulators more time, however. Halliburton and Baker Hughes said they
expect to certify substantial compliance
with the second request by midsummer.
The companies characterized the timing
agreement as typical for a large, complex
transaction because antitrust officials need
additional time to review the companies’ responses. The companies also said they continue to be in discussions with the DOJ, the
European Commission and other competition authorities around the globe regarding
the merger. As previously announced, Halliburton is seeking buyers for its Fixed Cutter and Roller Cone Drill Bits, Directional
Drilling and Logging-While-Drilling/Measurement-While-Drilling businesses, which
the company will sell to address antitrust
concerns. In addition, it is offering to divest
additional businesses that competition authorities may deem necessary to spin off.
Halliburton stressed that to date there is no
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6 the daily deal M on day Ju ly 20 2015
TOP STORY
< PREVIOUS
agreement with any competition authority
regarding the adequacy of Halliburton’s or
any divestiture proposal.
The nature of their divestiture proposals
show that they are counting on being able
to address the DOJ’s worries by divesting
specific product lines and rather than large
business segments. Some observers had
suggested early on that large segments such
as Completion, which is the running of production tubing and other steps necessary to
make a well ready for production; or Stimulation, which restores or enhances the productivity of a well, might have to be pared
off. Such large spinoffs would undercut
the rationale for the merger. But Halliburton officials argued that within the broad
categories are many subproduct lines and
services associated with each manufacturing location that can be divested to address
antitrust concerns.
McDonald said there is justification for
Halliburton’s contention because the major
producers play the service providers off of
each other when hiring providers to carry
out a range of work, including such things
as seismic testing, logging to clear a drilling
area, handling drilling mud and finishing
off well holes before extraction. “The producers will get the services they need from
whomever has the right skill set in a geographic area as well as according to price,”
he said.
Paradoxically, the recently blocked Sysco-US Foods merger may play into Halliburton’s favor. In the US Foods deal the
FTC defined the market narrowly, finding
that although there were many types of distributors to food service operations, the relevant market for that merger was broadline
operators with national footprints.
No divestiture package could preserve
the rationale for the deal and prevent the
handful of institutional customers that
would be hurt by combining the two national broadliners.
In this case, however, Halliburton is
willing to make a divestiture in any narrow
product line that the DOJ feels will be hurt.
“Different companies have different
strengths and different strengths depending if the producer is fracking or if drilling
on land, offshore or deep offshore,” McDon-
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ald observed.
Another recent merger approval indicating that Halliburton’s approach might carry
the day with regulators is the FTC’s recent clearance of Zimmer Holdings Inc.’s
(ZMH) acquisition of rival joint replacement
maker Biomet Inc. The combination created
the second-largest player in the market for
treating muscle and orthopedic injuries, behind Johnson & Johnson Inc. (JNJ), and
reduced the number of significant players to
four from five. The deal was approved after
the FTC accepted the parties’ offer to make
targeted divestitures of Zimmer’s Unicompartmental High Flex Knee system and Biomet’s Discovery Elbow System and Cobalt
bone cement assets.
THE NOTION that Halliburton can pare
off discreet business lines to DOJ’s satisfaction is shared by Tudor, Pickering, Holt &
Co. LP analyst Jeff Tillery. He noted in a report when the deal was announced last November that even in narrow product lines
the companies’ high market shares can be
deceiving.
For example, he pointed out that cementing services shows at first glance a high
combined market share for the companies.
But the real concentration in cementing is
offshore, he said, whereas onshore is less of
a problem.
“There are many other similar examples
and as such, forced divestitures across entire product/service lines are less likely than
specific niche products/services within the
broad categories which have high market
concentrations,” Tillery wrote.
After the parties reported the timing
agreement July 10, Tillery told clients the
announcement was a good sign for merger.
“We see [Halliburton] as committed to do
what’s necessary to get it across the finish
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< Index >
line,” he wrote.
Tillery has suggested that the true threat
to the merger is the difficulties Halliburton
will face integrating the two sprawling and
complex companies.
Jones Day’s McDonald said for buyers of
any divested Halliburton/Baker Hughes assets to be acceptable in the DOJ’s eyes they
must have the market presence to go headto-head with the new Halliburton as well as
the top oil field services provider, Schlumberger Ltd. (SLB). “They have to be in the
business and have the balance sheet to compete against the combined company and
Schlumberger,” he said.
The likely candidates, he predicted, are
National Oilwell Varco Inc., Weatherford International plc (WFT), Siemens
AG, and GE Oil & Gas. Any divested assets
that can operate as standalone business
could also be acquired by a PE buyer he predicted.
McDonald doubted the DOJ would accept Schlumberger as a buyer because there
are few oilfield services that it doesn’t provide already. “The DOJ will generally not
want the biggest players to get bigger but
wants the smaller ones better positioned to
compete,” he said.
Halliburton officials have stated they are
well on their way to finding buyers the DOJ
will accept for the assets it has already designated for sale. “We are very pleased with
the strong interest that’s been expressed in
the assets by potential buyers both within
the energy industry as well as outside the
industry, including a number of very capable financial sponsors,” Halliburton’s chief
integration officer, Mark McCollum, said
during the company’s first-quarter earnings call.
When it comes to a DOJ decision, the
views of the major producers may be the
deciding factor, McDonald said. Postmerger Schlumberger and the combined
Halliburton/Baker Hughes will be the only
oilfield servicers that can provide a broad
range of services. “If the DOJ thinks there
is a sizable customer group that wants to
buy a broad range of services from a single
company, just as the FTC did with the Sysco deal, that creates great problems for
this merger.” n
—Claire Poole in Houston contributed to this
report.
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7 the daily deal Monday J uly 20 2015
ACTIVISM
The Confidential Insurgent: The SEC takes on 13D filers
Experts discuss whether there is too much—or just enough—policing of joint action by activists
By Ronald Orol and Paula Schaap
Activist fund managers and other investors are required to publicly report their
stakes in Schedule 13D filings with the Securities and Exchange Commission within 10 days of owning 5% or more of a public
company when they have plans to communicate some sort of strategic options for
the business, which they must explain in
the report.
Investors who jointly agree to buy, sell
or vote securities and communicate their
intentions for the company are required
to jointly file a 13D if they together own
more than a 5% stake. Companies targeted
by insurgents lately have stepped up their
pressure on the SEC to identify whether
activists are working as a group but not
disclosing their ties.
With the regulator looking into whether activist funds have joined forces to target companies without disclosing their alliances, The Deal asked its panel of experts
to weigh in on a whether the SEC can—or
should—do more to improve activist fund
disclosures or if Congress needs to step in
with new legislation to change the playing
field.
The Deal: Do you think the SEC or Congress should redefine what it means for
activist funds to act jointly? Why or why
not?
Activist fund manager: The current SEC
rules prohibit investors from making decisions jointly on buying, selling or voting securities. We agree with those rules.
Any rules that would restrict a free flow
of investor’s views on a company, their
management or their board would seem
to be counter-productive to the owners of
the company discussing what they believe
needs to happen on their behalf. So, we are
comfortable the current rules, if followed,
are the right ones.
M&A attorney: Generally, activists have
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not been in violation of the law. If there
aren’t any formal plans or arrangements
they don’t have to file. But if you’re trying
to capture preliminary conversations—
what does that mean? Every time somebody has a conversation? You can’t clarify
what that means—it’s a factual question as
to whether there was an agreement, plan
or arrangement.
Corporate adviser, former M&A banker: In my practice, it is clear that in many
instances funds are acting in a coordinated
fashion despite not disclosing themselves
as a group. In a fight, there is a possibility
that this surfaces in discovery but for the
most part it is just tacitly understood to
be happening because there are too many
similarities among their thesis and statements. 13D requires disclosure of funds
acting in concert so it makes sense to redefine it to provide less of a gray area for
funds to operate in.
Adviser to targeted companies: Companies are limited in their ability to seek
redress for 13D violations because they
can’t pursue monetary damages under 13D
and effective injunctive relief is limited,
all of which frustrates private enforcement efforts. A move by Congress to authorize federal courts to award monetary
damages and broad injunctive relief when
it comes to 13D violations would drive a
much stricter level of compliance with the
rules.
Former SEC official: One of the things
we would think about is whether there
was something the agency should be doing to broaden the definition of a group to
force activist fund managers to disclose
groups earlier on. When Christopher Cox
was chairman at the SEC, the agency in
2007 issued a proxy access proposal that
also sought to move the 13D trigger line to
earlier in the process, but nothing came
of that. The difficulty was trying to deter-
back
< Index >
mine where to draw the line. Discussions
by activist fund managers don’t trigger a
group—there has to be an agreement to
buy, sell or vote securities. Congress could
consider doing something but it may be
better to have it come from the SEC so that
there is a public comment period on a proposal allowing everyone to weigh in on it.
The Deal: How would you suggest the SEC
or Congress balance the right of investors
to talk to one another about company concerns with the need for disclosure about
joint activism?
Corporate adviser, former M&A banker:
Frankly I don’t think there needs to be
much of a balance. 13D filers are a small
minority of investors—the right of communication of these investors pre-13D filing is a small concern relative to the broader policy objective of having transparency
when significant blocks are attempting to
influence the strategy of a public company
that impacts all shareholders. This is the
reason we have a distinction on 13D and
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8 the daily deal Monday July 20 2015
ACTIVISM
Hedging the activists
Performance of The Deal’s potential targets portfolio (market cap weighted) against the S&P 500 since inception
35
30
% increase
25
20
15
10
5
0
Jan feb
mar
apr
may
jun
jul
aug
sep
oct
nov
dec
Jan
The Deal
feb
MAR
apr
may
jun
jul
2015
2014
S&P 500 Index
Source: Bloomberg
< PREVIOUS
13G (passive 5%-plus holder). I think the
SEC should be expansive in interpreting
“groups,” which will likely require funds
to file sooner if they are trying to syndicate
their ideas.
M&A attorney: Let’s take the situation
where it’s a take private. If at the time you
have you have the first discussion—do you
have to file a 13D? I would argue no. You’re
considering it, but it’s not an agreement
plan or arrangement. The same could be
applied to hedge funds.
The Deal: The SEC has a lot on its plate
regarding corporate governance issues—
for instance, Chairwoman Mary Jo White
recently said the agency is moving toward
making recommendations for universal
proxy cards. Is the issue of activists acting
jointly important enough to warrant the
agency’s attention? And even if it is, does
the SEC have the resources to properly
oversee the issue?
Activist fund manager: Investors in a
particular company are the owners of
the business. They should have the absolute right to speak to one another and exchange ideas about companies. Generally,
these investors are talking about situations
where there are opportunities to improve
the current state of affairs of the company
that they jointly own. Many times these
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companies are underperforming and there
is a strong need for the owners of the companies to exchange views.
M&A attorney: It’s not so much that they
have so much on their plate, but it’s a really
tough question and I’m not sure there’s a
black and white answer unless the legislature says: you can’t talk to anyone—period.
Former SEC official: I think the SEC
has the resources to focus more energy on
13D violations but the question is do they
want to make it a priority. The SEC’s enforcement division should have an M&A
enforcement task force. Mary Jo White
set up a Financial Reporting and Audit
Task Force, and the agency found cases in
that area. When I was at the SEC, someone at the Division of Corporation Finance
would receive a tip, and we would go to
enforcement, and they would have a look.
However, without a task force in the area,
you don’t have people in the SEC’s enforcement unit specifically looking for 13D
violations. You don’t have people who are
looking for witnesses or teaming up with
the Justice Department on this. Maybe if
they had three or five people just focused
on M&A they would find enforcement in
that area.
SEC’s attention. It does not seem that
funds are really complying with the intent
of the law. However, the current administration has been very investor-focused
and activists have a tremendous amount
of lobbying clout in D.C. I wonder whether
the SEC really has the will or inclination
to do something that would be viewed as
corporate friendly.
The Deal: Some observers argue that lawsuits filed by companies alleging that activists are illegally acting as a group have
backfired by angering institutional investors. Do you agree or disagree and why?
Activist fund manager: In our experience most institutional investors find it
highly distasteful when companies start
suing their shareholders. Generally, we
find these lawsuits are often meritless and
accordingly are a waste of corporate assets. The lawsuits are designed to frustrate
the shareholder(s) they are filed against
and to further entrench the existing board
and management. Quite frankly, we would
find it more appropriate if companies had
to seek approval through a vote from its
shareholders before suing another shareholder of the company. In the absence of
approval from shareholders the board and
management team should be held personally liable to reimburse the company for
Corporate adviser, former M&A banker: It is important enough to warrant the
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< Index >
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9 the daily deal Monday Ju ly 20 2015
ACTIVISM
< PREVIOUS
all expenses incurred in taking legal action against a shareholder that does not
succeed.
Large-cap Target of the Week
Tie-up between the chipmaker and Qualcomm looks enticing
Corporate adviser, former M&A banker: Yes. It is not a viable option for companies defending against a proxy fight
because investors will say, “Why are you
using investors’ money to sue an investor?” Unless you can win completely on
litigation, the only time it works is if the
activist sues the company first.
M&A attorney: When a company is under siege from an activist it has lots of arrows its quiver and one of them is litigation. All’s fair in love and war. If someone
is violating the law, a board has a fiduciary
duty to protect the company. I don’t know
why an institutional investor should tell
the company—don’t act within your legal
rights to protect the company.
