Deal Watch - The Blog

How Nelson Mullins partner met Oprah, Dr. Oz

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Tue, 10 Nov 2009 15:46:27 -0400

It’s not every day that Nelson Mullins Riley & Scarborough partner Jeffrey A. Allred gets to rub elbows with the likes of celebrity physician Mehmet Oz and the queen of talk herself, Oprah Winfrey.

But on a recent trip to Chicago, he did just that in the service of a complicated deal that brings together a variety of high-profile medical, media and technology entities to form Sharecare Inc., the latest brainchild of WebMD founder Jeff Arnold.

The idea behind Sharecare, a Web site slated to launch in 2010, is to provide a platform connecting consumers who have health-related questions with answers and information provided by well-known medical centers such as Johns Hopkins Medicine; health and wellness authors including Dr. Dean Ornish; celebrity doctors such as Oz; local physicians and even other healthcare consumers in a social media-type format.

Sharecare also will link users by offering online prompts to help consumers ask more detailed medical questions, direct them to Web sites run by Sharecare content providers and even allow them to buy individual chapters from healthcare-related books.

These sorts of information connections seem especially fitting given the web of business connections that link Sharecare’s six co-founders—not to mention its lawyers at Nelson Mullins.

The company’s founders are Discovery Communications, Harpo Productions, Sony Pictures Television, HSW International, Oz and Arnold.

Allred said he has known Arnold, a University of Georgia-educated entrepreneur who sold WebMD in 1999 for a reported $2.5 billion, for more than a dozen years. The two met when Allred was with Premiere Global Services Inc., an Atlanta communications technology company where he served as president and chief operating officer.

“We met Jeff Arnold when he was starting Web MD, and we were fortunate enough at Premiere to invest in that company as a strategic partner and that investment did quite well,” Allred said.

Years later, Arnold asked Allred to handle Sharecare’s legal work. “We were charged with executing, really, the vision that Jeff Arnold and his team brought to the table, which was to combine these very important media players … and also to help paper the relationship between Sharecare and various knowledge and content partners,” Allred said.

The connections between many of those people and entities come from Arnold, who, after selling WebMD, went on to acquire How Stuff Works, a Web site that explains difficult concepts in simple terms. How Stuff Works was an affiliate of Sharecare co-founder HSW International. Arnold in 2007 sold How Stuff Works to Sharecare co-founder Discovery Communications.

Through Discovery, said Allred, Arnold met Oz, who has appeared on The Oprah Show a number of times—leading to the connection with Sharecare co-founder Harpo Productions, which produces both The Oprah Winfrey Show and The Dr. Oz Show.

Oz’s show is co-produced by another Sharecare co-founder, Sony Pictures Television; Oz, along with Dr. Michael Roizen, co-authored the bestselling book "YOU: The Owner’s Manual." Roizen is a Sharecare content provider, as is the book’s publisher, HarperCollins. Oz and Roizen work, respectively, with New York Presbyterian Hospital and the Cleveland Clinic, both of which will provide Sharecare content.

“The brilliance is in getting all these companies to come together,” said Rusty Pickering, a Nelson Mullins partner who handled corporate governance and other aspects of the deal. “Jeff [Arnold] spent a lot of time getting these people together.”

Sharecare’s lawyers at Nelson Mullins spent their time, in addition to handling licensing, tax and other issues, getting the co-founding companies together.

One of those transactions involved representing Sharecare in its purchase of DailyStrength from Sharecare co-founder HSW International. DailyStrength.org is a social network designed to connect people dealing with health issues such as depression, cancer and alcoholism to one another.

According to HSW’s most recent 8-K, filed with the Securities and Exchange Commission earlier this month, HSW got about a 20 percent equity stake in Sharecare valued at $1.25 million and is providing Web design and development services in exchange for the DailyStrength assets and a technology license agreement. Sharecare also agreed to assume DailyStrength’s liabilities, including a potential earn-out payment of up to $3.525 million.

Allred said the terms of the other deals linking Sharecare’s co-founders have not been disclosed.

Sharecare’s other lawyers at Nelson Mullins include Atlanta partners Donna K. Lewis, Brian S. Galison and Paul J. Cox, as well as associate Hemant Dutta.

Harpo was represented by in-house counsel and lawyers from Much Shelist Denenberg Ament & Rubenstein in Chicago; HSW was represented by in-house lawyers and Wyrick Robbins Yates & Ponton in Raleigh, N.C.; Sony and Discovery were represented by their respective in-house counsel and Oz was represented by Grubman Indusky & Shire in New York.

Allred said he went with Arnold to meet Oz in his greenroom just before the physician made an appearance on The Oprah Show. He described Oz as “very charismatic, very intelligent, very intense and very energetic.”