Former SEC official: Sometimes a more
quiet behind-the-scenes approach works
best. We went to the SEC and complained
that the activist didn’t switch from a passive 13G to an activist 13D filing even
though we had evidence the fund had engaged in activist intentions. The SEC never tells you what they did, but a 13D came
on file quickly afterward, and I’m sure it
was because the commission put pressure
on the fund to switch their filing.
You have to be careful about how you message your lawsuit: if you go after private
litigation you have to live with the repercussions of that. If you piss off the activists and the people who support them then
that’s a problem. If the targeted company
has a legitimate message about why they
are the right people to run the company
and they have a genuine beef with the activists who want to run the company but
they aren’t complying with the disclosure
rules and other investors aren’t getting the
best information about the company’s future then a lawsuit charging that they are
acting in concert makes sense. If it’s a nitpicking situation then the company has to
know that it is giving the activist help in its
public relations battle to gain the backing
of institutional investors. n
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After the consolidation in semiconQualcomm has faced pressure
ductors this year, Skyworks Sofrom shareholder Jana Partners
lutions Inc. (SWKS), with a $19.5
LLC, but that’s a scenario seen in
billion market cap, could interest a
the past: a deal done as a defensive
company such as mobile technolmeasure and to deliver the kind
ogy company
of
growth
Qua lcomm Skyworks Solutions (SWKS) by the numbers the activist is
SWKS
Peer average
Inc. (QCOM)
dem a nd i n g .
and is one Market cap
Also,
activ$19.56B
$6.45B
of the larg- P/E
ists
have
been
30.1
28.97
est remainknown to get
EPS growth (1 year)
64.86%
124.53%
ing takeover
on both sides
Revenue growth (1 year)
27.87%
13.80%
candidates.
of a merger
Skyworks
that
makes
Source: Bloomberg
makes chips
sense: witness
and components for diverse uses that the Men’s Wearhouse Inc.-Jos. A. Bank
range from cars and medical devices to Clothiers Inc. merger where Eminence
GPS systems and smartphones. Clients Capital LLC was in both companies and
include large tech groups Cisco Systems pushed for the deal. Tim Arcuri of CowInc. (CSCO) and Google Inc. (GOOG); en & Co. has suggested Qualcomm could
defense contractor Northrop Grumman seek to buy Skyworks for its radio frequenCorp. (NOC); Apple Inc. (AAPL) supplier cy chips. Woburn, Mass.-based Skyworks
Foxconn Technology Group and Qual- presents results from its third quarter on
comm.
July 23. n —Chris Nolter
National Oilwell faces turmoil
Houston-based oil services giant National
Oilwell Varco Inc. (NOV) has grown tremendously over the years via consolidation. Now, with the industry downturn coinciding with longtime chairman and CEO
Pete Miller’s departure, industry watchers
wonder whether shareholders are patient
with new CEO Clay Williams as he makes
changes (or doesn’t) at the company. “It
will come down to performance,” one
oil services banker said. Added another:
“National Oilwell could attract some [activism] if they remain under-levered and
don’t perform well.” In November, rumors
flew that the company was being targeted
by General Electric Co. (GE), which has
moved into oil services, but the conglomerate seems to have retrenched its growth
< Index >
cover
initiatives in energy given the downturn,
one of the bankers said.
National Oilwell’s stock is trading
around $43 per share, half of last year’s
level, and the shares are comparatively
cheap with a 7.53 price-to-earnings ratio
as compared to the industry average of
16.41. Billionaire Warren Buffett sold a big
chunk of his shares in the first quarter. Its
return on invested capital, according to
Bloomberg data, is 8.48% as compared to
12.48% for its peers, though its total return
in this commodity price-pressured environment over the past two years is in line
with the industry average: -30.39 for National Oilwell versus -32.45 for peers. For
all those reasons, the company joins our
watch list this week. n —Claire Poole
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10 the daily deal Monday July 20 2015
ACTIVISM
The watch list
A roster of companies that might soon rank among the top 10 potential activist targets
by the deal staff
American Eagle Outfitters Inc. (AEO)—
Teen retailer pleased investors on May
20, reporting that revenue increased 8%,
to $700 million, while comparable sales
increased 7%.
Approach Resources Inc. (AREX)—Approach said May 6 it lost $7.7 million, or
19 cents per share, on sales of $33.3 million in the first quarter, both of which
missed analysts’ forecasts.
Astec Industries Inc. (ASTE)—On April
21, the asphalt and aggregates supplier
said net sales were up 21% for the first
quarter to $288.7 million, though its
backlog was down 6%, primarily in international business because of the strong
dollar and slowdown in mining globally.
Atmel Corp. (ATML)—In early May,
CEO Steven Laub said he would retire at
the end of August.
Atwood Oceanics Inc. (ATW)—On April
29, offshore drilling contractor beat Wall
Street’s estimates for EPS by 26 cents.
Avon Products Inc. (AVP)—With Coty
buying Procter & Gamble’s beauty brands
for $12.5 billion, the company that once
offered to buy Avon for $10.7 billion is
now unlikely to consider re-upping.
Bed Bath & Beyond Inc. (BBBY)—On July
2, shareholders voted against the household retailer’s executive pay package.
Blucora Inc. (BCOR)—Blucora reported
first-quarter earnings of $1.03 per share
on April 30, topping forecasts of 91 cents
per share.
Bravo Brio Restaurant Group Inc.
(BBRG)—At restaurant chain’s annual
meeting on May 6, almost half of shareholders cast votes against incumbent director Thomas Baldwin.
close
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Cablevision Systems Corp. (CVC)—
Shares of the cable operator jumped May
21 after Altice announced the acquisition
of fellow cabler Suddenlink.
Caleres Inc. (CAL)—The former Brown
Shoe reported first-quarter results on
May 27, with revenue up 1.9%, to about
$600 million, while net earnings were
up 24.8%, to $19.3 million.
Campbell Soup Co. (CPB)—On June 25,
Campbell said it was authorizing additional pre-tax costs to help it take certain initatives, including employee severance benefits, to help it reduce costs
and streamline its organizational structure.
Comerica Inc. (CMA)—On July 13,
Comerica said executive vice president
J. Patrick Faubion had been named to
head up its Business Bank, replacing vice
chairman Lars Anderson who had resigned to pursue other opportunities.
Con-way Inc. (CNW)—Trucking company on April 29, reported first-quarter
earnings: though revenues missed analysts’ expectations, it beat on profit.
Contango Oil & Gas Co. (MCF)—On May
11, oil and gas explorer said net loss for
the first quarter of the year was $18.6
million, or $0.98 per basic and diluted
share, compared to a net loss of $10.2
million, or $0.53 per basic and diluted
share, for the prior-year quarter.
CSX Corp. (CSX)—Railroad has been hit
hard by energy price declines, especially
because it has a heavy exposure to coal.
Cubic Corp. (CUB)—Cubic reported a
fiscal second-quarter loss of 41 cents per
share, heavily influenced by restructuring charges, forex, M&A charges and
“costs related to an audit committee investigation totaling $2.5 million.”
back
< Index >
Cornerstone OnDemand Inc. (CSOD)—
On June 3, shareholders at the cloud
software developer’s annual meeting
voted against the company’s executive
pay package.
Dawson Geophysical Co. (DWSN)—On
May 18, Dawson reported a first-quarter
net loss of almost $6.6 million on sales of
$73.7 million.
Deckers Outdoor Corp. (DECK)—Footwear company reported fourth-quarter
earnings on May 28: revenue increased
15.6% to nearly $341 million, while net
income was in the black to the tune of
about $1.4 million, compared to a net
loss of close to $2.7 million in the same
quarter the year before.
Denbury Resources Inc. (DNR)—Oil and
gas producer lost almost $108 million, or
31 cents per share, in the first quarter, in
line with analysts’ projections, but had
lower-than-expected sales of $307.6 million, it reported on May 6.
DSW Inc. (DSW)—Shoe retailer reported results on May 27 for the quarter
ended May 2, noting that sales increased
9.4%, to $655 million, while net income
increased 22.6%, to more than $47 million.
First Niagara Financial Group Inc.
(FNFG)—On May 6, Goldman Sachs said
in an analyst report, that “While FNFG
has worked to improve revenue/returns,
we see slowing loan growth, pressures
on fees (service charges), a potentially
flatter-than-expected yield curve, and
low capital levels as headwinds-all of
which are not fully reflected in consensus (2016).”
Five Star Quality Care Inc. (FVE)—On
June 3, the operator of senior living com-
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11 the daily deal Mo n day Ju ly 20 2015
ACTIVISM
< PREVIOUS
on April 29, two cents below forecasts.
munities said that an Arizona jury had
awarded $19.2 million in damages in the
case of a former resident who died, a verdict that the company intends to appeal.
Michael Kors Holdings Ltd. (KORS)—
The retailer’s enterprise value collapsed
over the past year, and the company has
opened too many stores with same store
sales falling.
Genesco Inc. (GCO)—On May 29, the
shoe company reported first-quarter
net income of $9.9 million and EPS of 42
cents, missing analysts’ forecasts.
Gulf Island Fabrication Inc. (GIFI)—On
May 5, the Houston-based fabricator of
offshore drilling and production platforms said in a filing that its revenue
backlog slid to $135.1 million versus
$184.7 million at the end of 2014.
ICF International Inc. (ICFI)—Government and industry advisory company on
May 7 missed earnings and revenue estimates.
ITT Corp. (ITT)—On April 1, industrial
components maker said it had completed
the acquisition of Hartzell Aerospace,
which makes environmental control systems for the industry.
Jarden Corp. (JAH)—On July 13, consumer products maker said it was acquiring plasticware manufacturer Waddington North America inc. for $1.35 billion.
Keyw Holding Corp. (KEYW)—Defense
firm trying to diversify into the commercial sector recently lost its founder
and CEO Len Moodispaw, who died at
the age of 72.
Kirkland’s Inc. (KIRK)—Stock of the
home decor retailer rose by over 9% on
May 21 on its solid financial results for
its most recent quarter ended May 3.
Lumos Networks Corp. (LMOS)—The
telecom said March 11 that backer Quadrangle Capital Partners LP would reduce
its stake from about 12% to 5.3% through
a secondary offering.
Mantech International Inc. (MANT)—
Government IT provider reported firstquarter net income of 31 cents per share
close
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Modine Manufacturing Co. (MOD)—
Thermal management systems components maker has been hurt by forex
headwinds and is doing some restructuring. It recently lowered growth expectations to a 1% to 3% range, down
from a 3% to 6% range, largely blaming
currency headwinds.
National Oilwell Varco Inc. (NOV)—Oil
services company may have grown too
big over the years via consolidation. Investors may be watching to see if the new
CEO can turn around performance.
Omega Protein Corp. (OME)—Maker of
protein ingredients for human and animal food the company is in a consolidating sector and has the right financial
metrics to make it an attractive target.
Orthofix International NV (OFIX)—At
the annual meeting June 18, 23% of the
medtech company’s shareholders voted
against its executive pay package.
Owens & Minor Inc. (OMI)—On May
20, the medical supplies distributor appointed P. Cody Phipps as the company’s
president and CEO effective July 1.
Roundy’s Inc. (RNDY)—Private equity
backer Willis Stein & Partners has mostly sold out its stake in the supermarket
chain.
Sagent Pharmaceuticals Inc. (SGNT)—
On May 5, generic injectables company
reported a net loss of $1.9 million for the
first quarter, compared to net income of
$5.1 million in the first quarter of 2014.
SanDisk Corp. (SNDK)—At the flash
storage maker’s annual meeting June
18, two directors had significant votes
against them: Irwin Federman, with
13%, and Dr. Chenming Hu, with 16%.
back
< Index >
ScanSource Inc. (SCSC)—The barcoding
technology company said April 30 that
it had fiscal third-quarter revenues of
$763.2 million, below forecasts of $813.6
million.
Stanley Black & Decker Inc. (SWK)—New
Britain, Conn.-based toolmaker reported
a first-quarter EPS of $1.04 on April 23,
beating analysts’ $0.95 estimate.
Synopsys Inc. (SNPS)—On June 2, the
chip design software maker’s comptroller and principal accounting officer
resigned with the standard line that it
wasn’t due to any disagreement with the
company.
Textron Inc. (TXT)—Providence, R.I.based company has a mini-conglomerate
model with no strong connection between businesses that some have complained suffer from conglomerate discount.
US Cellular Corp. (USM)—Chicagobased US Cellular’s parent, Telephone
and Data Systems Inc., has sold wireless
towers and other operations and is looking increasingly small in an industry that
is still consolidating.
Weatherford International plc (WFT)—
On April 22, the Dublin-based energy
services provider’s earnings and revenue
fell short of Wall Street estimates.
Western Union Co. (WU)— On July 16,
Western Union said it had appointed
Martin Cole, the former CEO of Accenture plc to the board, with the board size
increasing to 12 from 11.
YRC Worldwide Inc. (YRCW)—On May
1, trucking company hit a new 52-week
low after an earnings miss.
Zions Bancorp. (ZION)—On June 1, Salt
Lake City-based bank announced a corporate restructuring that it said would
improve the its profitability metrics, including extending deploying cash into
mortgage-backed securities and interest
rate swaps, while reducing its portfolio
of CDOs. n
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12 the daily deal Monday July 20 2015
THE CROSSHAIRS
This
Week
Last
week
1
1
2
TOP 10 POTENTIAL ACTIVIST TARGETS
Coach Inc. (COH)
On June 22, luxury accessories maker amended its agreements with top executives to include more of them in its severance package grants, as well as to require clawbacks if the named executives didn’t give three months’ notice of plans
to leave.