He also—briefly—met Oprah herself, as well as Discovery CEO David Zaslav and Discovery’s digital communications head Bruce Campbell. “There were a lot of, you’d call them famous folks that were involved in this,” he said, then added, laughing, “Certainly, we’re not among them.”

AGG lawyer brings a bit of Germany to Georgia

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Thu, 05 Nov 2009 10:23:00 -0400

On Wednesday, Arnall Golden Gregory partner Tycho Stahl was driving on the Autobahn near Münster, Germany, logging yet more miles on what has, so far, been a two-week, 3,000-mile road trip to meet with clients interested in doing business in the United States.

But his thoughts weren't only on the roadway famous for its high rates of speed. He was focused on Meriwether County, Ga., where he'd just completed a $9 million deal to bring the U.S. affiliate of a German client that makes components used in steel manufacturing to the rural south.

It's just one of a number of cross-border transactions that Stahl, a German native educated in the United States, is juggling these days. Speaking on his cell phone, he said that European companies—many of them family-owned and able to fund transactions with their own cash rather than by chasing scarce bank financing—are looking for opportunities in the United States because they have clients here.

U.S. communities are making them feel welcome with tax incentives, financial guarantees and help in training employees, constructing buildings and acquiring land and equipment.

Stahl's client, Gustav Wiegard Maschinenfabrik GmbH & Co., is a fourth-generation family business based in Witten, Germany, and its U.S. affiliate, Gustav Wiegard North America LP, is financed by a number of investors from around the globe. Wiegard manufactures huge, multi-ton rollers used to flatten cold-rolled steel.

The company, said Stahl, wants to come to the United States because one of its clients, ThyssenKrupp Steel and Stainless USA is building a $4.6 billion state-of-the-art steel and stainless steel processing facility in Calvert, Ala.

Meriwether, a rural county about 50 miles southwest of Atlanta with a population of about 22,500 spread over about 500 square miles, used a combination of incentives, financing and good chemistry to compete successfully against a number of other communities and win the deal.

Tyron C. Elliott of the Elliott Law Firm in Manchester, Ga., represented the Meriwether County Industrial Development Authority. “We've worked with Gustav Wiegard for a year, and we went to Germany to tour their plants,” he said. “We didn't know a great deal about the business of making these steel rollers, so we had to learn a lot.”

One of the things they learned, he said, is that the Wiegard executives weren't just interested in the bottom line; they were interested in developing a good, working relationship with the authorities in the region where they located.

So the Industrial Authority, along with the Metro Atlanta Chamber of Commerce and the State of Georgia worked together to offer Wiegard a deal. That deal, said Elliott, includes building the company a 30,000-square-foot, $2.5 million to $3 million plant, financed in part by the Industrial Authority via a loan from F&M Bank and Trust Co. which will be offered to Wiegard on a 10-year lease-purchase arrangement. The building will be in a state-of-the-art industrial park that already has one international business in operation, the Korean Dongwon Autopart Technology, which supplies components for the Kia Motors automobile plant in West Point, Ga.

The deal also includes financing for Wiegard's equipment and machinery, provided by another local bank, Meriwether Bank & Trust. And it includes a rebate on Georgia income and unemployment taxes under a state economic stimulus program and access to an employee job training program through a branch of West Georgia Technical College.

A number of other communities offered incentives, too, said Elliott, and delegations from Auburn and Pell City, Ala., even traveled to Germany to meet with Wiegard executives.

“There are many high-quality communities, high-quality industrial parks that have great highway access, great can-do attitude and are willing to make land available,” said Stahl. “I think where Meriwether came out ahead is they all put their shoulders together and pulled. It's the State of Georgia; it's the Metro Atlanta Chamber of Commerce; it's the county, which provided loan guarantees; the local banks; the developer; the Meriwether Industrial Authority.” And, he said, they all worked to develop relationships with Wiegard.

Wiegard, with revenues Stahl estimates in the low nine-figure range, has sales offices all over the world, including one in Washington State. But it now will consolidate its U.S. operations in Meriwether County, where the plant is expected to be up and running by mid-2010. Elliott said the plant, which is planned as a multiphase project, initially will employ 50 people, and later add about 30 more.

Stahl, who worked on the deal with about a dozen other Arnall Golden lawyers including John L. Gornall, Steven A. Kay, Neil P. Mulcahy, Hyun-Zu “Yonni” Kim, John G. Spinrad and Stephen P. “Steve” Pocalyko, said his team's work includes negotiating and drafting project agreements and contracts, handling employment-related legal work, real estate issues, environmental matters and permits and financing for construction and suppliers.

He said Wiegard, like his other European clients—the one he was driving to see on Wednesday was a supplier for the oil and gas industry interested in coming to Texas—also want their U.S lawyers to minimize their risks of doing business here.

So what Stahl and his team also do is set up U.S. arms of the company early on, negotiate with customers and suppliers so that the contractual risk stays with the U.S. entity and set up insurance so that liability stays with the U.S. entity.