-
P/E
ROIC
D/C
I%
MC
60DMA
UPI
16.74
15.42
5.49
0.97
$8.8B
$36.44
1149%
Urban Outfitters Inc. (URBN)
On June 2, shareholders at the retailer’s annual meeting cast about 40% of their votes against several directors, including co-founder Richard Hayne and his wife Margaret.
3
-
P/E
ROIC
D/C
I%
MC
60DMA
UPI
18.75
16.57
0
25.75
$4.6B
$37.01
961%
Stage Stores Inc. (SSI)
On June 7, director Gabrielle Greene-Sulzberger said she was resigning from the board to devote additional time to
other professional opportunities; the size of the board temporarily was reduced to nine directors.
4
2
P/E
ROIC
D/C
I%
MC
60DMA
UPI
14.66
7.94
9.06
4.15
$581.5M
$18.15
748%
Titan International Inc. (TWI)
Tire maker’s shareholders weren’t happy with its executive pay as demonstrated by an almost 30% negative vote on say
on pay at the annual shareholder meeting June 5.
5
-
P/E
ROIC
D/C
I%
MC
60DMA
UPI
NA
-7.68
46.98
4.23
$519M
$10.68
600%
Genesco Inc. (GCO)
Footwear company said May 29 that its net sales increased 5% for the first quarter, though its net earnings were down
to $10 million as compared to $14 million for the same period a year prior.
P/E
ROIC
D/C
I%
MC
60DMA
UPI
13.74
10.26
2.84
3.45
$1.6B
$67.62
543%
CONTINUED >
60DMA: 60-day moving average UPS: Underperformance Index: (Percentage by which the company underperformed its peers) ROIC: Return on invested capital
P/E: Forward Price/Earnings ratio D/C: Debt to capital ratio MC: Market capitalization I%: Percentage of insider shares outstanding
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13 the daily deal Mo n day J uly 20 2015
THE CROSSHAIRS
< PREVIOUS
This
Week
Last
week
6
-
Ascena Retail Group Inc. (ASNA)
Though the women’s specialty retail operator is acquiring Ann Taylor parent Ann Inc. for $2.15 billion, it still has its
problems. On July 10 Ascena said it would take an asset impairment charge tied to Lane Bryant; it also lowered its full
year EPS guidance.
7
3
P/E
ROIC
D/C
I%
MC
60DMA
UPI
23.08
4.81
19.48
14.06
$2.2B
$15.51
435%
Demand Media Inc. (DMD)
On June 8, Osmium Partners, a sometime activist firm, revealed a 6.6% passive stake in the Internet media company.
8
-
P/E
ROIC
D/C
I%
MC
60DMA
UPI
NA
-73.25
0
7.64
$119.6M
$5.93
372%
Jacobs Engineering Group Inc. (JEC)
On April 28, Jacobs Engineering missed on EPS and revenue: $0.72 EPS versus $0.79 estimated; $2.9 billion revenue
versus $3.2 billion estimated.
9
9
P/E
ROIC
D/C
I%
MC
60DMA
UPI
13.26
6.63
15.09
2.07
$5.0B
$42.97
356%
NetApp Inc. (NTAP)
NetApp said June 1 that Chairman and CEO Tom Georgens was leaving immediately. UBS analyst Steven Milunovich
said it appeared he was pushed out for lack of execution.
10
5
P/E
ROIC
D/C
I%
MC
60DMA
UPI
14.45
12.27
30.35
0.79
$9.5B
$33.75
264%
Pier 1 Imports Inc. (PIR)
On June 17, home furnishings seller said its fiscal first quarter earnings fell 54% on higher costs, though its EPS was in
line with expectations and it had comparable sales growth of 4%.
P/E
ROIC
D/C
I%
MC
60DMA
UPI
15.57
13.82
38.00
5.06
$1.2B
$12.66
254%
60DMA: 60-day moving average UPS: Underperformance Index: (Percentage by which the company underperformed its peers) ROIC: Return on invested capital
P/E: Forward Price/Earnings ratio D/C: Debt to capital ratio MC: Market capitalization I%: Percentage of insider shares outstanding
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14 the daily deal Monday Ju ly 20 2015
BANKRUPTCY
more at the deal Pipeline >
bankruptcy m&a by industry bankruptcy auctions by industry dip financings
Family feuds fueled by low oil prices
Peace come to the Sargeants, but bankruptcy professionals say others like them will also feel pain
law firms , volume
By kelsey butler and Alicia McElhaney
Families can fight over many things: holidays, wills and who is actually Mom’s favorite. And asphalt refineries?
In Texas, where everything is big, one family, the Sargeants, indeed fought over an oil-dependent asphalt refinery, and it led to a
bankruptcy fight that only recently has been resolved.
Things are getting so bad in the oil patch that bankruptcy professionals believe that the brother-versus-brother donnybrook may
only be a preclude to other nasty battles there. A barrel of West Texas Intermediate oil, at a recent $52.97, is down from $101.73 a year
ago, and tempers may be running high.
“Any company today that supplies goods and services to the oil
patch is experiencing stress,” said Kenneth Rosen, a partner at Lowenstein Sandler LLP whose 35 active cases put him in a tie for
19th place among lawyers in the Deal’s Bankruptcy League Table
rankings for the first half of 2015.
One example: Chesterfield, Mo.-based Boomerang Tube LLC,
which makes piping for the energy space, filed for Chapter 11 in the
U.S. Bankruptcy Court for the District of Delaware in Wilmington
on June 9.
“If the people that are transporting oil, that are refining oil, that
are making products that are used in the oil industry are not hiring
and laying [people] off, I needn’t tell you what the impact of that is
in the local communities,” Rosen said. “A lot more companies that
are either in the oil patch or that service the oil patch will be going
through a financial restructuring.”
Andrew Lipow, president of Houston consulting firm Lipow Oil
Associates LLC, said the increase in the oil supply is outpacing the
increase in demand, putting pressure on oil prices. Iraq is producing oil at record levels, and Saudi Arabia and Russia are producing at
near-record levels, he added. “Oil prices are going to remain under
pressure through the balance of 2016, as we have yet to see much of
an impact on the declining rig count and oil production in the U.S.,”
Lipow predicted. And many of the smaller, most vulnerable companies are family-owned.
THE SARGEANTS’ SITUATION hasn’t been helped by the challenges of declining oil prices, but it did predate them.
Trigeant Holdings Ltd., which is owned and operated by Harry Sargeant Jr., and his sons James, Daniel and Harry III, owned
a refinery in Corpus Christi, Texas, that at one time bought crude
oil to process into asphalt from PDVSA Petroleo SA. Because of
disputes regarding payments for the oil deliveries to Trigeant, PDVSA obtained an arbitration award against Trigeant for nonpay-
CONTINUED >
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( $ bill .)
Law firm
No. of
active cases
Avg.
liabilities
Liabilities
1
Akin Gump Strauss Hauer & Feld LLP
86
$12.5
$1,070.9
2
Vedder Price PC
48
21.5
1,031.0
3
Duane Morris LLP
131
7.5
977.9
4
DLA Piper
105
8.8
925.7
5
Latham & Watkins LLP
66
13.9
917.6
6
Debevoise & Plimpton LLP
15
60.9
913.0
7
Goulston & Storrs PC
50
18.2
910.9
8
King & Spalding LLP
46
19.8
909.7
9
Orrick, Herrington & Sutcliffe LLP
40
21.9
874.4
10
Cleary Gottlieb Steen & Hamilton LLP
12
72.4
868.2
11
Chadbourne & Parke LLP
28
30.6
855.6
12
Ropes & Gray LLP
16
52.7
842.8
13
Saul Ewing LLP
51
15.9
813.2
14
Skadden, Arps, Slate, Meagher & Flom LLP
66
12.3
809.1
15
Cravath, Swaine & Moore LLP
7
115.1
805.5
lawyers, volume
( $ b i l l .)
Lawyer
Law firm
1
2
3
Rosner, Douglas
Hahn, Richard
Davidson, Scott
Goulston & Storrs PC
4
Golden, Daniel
5
6
No. of
active cases
Avg.
liabilities
Liabilities
33
8
9
$27.1
110.2
95.8
$895.3
881.5
862.1
833.0
Debevoise & Plimpton LLP
13
64.1
Gilhuly, Peter
King & Spalding LLP
Akin Gump Strauss Hauer
& Feld LLP
Latham & Watkins LLP
23
36.2
832.3
Steinberg, Arthur
King & Spalding LLP
10
79.4
794.4
Nixon, Timothy
Williamson, Brady
Wofford, Keith
9 Lipke, Douglas
10 Seife, Howard
Godfrey & Kahn SC
Godfrey & Kahn SC
Ropes & Gray LLP
Vedder Price PC
Chadbourne & Parke LLP
4
2
2
40
17
196.5
392.9
392.9
18.7
43.6
785.9
785.8
785.8
746.3
740.6
11
Lauria, Thomas
White & Case LLP
17
43.5
739.5
12
LeMay, David
Chadbourne & Parke LLP
8
89.9
719.2
8
89.8
718.6
9
76.4
687.9
7
98.0
686.2
7
8
13
Mayer, Thomas
14
Milmoe, J. Gregory
15
Kiplok, Christopher
< Index >
Kramer Levin Naftalis &
Frankel LLP
Skadden, Arps, Slate,
Meagher & Flom LLP
Hughes Hubbard & Reed
LLP
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15 the daily deal M onday July 20 2015
BANKRUPTCY LEAGUE TABLES
< PREVIOUS
investment banks , volume
ment, and in order to pay it, the latter mortgaged the refinery and
obtained a loan from American Capital Financial Services Inc.
In 2007, Trigeant defaulted on its AmCap debt and the bank put the
company’s oil refinery into foreclosure.
In addition to working for Trigeant, Harry III also had business
interests of his own, including BTB Refining LLC. In December
2007, BTB swooped in and purchased the AmCap debt, and on
March 4, 2008, BTB foreclosed on the real property. After that
foreclosure, BTB entered into an agreement under which Trigeant
continued to operate the refinery on BTB’s behalf in exchange for a
fee paid by BTB to Trigeant. According to BTB, Trigeant ultimately
violated its lease with BTB, so BTB blocked Trigeant from processing crude oil stored in the refinery.
While Harry III, a former Marine fighter pilot, worked with his
family, it’s this incident that seems to have pitted Harry III against
his father and two brothers and festered for a number of years.
Each side has accused the other of breaches of fiduciary duty
and fraud, with the result being bankruptcy filings and at least a
dozen lawsuits.
Trigeant first filed for Chapter 11 in the U.S. Bankruptcy Court
for the Southern District of Florida in West Palm Beach on Nov. 27,
2013. In a Jan. 22, 2014, motion, BTB sought to dismiss the bankruptcy filing, asserting the estate was not likely to reorganize in
Chapter 11. The creditor cited issues with the alleged “grossly administratively insolvent case” and its failure to maintain appropriate insurance, which allegedly posed a risk to the estate or the
public. Judge Erik P. Kimball ultimately agreed with BTB, and dismissed Trigeant’s filing on April 9, 2014.
Then, on July 28, petitioning creditors including Harry Jr., Daniel and James, filed an involuntary Chapter 7 petition against BTB
in the same West Palm Beach, Fla., court.
In court papers, BTB, controlled by Harry III, alleged that the involuntary petition against it was the latest in a string of legal moves
in the running dispute among the family members. BTB argued
that its $23 million lien against Trigeant was behind the Sargeant
family’s efforts to interfere with its business affairs.
“This involuntary petition is an improper defensive litigation
tactic by Trigeant and the Sargeants,” BTB said, adding that the filing was simply a part of an “ongoing years-long attempt to stave off
BTB’s foreclosure of its first lien on Trigeant’s refinery.
Kimball ultimately tossed out the involuntary case on Dec. 15,
siding with BTB, which had asserted that it was paying all its debts
as they came due and that the filing was simply a means to “advance
the litigation agenda of its principals,” namely Harry Jr., Daniel and
James Sargeant.
But the barbs weren’t limited to the bankruptcy court. In a May
9, 2013, suit in the Circuit Court for the Fifteenth Judicial Circuit
for Palm Beach County in Florida, Daniel called out Harry III for a
“taste for very expensive toys” and said that his penchant for excess
forced the rest of the family to boot him from his managerial roles
at the family businesses, including Trigeant.
1
Blackstone Group LP
2
CONTINUED >
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( $bill.)
Avg.
liabilities
Liabilities
40
20.8
831.4
Miller Buckfire & Co. LLC
7
103.7
726.1
3
Jefferies LLC
15
7.9
118.3
4
Solic Capital Advisors LLC
12
6.7
80.8
5
Millstein & Co.
2
34.8
69.6
6
Centerview Partners LLC
2
32.5
65.0
No. of
active cases
Bank
7
Evercore Group LLC
8
6.7
53.6
8
Peter J. Solomon Co.
1
49.7
49.7
9
Moelis & Co. LLC
18
2.3
41.4
10
Houlihan Lokey Inc.
18
2.1
38.6
crisis management firms , volume
No. of
Firm
active cases
( $bill.)
Avg.
liabilities
Liabilities
1
FTI Consulting Inc.
94
$10.5
$987.2
2
Goldin Associates LLC
12
61.2
734.9
3
BRG Capstone
24
7.8
186.7
4
Alvarez & Marsal LLC
33
2.6
87.2
5
Gavin/Solmonese LLC
26
2.4
63.3
6
AlixPartners LLP
22
2.4
53.0
7
Protiviti Inc.
18
1.8
32.0
8
Conway MacKenzie Inc.
18
0.8
14.1
9
Huron Consulting Group Inc.
10
0.9
9.0
10
McKinsey Recovery & Transformation
Services U.S. LLC
2
2.9
5.7
noninvestment banks , volume ( $bill .)
Avg.
No. of
Firm *
active cases
liabilities
Liabilities
1
Epiq Bankruptcy Solutions LLC
81
$10.4
$841.2
2
BMC Group Inc.
63
11.6
728.0
3
Kurtzman Carson Consultants LLC
115
2.0
230.7
4
KPMG
3
25.1
75.4
Garden City Group Inc.
26
2.1
53.7
Kekst and Co.
7
7.7
53.7
6
Perry Street Communications
1
49.7
49.7
7
Prime Clerk LLC
39
1.1
44.4
8
EisnerAmper LLP
25
0.7
17.7
9
Rubenstein Associates Inc.
1
15.3
15.3
10
Donlin, Recano & Co.
16
0.9
14.7
5
*Deloitte includes Deloitte & Touche Inc., Deloitte & Touche LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP and
Deloitte Touche Tohmatsu; Ernst & Young includes Ernst & Young Inc. and Ernst & Young LLP; KPMG includes KPMG Corporate
Recovery, KPMG Inc. and KPMG LLP.
< Index >
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16 the daily deal Monday J uly 20 2015
BANKRUPTCY LEAGUE TABLES
investment bankers , volume
< PREVIOUS
For his part, Harry III said that Daniel, with the help of James,
Harry Jr. and Stephen Roos, the CFO of related entity Sargeant
Trading Ltd., “orchestrated an ongoing scheme to siphon off millions of dollars in personal expenses” that were “wholly unrelated”
to Sargeant Trading’s business.
What’s more, Harry III alleged that his family members “commenced a scheme to misappropriate the corporate opportunities of
Sargeant Trading by forming a new entity in which he was not a
shareholder—Global Asphalt Logistics and Trading SAGL.
Shortly after its principals filed the involuntary petition for BTB,
Trigeant tried to put itself into Chapter 11, first on Aug. 25 in the
West Palm Beach court, and then, when that case was dismissed,
on Sept. 16. The company’s reorganization plan went effective on
June 5, thanks to the deal all the parties reached on May 1 to sell
the Corpus Christi refinery to Houston-based oil processor Gravity Midstream LLC, a portfolio company of private equity firm
EnCap Flatrock Midstream LP.
Under the $100 million sale, which was completed on June 8,
Harry III received $56 million. The $44 million remainder has
been set aside to pay off Trigeant’s creditors. In return, Harry III,
who also served as finance chair to the Florida Republican Party
from 2007 to 2009, has agreed to give up any ownership interest in
companies owned by his father and his brothers.
The brothers extended an olive branch to each other when the
deal was announced. “I am pleased with and support this agreement that will permit the sale of the refinery to Gravity to proceed,
and that resolves all of our disputes,” said Harry III in a statement
to which Daniel added, “We are pleased to have resolved these matters, and especially that all approved claims in the Trigeant bankruptcy estate will be paid 100%.”
Neither party shed light on what prompted both sides to agree
to the deal, or how many concessions needed to be made for the
pact. Counsel for Harry Jr., Daniel and James, Charles H. Lichtman at Berger Singerman LP (the firm’s 47 active cases place it
27th among law firms) couldn’t be reached for comment. Counsel to
Trigeant, Mark D. Bloom at Greenberg Traurig PA (60 active cases, tying it for 23rd among law firms) directed requests for comment
on the matter to Jordi Guso at Berger Singerman, who couldn’t be
reached. Counsel to Harry III, Christopher M. Kise at Foley Lardner LLP (25 active cases, tying it for 46th among law firms), and
counsel to BTB, Charles W. Throckmorton at Kozyak Tropin &
Throckmorton PA (7 active cases), also couldn’t be reached.
FAMILY DISPUTES involving business matters are as old as the
concept of family. “What we see often is that a business outgrows
the family that started it,” Lowenstein Sandler’s Rosen said. “Maybe the managing family can no longer effectively run it, or a family
dispute paralyzes the company. Sometimes the controlling family simply cannot see how the industry, market or competition has
changed. They are stuck in their old ways and cannot see the forest
from the trees. Family disputes can cripple a company.”
CONTINUED >
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( $bill.)
No. of
active
cases
Avg.
liabilities
Liabilities
8
$89.8
$718.1
Miller Buckfire & Co. LLC
3
217.7
653.2
Jefferies LLC
8
13.8
110.4
Blackstone Group LP
8
10.2
81.8
Solic Capital Advisors LLC
11
7.3
80.7
Solic Capital Advisors LLC
9
8.8
79.6
Banker
Bank
1
Coleman, Timothy
Blackstone Group LP
2
Erickson, Stuart
3
Szlezinger, Leon
4
Zelin, Steven
5
Luria, Neil
6
Casas, Edward
7
Millstein, James
Millstein & Co.
2
34.8
69.6
8
Nowitz, Raoul
Solic Capital Advisors LLC
3
18.2
54.7
9
Cesarz, John
Miller Buckfire & Co. LLC
2
25.7
51.3
10
Klein, Richard
Jefferies LLC
6
8.5
51.0
No. of
active
cases
Avg.
liabilities
Liabilities
$75.2
$826.8
crisis managers , volume
( $bill.)
Professional
Firm
1
Tully, Conor
FTI Consulting Inc.
11
2
Star, Samuel
FTI Consulting Inc.
12
55.1
661.5
3
Pauker, David
Goldin Associates LLC
6
107.2
643.3
4
Eisenband, Michael
FTI Consulting Inc.
14
21.1
295.2
5
Kearns, Christopher
BRG Capstone
9
11.3
101.6
6
Nolan, William
FTI Consulting Inc.
7
11.7
81.7
7
Simms, Steve
FTI Consulting Inc.
15
5.2
77.7
Joffe, Steven
FTI Consulting Inc.
5
15.2
75.8
Chadwick, Peter
BRG Capstone
5
11.7
58.7
Greenspan, Ronald
FTI Consulting Inc.
8
7.3
58.7
Weitz, Wayne
Gavin/Solmonese LLC
11
4.9
54.1
8
9
10
noninvestment bankers , volume
( $bill.)
Professional
Firm
No. of
active
cases
Avg.
liabilities Liabilities
1
Corrie, Pamela
Epiq Bankruptcy Solutions LLC
103
$8.2
$840.7
2
Feil, Tinamarie
BMC Group Inc.
57
12.7
721.4
3
Kass, Albert
Kurtzman Carson Consultants
LLC
113
2.0
230.5
Berman, E.; David,
J.; Hill, P.; Kriger, K.;
Lovern, R.
Kekst and Co.
1
49.7
49.7
Bibby, Thomas
KPMG LLP
1
49.7
49.7
4
Morgan, Jonathan
Perry Street Communications
1
49.7
49.7
5
Waisman, Shai
Prime Clerk LLC
34
1.2
41.5
6
Beekenkamp, B.;
McDonald, M.
Ernst & Young Inc.
1
22.4
22.4
EisnerAmper LLP
7
Phillips, Edward
7
2.3
16.0
8
Kresler, T.; Stockham, A. Rubenstein Associates Inc.
1
15.3
15.3
9
McCormick, Colleen
Donlin, Recano & Co.
10
1.2
12.2
10
Johnson, Craig
Garden City Group Inc.
1
10.2
10.2
< Index >
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17 the daily deal M o n day July 20 2015
BANKRUPTCY LEAGUE TABLES
law firms , number
No. of
active cases
Law firm
1
Duane Morris LLP
220
2
Dentons
212
3
Young Conaway Stargatt & Taylor LLP
177
4
Richards, Layton & Finger PA
164
5
Ballard Spahr LLP
153
6
DLA Piper
149
7
Pachulski Stang Ziehl & Jones LLP
134
8
Cooley LLP
110
9
McCarter & English LLP
101
10
Akin Gump Strauss Hauer & Feld LLP
97
11
Latham & Watkins LLP
94
Katten Muchin Rosenman LLP
90
Morgan, Lewis & Bockius LLP
90
13
Lowenstein Sandler LLP
84
14
Skadden, Arps, Slate, Meagher & Flom LLP
83
15
Blank Rome LLP
74
16
Reed Smith LLP
72
17
Vedder Price PC
71
18
King & Spalding LLP
69
19
Goulston & Storrs PC
68
20
DelBello, Donnellan, Weingarten, Wise & Wiederkehr LLP
64
21
Cole, Schotz, Meisel, Forman & Leonard PA
63
22
Orrick, Herrington & Sutcliffe LLP
61
Greenberg Traurig LLP
60
Kirkland & Ellis LLP
60
Saul Ewing LLP
60
Weil, Gotshal & Manges LLP
57
Jackson Walker LLP
51
Levene, Neale, Bender, Yoo & Brill LLP
51
26
Holland & Knight LLP
49
27
12
23
24
25
Berger Singerman LLP
47
28
Drinker Biddle & Reath LLP
46
29
Kelley Drye & Warren LLP
45
30
White & Case LLP
44
Baker & Hostetler LLP
42
Dechert LLP
42
Sidley Austin LLP
41
Stichter, Riedel, Blain & Prosser PA
41
Jones Day
40
Kutner Brinen Garber PC
40
Norton Rose Fulbright LLP
40
31
32
33
Includes all debtor, creditor and other assignments within active bankruptcy cases in the United States and Canada. All cases active
as of June 30, 2015.
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lawyers , number
No. of active
assignments
Lawyer
Law firm
1
Branch, Dustin
Katten Muchin Rosenman LLP
643
2
Pollack, David
Ballard Spahr LLP
394
3
Huben, Brian
Katten Muchin Rosenman LLP
233
4
Carr, James
Kelley Drye & Warren LLP
107
5
Collins, Mark
Richards, Layton & Finger PA
80
Minuti, Mark
Saul Ewing LLP
59
Nestor, Michael
Young Conaway Stargatt & Taylor LLP
59
7
Taylor, William
McCarter & English LLP
56
8
Herman, Neil
Morgan, Lewis & Bockius LLP
53
9
Jones, Laura
Pachulski Stang Ziehl & Jones LLP
50
10
Mayer, Katharine
McCarter & English LLP
49
11
Bellavia, Leonard
Bellavia Blatt Andron & Crossett PC
47
12
Brady, Robert
Young Conaway Stargatt & Taylor LLP
46
13
Gottlieb, Lawrence
Cooley LLP
43
14
Pasternak, Jonathan
DelBello, Donnellan, Weingarten,
Wise & Wiederkehr LLP
41
15
Lipke, Douglas
Vedder Price PC
40
16
Rosner, Douglas
Goulston & Storrs PC
39
17
Heath, Paul
Richards, Layton & Finger PA
37
18
Ford, Buddy
Buddy D. Ford PA
36
Miller, Brett
Morrison & Foerster LLP
35
Rosen, Kenneth
Lowenstein Sandler LLP
35
Hershcopf, C.; Indyke, J.
Cooley LLP
34
Holden, Frederick
Orrick, Herrington & Sutcliffe LLP
34
6
19
20
Includes all debtor, creditor and other assignments within active bankruptcy cases in the United States and Canada. All cases active
as of June 30, 2015.
< Index >
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18 the daily deal M o n day July 20 2015
BANKRUPTCY LEAGUE TABLES
investment banks, number
No. of
active cases
Bank
investment bankers, number
No. of active
assignments
Banker
Bank
Genereux, Michael
Blackstone Group LP
13
Luria, Neil
Solic Capital Advisors LLC
13
1
Blackstone Group LP
44
2
Carl Marks Securities LLC
22
Houlihan Lokey Inc.
20
2
Wu, Christopher
Carl Marks Securities LLC
12
Moelis & Co. LLC
20
3
Casas, Edward
Solic Capital Advisors LLC
11
4
Lazard Ltd.
17
Coleman, T.; Zelin, S.
Blackstone Group LP
8
3
1
5
Jefferies LLC
16
Rubin, Matthew
Solic Capital Advisors LLC
8
6
Solic Capital Advisors LLC
15
Szlezinger, Leon
Jefferies LLC
8
7
Rothschild
13
Klein, Richard
Jefferies LLC
7
Murphy, B.; Williams, B.
Teneo Capital LLC
7
Augustine, Neil
Rothschild
5
Cullen, Brian
Duff & Phelps Securities LLC
5
Kaufman, Peter
Gordian Group LLC
5
8
9
Mesirow Financial Holdings Inc.
9
Duff & Phelps Securities LLC
8
Evercore Group LLC
8
Miller Buckfire & Co. LLC
8
crisis management firms, number
Firm
No. of
active cases
1
FTI Consulting Inc.
105
2
GlassRatner Advisory & Capital Group LLC
96
3
Gavin/Solmonese LLC
39
4
Alvarez & Marsal LLC
5
BRG Capstone
6
KSV Advisory Inc. (fka: Duff & Phelps Canada
Restructuring Inc.)
25
AlixPartners LLP
24
Protiviti Inc.
24
8
Development Specialists Inc.
22
9
Conway MacKenzie Inc.
20
Executive Sounding Board Associates LLC
15
Goldin Associates LLC
15
7
10
noninvestment banks, number
Firm *
4
5
6
crisis managers, number
Professional
Firm
No. of active
assignments
1
Gavin, Edward
Gavin/Solmonese LLC
31
2
Kofman, Robert
KSV Advisory Inc. (fka: Duff & Phelps
Canada Restructuring Inc.)
19
35
3
Simms, Steve
FTI Consulting Inc.
17
26
4
Weitz, Wayne
Gavin/Solmonese LLC
16
5
Smith, Margaret
GlassRatner Advisory & Capital Group LLC
15
Eisenband, Michael
FTI Consulting Inc.
14
Glass, Ronald
GlassRatner Advisory & Capital Group LLC
14
Greenspan, R.; Star, S.
FTI Consulting Inc.
12
Atkinson, Michael
Protiviti Inc.
11
Fox, C.; Sorvik, C.
GlassRatner Advisory & Capital Group LLC
11
Madden, John
Emerald Capital Advisors
11
Tully, Conor
FTI Consulting Inc.
11
No. of
active cases
6
7
8
noninvestment bankers, number
Professional
Firm
No. of active
assignments
1
Kurtzman Carson Consultants LLC
123
1
Kass, Albert
Kurtzman Carson Consultants LLC
121
2
EisnerAmper LLP
99
2
Corrie, Pamela
Epiq Bankruptcy Solutions LLC
120
3
Epiq Bankruptcy Solutions LLC
94
3
Feil, Tinamarie
BMC Group Inc.
65
4
BMC Group Inc.
73
4
Waisman, Shai
Prime Clerk LLC
35
5
Prime Clerk LLC
42
5
Ringer, David
EisnerAmper LLP
33
6
PricewaterhouseCoopers
36
6
Calascibetta, Anthony
EisnerAmper LLP
25
7
Garden City Group Inc.
35
8
7
Wilen, Allen
EisnerAmper LLP
18
Ernst & Young
32
9
Rust Consulting/Omni Bankruptcy
23
Logan, Kathleen
Logan & Co.
17
10
KPMG
22
Vandell, Travis
Upshot Services LLC
17
9
Phillips, Edward
EisnerAmper LLP
16
10
Gottlieb, Emily
Garden City Group Inc.
13
*Deloitte includes Deloitte & Touche Inc., Deloitte & Touche LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP and
Deloitte Touche Tohmatsu; KPMG includes KPMG Corporate Recovery, KPMG Inc. and KPMG LLP; PwC includes
PricewaterhouseCoopers EC Inc., PricewaterhouseCoopers Inc. and PricewaterhouseCoopers LLP; Ernst & Young includesErnst &
Young Inc. and Ernst & Young LLP.
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< Index >
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19 the daily deal Mon day July 20 2015
ON THE HUNT
Victor Jets charters acquisition agenda
edited by Sarah Pringle
Victor Jets
London-based Victor Jets,
the so-called Uber for jets,
is soaring toward its M&A
goals. The on-demand private
jet charter services company
on July 14 agreed to acquire
YoungJets LLC for an undisclosed amount. Based in Santa
Barbara, Calif., YoungJets also
provides luxury private jet
charter services. YoungJets
CEO David Young will join the
Victor management team as
senior vice president. Victor
Jets indicated in its announcement that YoungJets wouldn’t
be its last stop. The private
aviation company also said
July 14 it has secured $5 million in funding from a group
of unnamed investors, capital
which it plans to use to pursue
more acquisitions.
—Tatjana Kulkarni
Oculus VR LLC
Facebook Inc.’s (FB) Oculus VR LLC continues to eye
acquisitions to gain scale in a
nascent virtual reality market. The Irvine, Calif., maker
of virtual reality headsets said
July 16 it has agreed to snatch
up Israeli startup Pebbles Interfaces for an undisclosed
sum. Gartner Inc. analyst
Brian Blau said Oculus clearly
wants to emerge as a market
leader and will likely pursue
more M&A as it looks to expand its footprint in three areas of virtual reality: devices,
software and content. Since
being acquired by the social
media giant of Menlo Park,
Calif., about a year ago for $2
billion, Oculus has been a busy
buyer, purchasing 3-D map-
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ping company Surreal Vision
Ltd. and product development
consultant firm Carbon Design Group.
—Jaewon Kang
C&S Wholesale Grocers
As the fate of regional supermarket operators, including
Great Atlantic & Pacific
Tea Co., looks increasingly
doomed, Keene, N.H.-based
grocery supplier C&S Wholesale Grocers Inc. may be
poised to adjust its acquisition
strategy to make up for lost
business. Industry sources
suggest the company ought to
shift its attention to retail operations from wholesale and
distribution operations. One
opportunity C&S may want to
explore is A&P, which is working with Evercore Partners
Inc. as it looks to exit 137 of
its 301 grocery locations. C&S
could also go after any distressed regional grocer that
is self-supplied, said David J.
Livingston, a supermarket analyst at DJL Research of Milwaukee. He said potential acquisition targets could include
Central Wholesale Grocers
Inc., a Joliet, Ill.-based cooperative that boasts $2 billion
in annual sales and supplies
more than 400 food retailers
in the Chicago region, according to its website. Livingston
said the warehouse and distribution operations of Roundy’s
Inc. (RNDY) could also be attractive —S.P.
Mindtree Ltd.
Mindtree Ltd. has stuck two
deals for a combined $76 million in the past week, and the
back
Internet consulting firm indicated it is interested in more
dealmaking. The company
will likely target opportunities
within data analytics and SAP,
or systems application products, according to a Mindtree
spokeswoman. Based in Warren, N.J., and Bangalore, India,
Mindtree is still exploring the
expansion of its European and
North America businesses, the
spokeswoman wrote in an email. Founded in 1999, Mindtree employs nearly 14,500
people and has about 218 active customers. The company
posted about $155 million in
revenue during its first ended
June 30. —Dian Zhang
Albany Molecular
Albany Molecular Research
Inc. (AMRI) will continue experimenting with acquisitions
following its July 16 deal to acquire Gadea Pharmaceutical
Group, of Spain, for $174 million in cash and stock. The deal
is the latest step in building a
$1 billion in revenue business
for Albany Molecular, William
S. Marth, Albany Molecular’s
president and chief executive
officer, said in a conference
call. The deal adds a portfo-
lio of steroidal compounds to
Albany Molecular’s portfolio
and about $90 million in revenue. Going forward, Albany
Molecular said it would look to
build its API business through
organic growth and acquisitions. —Michael D. Brown
... captured
I AC/ I nterAc t iveCor p.’s
(IACI) Match Group, as anticipated by The Deal in June, has
once again struck a deal. The
online dating house said July
14 that it has agreed to shell
out $575 million to grab Canadian dating site PlentyOfFish
Media Inc. New York-based
IAC revealed June 25 its plan
to pursue an initial public offering of Match Group, which
includes Match.com, Tinder
Inc., OkCupid and OurTime.
Cowen & Co. analyst John
Blackledge said at the time
that Match Group would continue pursuing new strategic
assets and nurture them over
time. Meanwhile, sources had
previously said IAC has been
consolidating the online dating space through M&A and
was expected to spin off the
division. n —J.K.
< PREVIOUS
While the Sargeants settled their issues with each other, one
problem none of them can control is the disposition of the oil
and gas sector. Industry observers said lower oil prices won’t
affect everyone equally.
“The billion-dollar deals are still happening,” said Wayne
Weitz, managing director at Gavin/Solmonese LLC (39 active
cases, ranking it third among crisis management firms). “The
highly capitalized enterprises will survive. The smaller exploration and production companies will go by the wayside.” n
< Index >
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20 the daily deal Monday Ju ly 20 2015
PRIVATE EQUITY
more at the deal Pipeline >
ripe PE candidates by industry pe auction bidder listings pe auctions latest sellers•assets
Allied Fiber declares neutrality on the net
The company doesn’t offer networks services, just space on a planned nationwide fiber loop
By Chris Nolter
The $1.9 billion sale of data center operator
Telx Group Inc. to Digital Realty Trust
Inc. (DLR) by Abry Partners and Berkshire Partners underscores the value of
Internet infrastructure as video, cloud services, mobile computing and other applications drive traffic on broadband networks.
Operating in areas such as Los Angeles,
New York, San Francisco and Silicon Valley, the company’s 20 facilities are carrierneutral, meaning they are not owned by a
telecom services provider.
Having helped found Telx, Allied Fiber
Inc. CEO Hunter Newby is taking a page
out of the company’s playbook. Newby was
chief strategy officer and a director of Telx
until 2008, when he left the company to
found Allied Fiber.
Allied Fiber leases dark fiber to telecoms
and others companies. The tenants “light”
the strands with their own electronics and
operate the networks themselves. The company also runs data centers where customers can recharge their fiber transmissions,
link to networks and park their servers.
Like Telx, the company does not offer network services.
“Think of it like a big interstate highway
system,” Newby said. The data centers are
spaced every 60 miles, or the distance that
light can travel over the fiber networks before transmissions need to be recharged.
“They are kind of like rest stops where you
get gas for your car,” Newby said. “Well,
your photons need electrons.” While fiber is
an attractive business, Newby said that Allied Fiber can make 7 to 10 times more on
co-location than on fiber.
Allied Fiber aims to build a fiber loop
dotted with data centers around the country. The goal is ambitious. Fiber networkers
were hit hard in the telecom bust of 2001
and 2002, though Newby does not accept
the notion that there is oversupply of fiber
in many parts of the country.
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Recent customer wins range from large
public telecoms Telefónica SA (TEF) and
Windstream Holdings Inc. (WIN) to Cable Bahamas Ltd.’s outpost in the Florida
and the municipal broadband network of
City of Palm Coast, Fla.
“It really dispels and obliterates the myth
there is a fiber glut in the U.S.,” Newby said.
While large incumbent telecoms or other
network operators have abundant fiber,
they do not have an incentive to offer critical infrastructure to a rival at an economic
cost. “There is no glut of neutral dark fiber,”
he said.
ALLIED FIBER COMPLETED a fiber
link from Miami to Atlanta in mid-June,
with 11 data centers along the roughly 660
mile route.
The next phase will go from Atlanta to
the Dulles technology corridor in Ashburn,
Va. From there, the network will go to Chicago or New York. Allied Fiber has a survey
on its website seeking input from potential
customers about where it should go next,
and Newby said that 90 to 100 outfits have
replied. Eventually, the company aims to
build a loop connecting Miami, New York,
Seattle and Los Angeles.
Allied Fiber has backing from “friends
and family” and “a lot of people who made
money during the Telx days,” Newby said.
GI Partners acquired Telx in 2006.
“When we sold to GI Partners everyone did
well, and they asked me what I was going to
do next,” Newby said. Abry and Berkshire
bought the company 2011.
Allied Fiber has also raised debt, and
is now refinancing to continue the expansion. The company is not looking for private
backing, Newby said, and does not plan to
go public.
The entire network would cost $2 billion, he projects, though Allied Fiber will
seek local partners, either corporations or
telecoms, to help cover the construction
back
< Index >
costs of portions of the fiber loop.
Florida is a growth market for Cable
Bahamas, which trades on the Bahamas
International Securities Exchange Ltd.
The company went on a buying spree in
2013, acquiring US Metropolitan LLC for
$29.4 million, Marco Island Cable for $10.1
million and NuVu LLC for $12.6 million.
The businesses, which have been integrated as Summit Broadband, operate in Southwest and Central Florida.
“With Miami being a major peering
point for IP traffic in Florida, its imperative
that we bring our customer directly to the
source for content, social media and other
forms of IP connectivity,” said Andy Kissenberth, Summit’s senior vice president of
sales and marketing.
Allied helps Summit Broadband connect
the regions it serves, with the primary route
going from Orlando to Miami.
“There really isn’t another provider out
there today that meets our current and future bandwidth requirements for the areas
cover
CONTINUED >
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21 the daily deal Mo n day Ju ly 20 2015
PRIVATE EQUITY
< PREVIOUS
we serve,” Kissenberth said. Summit connects its networks in central and southwest
Florida itself.
On the Atlantic coast of Florida, Allied
Fiber announced a deal with FiberNet in
the City of Palm Coast in June.
With a population of nearly 80,000, Palm
Coast sits between Daytona Beach and St.
Augustine. The city created a municipal
broadband network called FiberNet in 2007
to connect government offices. FiberNet
began connecting schools and later opened
the network to local businesses. The company has added two new customers since
it built a 14-mile fiber link to Allied Fiber’s
network.
“It kind of gives Palm Coast that added selling point,” said Steve Viscardi, the
town’s IT director, regarding the connection to larger market hubs such as Miami
and Jacksonville through Allied Fiber.
FiberNet signed up a telecom owned by
the Watchtower Bible and Tract Society of
New York, a group affiliated with Jehovah’s
Witnesses that recently opened a center in
Florida.
Jacksonville telecom Joytel began providing service in City of Palms once it was
connected to Allied Fiber.
“Because of this connection we now
have two new businesses in town that are
using that fiber,” Viscardi said.
For large customers, the fiber can connect parts of their network. Windstream
said that leasing from Allied Fiber would
allow it to service customers in Daytona
Beach and to connect with corporations
and other large customers in other markets.
Allied Fiber’s contract with Telefonica gives
the Madrid telecom a fiber link in the U.S. to
its networks in Colombia, Ecuador and Central America.
THE OBAMA ADMINISTRATION touts
the role of municipal networks in bringing
broadband to more towns and cities. “Many
markets remain unserved or underserved,”
a White House report from earlier this year
states. “Others do not benefit from the kind
of competition that drives down costs and
improves quality.”
In addition to municipal providers like
FiberNet in Palm Coast and regional outfits
close
print
such as Summit Broadband, Google Inc.
(GOOGL) has built fiber networks in Kansas City, Kans.; Austin, Texas, and Provo,
Utah.
Newby said that more companies would
build networks to deliver the last-mile fiber
to businesses and residences. “We are providing a bridge for the Google Fiber types,”
he said, “and there are a lot of people who
will want to be Google Fiber.”
For towns without high-speed networks,
broadband can be an economic development issue. “It really starts with connectivity,” Newby said. “Connectivity is the new
water, it’s the new power.”
By distributing data centers between
major cities, Newby said costs and latency
improves. “Imagine not having to backhaul
everything from Miami or Altanta but actually picking up the content midspan in
one of our 11 buildings in between,” he said.
The payoff would be particularly high with
bandwidth-intensive content such as video
and on mobile networks, two of the major
applications driving traffic increases.
“When you click on a link on your mobile phone you don’t want to be sitting there
waiting for that little clock to be spinning
around,” he said. “You want it to happen
instantaneously, and that really only comes
from moving content closer to the endpoints.”
WHILE ALLIED FIBER has nationwide
ambitions, the company is still small compared to other fiber networking companies.
Zayo Group Holdings Inc. (ZAYO) has
a different answer to the build or buy ques-
back
< Index >
tion. Unlike Allied Fiber, the Boulder, Colo.,
company has rolled up fiber networking orphans of the 2002 crash.
The company went public in October,
and has backing from GTCR LLC, Battery Ventures, Centennial Ventures,
Charlesbank Capital Partners LLC, Columbia Capital, M/C Venture Partners,
Morgan Stanley Alternative Investment
Partners and Oak Investment Partners.
Zayo has also expanded into data centers,
and purchased Latisys Holdings LLC from
Catalyst Investors LP and Great Hill
Partners LLC for $675 million earlier this
year.
Abry, Berkshire and Pamlico Capital
back Lightower Fiber Networks LLC,
which is acquiring Fibertech Networks
LLC for $1.9 billion.
Wireless tower operator Crown Castle
International Corp. (CCI) is buying fiber
outfit Sunesys from Quanta Services Inc.
(PWR). for $1 billion.
Telecoms such as Level 3 Communications Inc. (LVLT) lease dark fiber but also
provide network services.
Separating fiber and other infrastructure from a telecom service promotes net
neutrality, he suggested. While Allied Fiber’s network resembles a highway with
rest stops and on-ramps, its business model
is more akin to real estate than to telecom
services.
“The simplicity and the beauty of the
model is we just want people to pay rent on
time,” he said. “You can connect anyone you
want, do whatever you want. Nobody is going to tell you you can’t.” n
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22 the daily deal Monday July 20 2015
CAPITAL CALLS
Ares Capital, jilted by GE Capital, finds partner
The new venture—with AIG and Oak Hill—might not provide the same benefits as the old alliance
By Bob O’Brien
Ares Capital Corp. (ARCC) has
moved on after being effectively
spurned in its lending partnership
with General Electric Co. (GE)
earlier this year, though some questions linger as to whether the business development company will be
able to realize the same benefits it
formerly knew in its new collaboration.
Ares Capital announced on June
17 that it formed a new strategic
partnership for making senior secured loans to middle market companies, a venture that effectively
replaces the previous senior loan
joint venture that it shared with GE
Capital.
Ares’ new venture, dubbed the
Senior Direct Lending Program,
was reached with Varagon Capital
Partners, an asset manager focused
on direct lending to middle-market companies. Varagon,
formed in 2013, is a lending platform venture of American International Group Inc. (AIG) and Oak Hill Capital Management.
AIG announced the Varagon lending venture in June of last
year, saying it would commit $1.5 billion to the initiative. The
Ares-Varagon partnership participated in its first transaction
earlier this month when it helped finance the purchase by
General Atlantic LLC of EN Engineering LLC, a utility infrastructure services provider.
The Senior Direct Lending Program is effectively a replacement for the Senior Secured Loan Program in which Ares partnered with GE Capital. That’s the program that, for all intents
and purposes, skidded to a halt in April of this year, when GE
said it would conduct a divestiture of $165 billion of its financial services operations, in order to escape the constraints of
government regulations on banks and bank-like financial services providers that included GE.
Last month, GE announced it had reached an agreement
to sell its buyout lending operation, known as GE Antares, to
Canada Pension Plan Investment Board for $12 billion.
However, under the covenants of its joint venture with
Ares, GE couldn’t unilaterally sell its stake in the $6.2 billion
senior secured loan program, which provides relatively quick
financing for middle-market buyouts.
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At the time, GE indicated it
would either facilitate an agreement
between the CPPIB and Ares Capital or, if no deal could be reached,
agree to let the credit facility wind
down as loans, which reportedly
had an average time of about 4.3
years, matured.
Sell-side analysts covering Ares
Capital, managed by Ares Management LP (ARES), said that investors were evincing concern about
the disposition of the joint venture with GE Capital. Ares Capital
shares didn’t take a huge hit. At
the low following GE’s April 10 announcement of its plans to divest its
financing operations, Ares shares
had declined 7%, though, in fact,
the stock hasn’t traded above $17 a
share, which is where it was when
GE announced its divestiture plans,
since April.
THE ANNOUNCEMENT of the new venture with Varagon
seems to have calmed some of the restlessness regarding Ares’
participation in middle-market buyout financing. Greg Mason,
an analyst at Keefe Bruyette & Woods, was recently quoted
as saying, “[w]hile the end result of the GE program is still unclear, [Ares Capital] announced a new senior loan fund partner that should have the size and expertise to fill whatever gap
is left by the GE joint venture over time.”
Ares did, for all intents and purposes, quietly concede that
it won’t be pursuing CPPIB as a successor to GE in its middlemarket buyout lending platform. In an 8-K filing on June 9,
Ares Capital said it notified the Senior Secured Loan Program
that “Ares terminated its obligation to present senior secured
lending investment operations to the SSLP prior to pursuing
such operations for itself.” The latter, surely, is a reference to
its new joint venture with Varagon.
Ares Capital, through a spokesman, declined to comment
on Ares’ plans for its senior secured loans to middle-market
companies, except to point to Ares’ June 17 press release announcing the Varagon partnership.
The uncertainty created by GE’s withdrawal from middle-
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23 the daily deal Mo n day July 20 2015
CAPITAL CALLS
< PREVIOUS
market lending comes at an inopportune time for middlemarket lenders. The leveraged buyout market has virtually
collapsed, even though the credit market that would lend to
those deals remains robust. “The sponsored market, year over
year, is down, from an M&A perspective, though from a liquidity perspective, it’s up,” Jeff Kilrea, co-head of the sponsor finance group at CIT Group Inc. (CIT), said in an interview.
“It’d be a great time to be a borrower.”
The sheer plentitude of available capital is helping to conflate the valuations that the LBO market seems to be commanding, along with the lofty expectations for those valuations created by the record levels in the public markets. “There’s a lot
of pressure to put dry powder to work,” Tom Hobbis, also the
co-head of sponsor finance at CIT, said in an interview.
With lenders effectively chasing deal opportunities, the environment is very different than it was when Ares Capital created its partnership with GE Capital in 2009. Ares is believed
to have committed a relatively modest $165 million to the joint
venture at the outset, whereas its fair value in the unit by the
end of 2014 reached $2.1 billion, according to Ares most-recent
annual financial statement.
By partnering with GE at the outset of the financial crisis,
Ares was able to navigate the rockier shoals of the credit market with high-quality, first-lien lending facilities. There may
not have been many buyout financing opportunities at the outset of its partnership with GE, as the M&A market suffered
one of its periodic swoons, but what lending the partnership
executed was considered choice.
The partnership with Varagon helps Ares sooth some investor concerns. By linking with AIG, it’s partnering with a
sponsor with deep financial resources. And it enjoys the acumen that Oak Hill brings to the loan origination process.
The rap, though, is that neither one hits for the kind of power that GE did. At the height of its prowess, GE was accounting for a huge percentage—somewhere in the high teens to low
20s, according to some analyses—of buyout loan financing.
GE’s massive balance sheet gave it a low cost of borrowing,
something that even AIG can’t match. That meant that GE got
first-mover status on a lot of deals, especially at the high end of
the buyout market.
And though Ares was getting a good portion of the origination fee revenues from its partnership, GE was considered the
ringleader of the origination initiatives. Even with Oak Hill’s
support, Ares Capital is going to have to be expected to serve a
larger role in the origination process, a role it’s probably going
to have to grow into.
Some of those questions likely will be addressed Aug. 4,
when Ares presents its second-quarter results, and analysts
will get to question the firm’s management during the ensuing
conference call.
Meanwhile, Ares Capital’s shares are looking relatively
attractive, especially after the relative dormancy of the past
three months. That it’s yielding something on the order of 9%
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Exit ramp
A leveraged healthcare IT provider keeps gaining scale
When Emdeon Inc. announced on July
13 that it had agreed to acquire fellow
healthcare IT provider Altegra Health
Inc. for $910 million, it was just another
in a long line of add-ons for the Nashville-based company.
Emdeon has had a busy 12 months,
announcing deals for AdminiSource
Communications, a payment and com- Emdeon Inc.
munications platform, on Dec. 15 for Date acquired
$35 million, one for Brentwood, Tenn.Aug. 4, 2011
based Change Healthcare for $180 million on Nov. 20, and another for Santa PE owners
Ana, Calif.-based Capario, a cloud-based Blackstone Group LP;
financial management company, for Hellman & Friedman LLC
Buyout price
$115 million in June 2014.
Owned by New York PE firm Black- $3.1 billion
stone Group LP (BX) and San Francis- 2014 debt
co PE firm Hellman & Friedman LLC
$2.2 billion
since Aug. 4, 2011, Emdeon has some
observers believing that it’s building
mass in preparation for an initial public offering.
“As we’ve seen in the recent past, if there are products they
need, they will go out and get them,” said Adam McLaren, a
Moody’s Investors Service Inc. analyst, by phone. “I think an
IPO is certainly a possibility. I don’t think [their leverage] would
change their plans.”
McClaren explained that healthcare IT stocks are trading at
solid multiples as investors reward technology companies with
scale, even if they have signficant leverage.
And Emdeon has some leverage on its balance sheet. It finished 2014 with a debt-to-Ebitda ratio of 5.7 times, based on $2.2
billion in debt and Ebitda of $364 million. While it’s unclear how
much the Altegra deal will affect that—the company is paying
cash—McClaren said it’s likely that Emdeon’s debt will creep
above 6.5 times Ebitda.
Emdeon isn’t a stranger to the public market, either. Some
46% of the company was taken public by its previous owners,
Greenwich, Conn., PE firm General Atlantic LLC and Hellman, in 2009, raising $367 million.
Hellman retained a minority stake that it kept when Blackstone acquired Emdeon in 2011 for $3.1 billion. n
—Michael D. Brown
doesn’t hurt, as analysts have pointed out—two sell-side firms
recently upgraded their ratings on the stock. But clearly some
questions about the vitality of its structured finance operation
will take longer to address. n
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24 the daily deal M on day J u ly 20 2015
PRIVATE BRIEFING
Beltway Bandits stay strong despite budget woes
Interest in government services providers remains brisk and the business is now more competitive
By Lou Whiteman
For the better part of a decade private equity firms flocked to invest in government
services providers, the so-called Beltway
Bandits who manage everything from IT
networks to outsourced background checks
and training for the Pentagon and other federal agencies. There’s more dealmaking on
the horizon, despite government squabbles
and sequestration showdowns that some
had feared would drive capital out of the
sector.
The government services market jumped
onto private equity radar screens in 2006
when CI Capital Partners LLC sold Anteon International Corp.—bought a decade earlier for less than
$100 million—to General Dynamics Corp. (GD) for $2.2 billion.
That deal prompted a flood of new money into a sector that was
previously dominated by Carlyle Group (CG) and a few others.
Firms including Leonard Green & Partners LP, Veritas Capital Fund Management LLC, Cerberus Capital Management
LP and Providence Equity Partners Inc. made large bets on
the sector in the years following the Anteon deal.
In total, at least 60 private equity firms have dabbled in government services in the past decade, according to The Deal’s database, a far cry from the mid-1990s when both the perception
of the government as a boring, slow-growth customer and lender
inexperience financing the sector contributed to a lack of interest
among PE firms. Anita Antenucci, one of the bankers who worked
on the mid-1990s sale of what became Anteon, recalls that the
sellers had to work hard to bring in enough financial bidders for a
competitive auction.
The rally in interest that followed the Anteon deal could have
halted during the budget battles that peaked with the federal
government shutdown in 2013 and included threats of a defense
spending freeze. IT programs and other government services
were thought to be likely targets in an age of austerity, as it is
easier to cut 20% out of a tech contract than it is to trim a similar
amount out of a new defense hardware program.
But for all the worry, people familiar with the business are
hard-pressed to think of any company that failed or fell into
Chapter 11 directly due to government budget constraints. And
bankers say private equity interest in the sector remains strong.
“Sequestration wiped away some of the momentum players, and
at the very least provided an educational experience for those
who hung around,” said one defense banker.
Antenucci, who is now a senior managing director at Houlihan
Lokey and leader of the firm’s aerospace, defense and govern-
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ment group, noted that while sequestration
“might have a lasting impact on how buyers
conduct diligence” on potential deals, it has
not driven away many interested bidders. If
anything, the difficulties in the sector might
attract new types of firms like turnaround
specialists, she noted.
A fresh sign of the resurgence came earlier this month when SRA International Inc.
filed for an initial public offering. Providence
took SRA private in 2011 in a deal valued at
$1.9 billion, and weathered some contract
losses and a Moody’s Investors Service
Inc. downgrade during its ownership.
“There’s definitely more optimism, more confidence on the
part of CEOs and boards than there was just a few years ago,” said
Alper Cetingok, co-head of the security, defense and government
services practice at Raymond James Financial Inc.
Though there are still some strategic buyers for government
services assets—Harris Corp.’s $4.75 billion deal for Exelis Inc.
earlier this year is one prominent example—bankers say some of
the assets that go on the block are better suited for private equity. An increase in competition, fueled in part by private equity
money, has over the course of the past decade driven down margins on many government contracts, making those contracts less
appetizing to larger defense firms.
But, even at lower margins, the reliability of the government
as a payer and the longer-term nature of the contracts make the
math work for private equity, especially if a firm has the capital
available to consolidate a number of different small contractors.
“The No. 1 thing we are looking for in these deals is cash visibility,” one private equity executive actively seeking services deals
said. “There are still opportunities to put a platform together, and
then to expand the platform to grow profitability.”
Dave Wireman, head of the aerospace and defense practice at
advisory firm AlixPartners LLP, said he’s fielded a lot of inquiries lately from private equity firms interested in learning more
about defense. He said there is so much available money out there
that PE firms often have to bring more than capital to the table to
clinch a deal. “Firms are likely having trouble finding new platforms if they are only reviewing the books,” Wireman said. “If
you are out there pitching ways you can add value in a transaction, those are the ones who are having more success in creating
conversations right now.”
PE firms can add value, Wireman said, by offering access to
new markets or new contracting opportunities based on their
own network of connections or past experiences. n
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25 the daily deal Mo n day July 20 2015
SAFE HARBOR
In Delaware, Laster takes aim at a new target
Chancery’s assertive judge rejects a big settlement that was offered in exchange for a global release
By David Marcus
J. Travis Laster is the boldest judge on
took public in 2010. Cobham agreed to
Delaware’s Court of Chancery, and in
pay $1.46 billion or $10.50 a share for
his six years on the bench he has chalAeroflex, a 26% premium to the prelenged standard practice in virtually
announcement price. In addition to
every important aspect of the fiduCobham, another party, called Comciary duty litigation that is pervasive
pany A in the hearing, considered
in public company deals. In a bench
making a bid for Aeroflex, but was
ruling on July 8, the judge did so
prevented from doing so by a nondisagain when he refused to approve the
closure agreement. Those facts justiproposed settlement of a shareholder
fied the plaintiffs’ motion for expesuit arising from the $1.46 billion sale
dited discovery in the case, the judge
of Aeroflex Holding Corp. to Cobham
told Robert Weiser, who represented
plc because it included a so-called
shareholder Ramon Acevedo.
global release, an agreement that bars vice Chancellor J. Travis laster
But that discovery uncovered
other shareholders from suing the
nothing untoward in the Aeroflex
companies for a wide range of claims related to the deal. Laster
sales process, and the company settled the shareholder litigation
acknowledged that suing stockholders typically agree to a global
by cutting the termination fee on the Cobham deal to $18 million
release as part of a settlement but said that such agreements are
from $32 million, giving the buyer three days instead of four to
part of a system of “omnipresent litigation” that “undercuts Delamatch a competing offer, making additional disclosure to shareware’s credibility as an honest broker in the legal realm.”
holders, and agreeing not to oppose a fee request of $825,000 by
On the same day that Laster rejected the Aeroflex settlement,
Weiser and his co-counsel. In exchange, Aeroflex got a global refellow Vice Chancellor John Noble pondered the issue of global
lease.
releases in deferring a decision about whether to approve a proLaster told Weiser that the settlement terms did nothing to
posed settlement in shareholder litigation arising from the $8.3
address the nondisclosure agreement that prevented Company A
billion sale of Intermune Inc. to Roche Holding AG. “This is a
from making a serious bid for Aeroflex. As a result, Laster suguniversal problem,” Noble said, referring to the global release that
gested, Weiser didn’t deserve much of a fee for the settlement: “If
Intermune received to settle the case in exchange for some addiI say to you, ‘The problem with my car is the transmission and you
tional disclosures and $470,000 in plaintiffs’ attorneys fees. “The
bring it back to me and you say, ‘We changed the oil and we gave
defendants want total peace. They do some relatively minimal
you a new air filter,’ you didn’t fix the problem.”
disclosures, and they buy deal insurance. And there’s something
In cases such as Aeroflex, Laster told Weiser, plaintiffs’ lawabout that that has always troubled me.”
yers have “got to acknowledge you’ve got nothing and just go
The coincidence of the Aeroflex and Intermune hearings led
away. You don’t get to then try to salvage the case and say, ‘Oh,
some observers to wonder if the Court of Chancery was setting
but, you know, we’re going to settle for a reduced termination fee.’
out a major change in policy on global releases. The issue is not a
If you get in there and find out that fiduciaries have really done a
new one.
good job, you go away.”
As Laster noted in the Aeroflex hearing, Leo E. Strine Jr., now
A system where plaintiffs’ lawyers get $500,000 or more for
the chief justice of the Delaware Supreme Court and a member of
routine settlements in cases like Aeroflex erodes the credibility of
the Court of Chancery from 1998 to 2014, often referred to global
the Delaware courts and, Laster said, “means that some—indeed
releases as “intergalactic,” a word that conveyed his skepticism of
probably many—cases that should be litigated actually don’t get
them. And at the Tulane Corporate Law Institute in March, Delalitigated because once you get in the habit of settling everything
ware Chancellor Andre Bouchard also expressed doubts about the
for, to use [former] Chancellor [William] Allen’s phrase from Solovalue of the consideration that shareholders receive in exchange
mon, ‘a peppercorn and a fee,’ you’re in the habit of doing that.”
for forswearing future litigation.
The judge gave the parties three options. First, the plaintiffs
could agree that their claims had been rendered moot by the adAEROFLEX WAS A FAIRLY standard case. Veritas Capital
ditional disclosure and the changes in the deal terms. Second, the
Partners LLP, Golden Gate Private Equity Inc. and GS Direct
LLS owned 76% of the company, which the private equity shops
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26 the daily deal M o n day July 20 2015
SENSE OF THE MARKETS
As Delta hits turbulence, activists buzz the field
The airline has some high-profile hedge funds among its shareholders
By Lou Whiteman
High-flying Delta Air Lines Inc. (DAL)
cent results did contain some disappointsuddenly faces union unrest and regulators
ment. Management’s guidance on passenger
breathing down its neck. The last thing the
revenue per available seat miles, a common
carrier needs is to fight an activist campaign.
industry metric, fell short of expectations for
And despite a strong run of profits recently,
the coming quarters. The airline also noted
such a battle is possible.
that while corporate demand for air service
Atlanta-based Delta earlier this week reremains strong, yields are down on an uptick
ported second-quarter adjusted net income
in competition.
of $1 billion, as the company continues to be
Shares of Delta, after climbing by 83% in
a beneficiary of a streamlined marketplace
2014, have been mostly flat so far in 2015.
it helped create with its 2008 purchase of
Delta would appear to have few gaps in
Northwest Airlines Corp. A series of airline
its armor for an activist to exploit. The airdeals followed the Northwest purchase,
line in 2013 was the first legacy to reinstate a
with the industry consolidating around four
dividend when it announced a plan to return
major airlines that control most of the do$1 billion to shareholders over three years,
mestic market.
delta Ceo richard anderson
and has twice boosted both the payout and
The resulting competitive environment
the buyback amount in the years since. The
has allowed Delta and its rivals to generate sustained profitability,
company has no unit that if separated would significantly move
but it has also attracted the attention of regulators worried that
the needle, and would likely face regulatory hurdles if it tried to
the airlines are colluding on price. And it caused a hiccup in the
further consolidate the industry.
normally tranquil relations between the airline and labor, with
The airline does own and operate a refinery outside of PhiladelDelta pilots earlier this month unexpectedly rejecting a new conphia via its Monroe Energy LLC subsidiary that has been the subtract despite accompanying pay raises.
ject of some debate inside the airline industry. Delta claims that
Other dangers could lurk beneath the surface. Activist Dan
the unit is running in the black, producing a cumulative profit of
Loeb’s Third Point LLC began accumulating a stake in Delta in
$300 million over the past four quarters, and has helped stabilize
the fourth quarter of 2014 and by March 31 had built its position
fuel supplies and prices in the Northeast.
to 5.25 million shares, or about 0.67% of the float. Another hedge
But critics say the plant leaves the company exposed to energy
fund, David Tepper’s Appaloosa Management LP, owned a simiprice variations and threatens to keep Delta focused on fossil fularly sized stake as of March 31.
els at a time when rivals including United Continental Holdings
Neither the company nor the funds would comment on individInc. (UAL) are investing in alternative energy. United in June anual investments, and Delta has shown no outward signs of fearing
nounced a $30 million investment in Fulcrum BioEnergy Inc.,
a coming activist campaign. The hedge funds will provide updates
and expected before year’s end to operate flights using biofuel proon their holdings in mid-August.
Though Delta has produced steady profits of late, its most reCONTINUED >
< PREVIOUS
parties could agree to a more limited release from future litigation. Finally, the defendants could move to dismiss. In the first
two scenarios, Laster suggested, he would likely grant the plaintiffs’ lawyers a fee of around $200,000.
Lawyers not involved in the case said that even before Aeroflex
some companies narrowed the scope of their litigation releases
with a corresponding reduction in the fees plaintiffs’ lawyers are
able to request. If that trend gains momentum, it may lead to a
modest reduction in deal litigation, but shareholders are most
likely to uncover problems in a sales process if they sue and get
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discovery, and some lawyers will still find it economically rational to bring cases that they expect to settle quickly for $200,000
rather than $500,000. Plaintiffs’ lawyers may also to bring some
cases in venues other than Delaware, though that will be difficult
to do in matters where the target company has a Delaware choice
of forum clause in its bylaws or charter.
But Laster’s fellow judges have declined to follow his lead in
other areas where he’s innovated, and that pattern could be repeated here. Said one lawyer about Aeroflex: “If the other judges
really followed the decision over time, crap merger cases would
be reduced. But I don’t believe they’ll follow it.” n
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27 the daily deal Mo n day J uly 20 2015
MOVERS & SHAKERS
compiled by Baz Hiralal
Michael T. Ezzell II has landed at Inland Securities
Corp. as CEO. Until June, he was CEO at Cole Capital
Corp., leaving for what the REIT called personal reasons.
American Realty Capital Properties Inc. tried to sell
Cole to RCS Capital Corp. but the deal was scuttled after accounting troubles arose at ARCP, which tarnished
Cole’s image and led to a slowdown in sales of its nontraded REITs.
Ezzell joined Cole Capital in January 2010. Most recently, he
was executive vice president of ARCP and president and CEO
of Cole. Before the merger of Cole Real Estate Investments with
ARCP in February 2014, Ezzell was senior vice president of product and business development for Cole.
Ezzell also served as director of investment research at AIG
Advisor Group, where he worked from November 2004. Before
that, he was with J.P. Carey Asset Management.
In August, Francyn Stuckey will join Australia and New Zealand Banking Group Ltd. in Hong Kong from Bank of America
Merrill Lynch as global head of capabilities and client solutions in
the transaction banking business.
She was a managing director and global head of strategic solution delivery for global transaction services at BofA Merrill in
London. Stuckey was previously a director of global transaction
services at Citigroup Inc.
Orix USA launched Orix Energy Capital Inc. to provide private
debt and equity capital to energy-related companies in the U.S.
and Canada, including exploration and production, midstream,
services and alternative energy.
The team will be led by Josh Mayfield, a managing director
and 15-year veteran of Orix USA. Most recently, he led the alternative investments business unit, which he helped launch in 2010.
Managing directors Jay Mitchell and Mark Tharp, along with
director Alicia Summers, join the team from CLG Energy Finance. The team will design debt capital ranging from $10 million
to $50 million, with equity capital available alongside a debt facility or as a standalone investment.
KPMG Corporate Finance LLC named Mark Belford and Rob-
< PREVIOUS
duced by AltAir Fuels.
Now would seemingly be a good time to put a refining asset on the
block. Analysts at energy-focused investment bank Tudor, Pickering, Holt & Co. LP said last month that the refining environment
currently enjoys “healthy margins and many potential buyers.”
But the refinery seems too small a piece of Delta to make it
worth an activist battle. The company said during the recently
completed second quarter that the Trainer, Pa., facility account-
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ert Glowniak co-leaders of its U.S. consumer and retail
investment banking group.
Belford joins in New York from Janney Montgomery Scott LLC, where he was a managing director and
group co-head for consumer and retail investment banking since 2009. Previously, he was an executive director
for middle market consumer and retail investment banking at JPMorgan Chase & Co. and was a vice president
at Lehman Brothers Holdings Inc.
Chicago-based Glowniak was a principal at J.H. Chapman
Group LLC, where he was a leader in the food and consumer
products industry team. Previously, he was a managing director
in the middle market investment banking group at JPMorgan and
held senior positions at Bear, Stearns & Co. and Citigroup Global
Markets Inc.
Cooley LLP recruited four corporate partners from Reed Smith
LLP. They will be led by New York-based partner Yvan-Claude
Pierre, head of Reed Smith’s global corporate and securities group
and chairman of its U.S. capital markets group. Corporate and capital markets partners Daniel Goldberg and William Haddad will
also be in New York, while merger and acquisition attorney Garth
Osterman joins Cooley’s San Francisco office.
In New York, Greenberg Traurig LLP expanded its mergers
and acquisitions practice, adding shareholder Frank Martire III
from Weil, Gotshal & Manges LLP. This move comes on the heels
of corporate attorneys Joe Cosentino and Ivan Presant joining
from Clifford Chance LLP.
In a departure from status quo lawyer press release, GT included a statement from CEO Richard A. Rosenbaum noting that
Martire spent nearly eight years at Weil working with Michael
Aiello, the head of Weil’s corporate department. Martire joined
Weil as an associate in September 2007 after stints as an analyst at
IHS Herold and JPMorgan Chase & Co.
Perkins Coie LLP said Stephen J. Schrader joined the firm’s
corporate practice as a partner in San Francisco.
Focusing on capital markets, he was a partner at Baker & McKenzie LLP. n
ed for $90 million of its profit, and a sale of the facility, bought by
Delta in 2012 for $180 million, would barely register at a company
with $40.8 billion in annual sales.
So that leaves management as a potential angle of attack. But despite the lackluster guidance and other pressures, Wall Street analysts remain primarily positive on Delta, betting that CEO Richard
Anderson and his team will be able to pilot through whatever turbulence is up ahead. The critical question for Delta is whether its
large investors share that confidence. n
—Claire Poole in Houston contributed to this report.
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28 the daily deal monDAY july 20 2015
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< Index >
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29 the daily deal M onday J u ly 20 2015
COMPANY INDEX
A-g
Abry Partners . . . . . . . . . . . . . . . . . . . . . . . . . 20
AIG Advisor Group . . . . . . . . . . . . . . . . . . . . . 27
Albany Molecular Research Inc. . . . . . . . . 19
AlixPartners LLP . . . . . . . . . . . . . . . . . . . . . . . 24
Allied Fiber Inc. . . . . . . . . . . . . . . . . . . . . . . . 20
Altegra Health Inc. . . . . . . . . . . . . . . . . . . . . . 23
American Capital Financial Services Inc. . 14
American Eagle Outfitters Inc. . . . . . . . . . . 10
American International Group Inc. . . . . . . 22
American Realty Capital Properties Inc. . . 27
Appaloosa Management LP . . . . . . . . . . . . . 26
Apple Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Applied Materials Inc. . . . . . . . . . . . . . . . . . . . 5
Approach Resources Inc. . . . . . . . . . . . . . . . . 10
Ares Management LP . . . . . . . . . . . . . . . . . . . 22
Astec Industries Inc. . . . . . . . . . . . . . . . . . . . . 10
Atwood Oceanics Inc. . . . . . . . . . . . . . . . . . . . 10
Australia and New Zealand
Banking Group Ltd. . . . . . . . . . . . . . . . . . . . 27
Avon Products Inc. . . . . . . . . . . . . . . . . . . . . . . 10
Bahamas International
Securities Exchange Ltd. . . . . . . . . . . . . . 20
Baker & McKenzie LLP . . . . . . . . . . . . . . . . . 27
Baker Hughes Inc. . . . . . . . . . . . . . . . . . . . . . . . 5
Bank of America Merrill Lynch . . . . . . . . . 27
Battery Ventures . . . . . . . . . . . . . . . . . . . . . . . . 21
Bed Bath & Beyond Inc. . . . . . . . . . . . . . . . . . 10
Berger Singerman LP . . . . . . . . . . . . . . . . . . . 15
Berkshire Partners . . . . . . . . . . . . . . . . . . . . . 20
Blackstone Group LP . . . . . . . . . . . . . . . . . . . 23
Blucora Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Boomerang Tube LLC . . . . . . . . . . . . . . . . . . 14
Bravo Brio Restaurant Group Inc. . . . . . . . 10
BTB Refining LLC . . . . . . . . . . . . . . . . . . . . . . 14
C&S Wholesale Grocers Inc. . . . . . . . . . . . . 19
Cable Bahamas Ltd. . . . . . . . . . . . . . . . . . . . . 20
Cablevision Systems Corp. . . . . . . . . . . . . . . 10
Caleres Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Campbell Soup Co. . . . . . . . . . . . . . . . . . . . . . . 10
Canada Pension Plan Investment Board . . 22
Carlyle Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Catalyst Investors LP . . . . . . . . . . . . . . . . . . . 21
Centennial Ventures . . . . . . . . . . . . . . . . . . . . 21
Central Wholesale Grocers Inc. . . . . . . . . . 19
Cerberus Capital Management LP . . . . . . . 24
Charlesbank Capital Partners LLC . . . . . . 21
CI Capital Partners LLC . . . . . . . . . . . . . . . . 24
Cisco Systems Inc. . . . . . . . . . . . . . . . . . . . . . . . 9
CIT Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 23
Citigroup Global Markets Inc. . . . . . . . . . . . 27
CLG Energy Finance . . . . . . . . . . . . . . . . . . . . 27
Clifford Chance LLP . . . . . . . . . . . . . . . . . . . . 27
Cobham plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Columbia Capital . . . . . . . . . . . . . . . . . . . . . . . 21
Comcast Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Comerica Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Con-way Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Contango Oil & Gas Co. . . . . . . . . . . . . . . . . . 10
Cooley LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Cornerstone OnDemand Inc. . . . . . . . . . . . . 10
Cowen & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 19
Crown Castle International Corp. . . . . . . . 21
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Dawson Geophysical Co. . . . . . . . . . . . . . . . . 10
Deckers Outdoor Corp. . . . . . . . . . . . . . . . . . 10
Delta Air Lines Inc. . . . . . . . . . . . . . . . . . . . . . 26
Denbury Resources Inc. . . . . . . . . . . . . . . . . . 10
Digital Realty Trust Inc. . . . . . . . . . . . . . . . 20
DJL Research . . . . . . . . . . . . . . . . . . . . . . . . . . 19
DSW Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Emdeon Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Eminence Capital LLC . . . . . . . . . . . . . . . . . . . 9
EnCap Flatrock Midstream LP . . . . . . . . . . 15
Evercore Partners Inc. . . . . . . . . . . . . . . . . . . 19
Facebook Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Fibertech Networks LLC . . . . . . . . . . . . . . . 21
First Niagara Financial Group Inc. . . . . . . 10
Five Star Quality Care Inc. . . . . . . . . . . . . . . 10
Foley Lardner LLP . . . . . . . . . . . . . . . . . . . . . . 15
Gartner Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Gavin/Solmonese LLC . . . . . . . . . . . . . . . . . . 15
GE Oil & Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
General Atlantic LLC . . . . . . . . . . . . . . . 22, 23
General Dynamics Corp. . . . . . . . . . . . . . . . . 24
General Electric Co. . . . . . . . . . . . . . . . . . 9, 22
GI Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Golden Gate Private Equity Inc. . . . . . . . . . 25
Google Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 21
Gravity Midstream LLC . . . . . . . . . . . . . . . . 15
Great Atlantic & Pacific Tea Co. . . . . . . . . . 19
Great Hill Partners LLC . . . . . . . . . . . . . . . . 21
Greenberg Traurig LLP . . . . . . . . . . . . . . 15, 27
GS Direct LLS . . . . . . . . . . . . . . . . . . . . . . . . . . 25
GTCR LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Gulf Island Fabrication Inc. . . . . . . . . . . . . . 11
h-z
Halliburton Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Harris Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Hellman & Friedman LLC . . . . . . . . . . . . . . 23
Houlihan Lokey . . . . . . . . . . . . . . . . . . . . . . . . 24
IAC/InterActiveCorp. . . . . . . . . . . . . . . . . . . 19
ICF International Inc. . . . . . . . . . . . . . . . . . . .11
Inland Securities Corp. . . . . . . . . . . . . . . . . . 27
ITT Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
J.H. Chapman Group LLC . . . . . . . . . . . . . . 27
Jana Partners LLC . . . . . . . . . . . . . . . . . . . . . . . 9
Janney Montgomery Scott LLC . . . . . . . . . 27
Jarden Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Johnson & Johnson Inc. . . . . . . . . . . . . . . . . . 6
Jones Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
JPMorgan Chase & Co. . . . . . . . . . . . . . . . . . 27
Keefe Bruyette & Woods . . . . . . . . . . . . . . . . 22
Keyw Holding Corp. . . . . . . . . . . . . . . . . . . . . 11
Kirkland’s Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Kozyak Tropin & Throckmorton PA . . . . . 15
KPMG Corporate Finance LLC . . . . . . . . . 27
Lehman Brothers Holdings Inc. . . . . . . . . . 27
Leonard Green & Partners LP . . . . . . . . . . . 24
Level 3 Communications Inc. . . . . . . . . . . . 21
Lightower Fiber Networks LLC . . . . . . . . . 21
Lipow Oil Associates LLC . . . . . . . . . . . . . . . 14
Lowenstein Sandler LLP . . . . . . . . . . . . . . . . 14
Lumos Networks Corp. . . . . . . . . . . . . . . . . . 11
M/C Venture Partners . . . . . . . . . . . . . . . . . . 21
Mantech International Inc. . . . . . . . . . . . . . 11
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< Index >
Michael Kors Holdings Ltd . . . . . . . . . . . . . 11
Mindtree Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Modine Manufacturing Co. . . . . . . . . . . . . . 11
Moody’s Investors Service Inc. . . . . . . 23, 24
Morgan Stanley
Alternative Investment Partners . . . . . . . 21
National CineMedia Inc. . . . . . . . . . . . . . . . . . 5
National Oilwell Varco Inc. . . . . . . . . . 6, 9, 11
Northrop Grumman Corp. . . . . . . . . . . . . . . . 9
Oak Hill Capital Management . . . . . . . . . . . 22
Oak Investment Partners . . . . . . . . . . . . . . . 21
Omega Protein Corp. . . . . . . . . . . . . . . . . . . . . 11
Orix USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Orthofix International NV . . . . . . . . . . . . . . 11
Owens & Minor Inc. . . . . . . . . . . . . . . . . . . . . 11
Pamlico Capital . . . . . . . . . . . . . . . . . . . . . . . . . 21
PDVSA Petroleo SA . . . . . . . . . . . . . . . . . . . . . 14
Pebbles Interfaces . . . . . . . . . . . . . . . . . . . . . . 19
Perkins Coie LLP . . . . . . . . . . . . . . . . . . . . . . . 27
PlentyOfFish Media Inc. . . . . . . . . . . . . . . . . 19
Providence Equity Partners Inc. . . . . . . . . 24
Qualcomm Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Quanta Services Inc. . . . . . . . . . . . . . . . . . . . . 21
Raymond James Financial Inc. . . . . . . . . . . 24
RCS Capital Corp. . . . . . . . . . . . . . . . . . . . . . . . 27
Reed Smith LLP . . . . . . . . . . . . . . . . . . . . . . . . 27
Roche Holding AG . . . . . . . . . . . . . . . . . . . . . . 25
Roundy’s Inc. . . . . . . . . . . . . . . . . . . . . . . . . 11, 19
Sagent Pharmaceuticals Inc. . . . . . . . . . . . . 11
SanDisk Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ScanSource Inc. . . . . . . . . . . . . . . . . . . . . . . . . 11
Schlumberger Ltd. . . . . . . . . . . . . . . . . . . . . . . . 6
Screenvision LLC . . . . . . . . . . . . . . . . . . . . . . . . 5
Siemens AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Skyworks Solutions Inc. . . . . . . . . . . . . . . . . . . 9
SRA International Inc. . . . . . . . . . . . . . . . . . . 24
Stanley Black & Decker Inc. . . . . . . . . . . . . . 11
Steris Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Synergy Healthcare plc . . . . . . . . . . . . . . . . . . 5
Synopsys Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Sysco Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Telefónica SA . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Telx Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . 20
Textron Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Third Point LLC . . . . . . . . . . . . . . . . . . . . . . . . 26
Time Warner Cable Inc. . . . . . . . . . . . . . . . . . 5
Tinder Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Tokyo Electron Ltd. . . . . . . . . . . . . . . . . . . . . . . 5
Trigeant Holdings Ltd. . . . . . . . . . . . . . . . . . . 14
Tudor, Pickering, Holt & Co. LP . . . . . . . 6, 27
United Continental Holdings Inc. . . . . . . . 26
US Cellular Corp. . . . . . . . . . . . . . . . . . . . . . . . 11
US Foods Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Veritas Capital Partners LLP . . . . . . . . 24, 25
Victor Jets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Weatherford International plc . . . . . . . . 6, 11
Weil, Gotshal & Manges LLP . . . . . . . . . . . . 27
Western Union Co. . . . . . . . . . . . . . . . . . . . . . . 11
Windstream Holdings Inc. . . . . . . . . . . . . . 20
YoungJets LLC . . . . . . . . . . . . . . . . . . . . . . . . . 19
YRC Worldwide Inc. . . . . . . . . . . . . . . . . . . . . 11
Zayo Group Holdings Inc. . . . . . . . . . . . . . . . 21
Zimmer Holdings Inc. . . . . . . . . . . . . . . . . . . . 6
Zions Bancorp. . . . . . . . . . . . . . . . . . . . . . . . . . 11
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