“People have heard horror stories about product liability and similar things in the United States, and about lawyers run amuck. They worry about market risks.” But, he added, “Georgia has some pretty amazing [incentive programs], as do other states. All of those things help reduce the risk to foreign companies entering the U.S. market. Most Europeans when they come to the region are favorably surprised by the engagement in the region.”

Small-biz bankruptcies decline in Atlanta

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Thu, 05 Nov 2009 10:20:11 -0400

Small-business bankruptcies are declining in Atlanta, falling 44 percent between the second and third quarters of this year, according to data from Equifax.

The Atlanta-Sandy Springs-Marietta area ranked fifth in the nation for the number of small-business bankruptcies in June; at the end of September, the area had fallen to 15th place. The city with the highest number of small-business bankruptcies is Los Angeles.

Savannah made the list of 15 metro areas with the fewest small-business bankruptcy filings.

Nationwide, commercial bankruptcies among the country's 25 million small businesses increased by 44 percent from the third quarter of 2008 to the third quarter of 2009. In the month of September alone, the most recent month for which complete data are available, total bankruptcy filings around the country rose 27 percent, from 7,386 in September 2008 to 9,361 in September 2009, according to the Equifax analysis.

Equifax, which analyzed Chapter 7, 11 and 13 filings to collect this data, defines a small business as a commercial entity with fewer than 100 employees.

Kilpatrick represents Equifax in $124M deal

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Wed, 28 Oct 2009 10:00:00 -0400

Equifax Inc., the company known for its analysis of consumer creditworthiness, today closed a $124 million deal to acquire IXI Corp., thanks in part to legal help from Kilpatrick Stockton.

Kilpatrick mergers and acquisitions partner Gregory K. Cinnamon, who served as lead counsel on the deal, said he’s represented Equifax in various transactions over the past 15 years, including the company’s 2008 joint venture with Russian credit information company Global Payments Credit Services.

In the IXI deal, he said, “Intense focus was placed upon the transaction and meeting a tight time scale.”

Prior to the agreement, Equifax and IXI, a privately-held company based in McLean, Va., which collects and analyzes consumer wealth and asset data, had worked together for 18 months.

IXI sells its information to clients in the financial services and consumer marketing sectors. The company says it sources its information through more than 95 banks, brokerage firms and other financial entities, directly measuring data on more than $10 trillion in U.S. consumer assets and investments that represent more than 42 percent of all U.S. consumer-invested assets.

Cinnamon said six to eight other lawyers from three of his firm’s offices also worked on the deal, including Atlanta partners Lynn E. Fowler, who handled tax matters, and Jennifer S. Schumacher, who handled benefits and executive compensation issues.

Cooley Godward Kronish represented IXI; the company’s financial advisers were from Wells Fargo.

Nelson Mullins helps integration companies unite

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Tue, 27 Oct 2009 14:37:53 -0400

Five years ago when Nelson Mullins Riley & Scarborough partner Rhys Wilson was giving a speech at a law-related event, the owner of a Suwanee-based systems integration company came up to him and said, “I’m thinking of selling my business.”

Earlier this month, Wilson helped Joseph Ciotti, the president of Richardson Technology Systems Inc., do just that. South Western Communications, based in Newburgh, Ind., bought Richardson for an undisclosed amount, forming the new SWC-Richardson Technology Systems.

The deal brings together two companies with a focus on integrating security and communications systems in diverse settings.

Wilson said his client, which was founded some 40 years ago, initially launched its business by installing intercom systems in schools. Now, it sets up systems for security passcards, cameras, video monitoring, professional sound systems for meeting rooms, bedside nurse-call buttons in hospitals and cellphone paging systems for doctors and nurses.

“They’ll take all the different systems that other companies have that are placed in buildings and help them talk to each other and work together,” said Wilson. “It’s all that boring stuff that nobody cares about until it’s not working.”

South Western, which is a portfolio company of Koch Enterprises, an Evansville, Ind., private holding company, focuses on integrating systems technology in commercial, industrial and prisons/detention facility settings, as well as in the healthcare and educational sectors served by Richardson.

Wilson said the companies knew each other because each had customers with locations in the other’s territory and “they had to learn to share.” The CEOs knew and liked one another, Wilson said, and this helped the deal come together in just four or five months.

In addition to Wilson, other Nelson Mullins lawyers who worked on the deal were of counsel David K. Goldberg and associate Hemant Dutta.

South Western was represented by David Sanders of Fine & Hatfield in Evansville.

Allion's $278M going-private deal spawns suit

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Tue, 27 Oct 2009 12:50:55 -0400

As Shakespeare noted, the course of true love never did run smooth. The same, it seems, could be said about going-private transactions.

Earlier this month, Allion Healthcare Inc., represented by Alston & Bird partner Steven L. Pottle, agreed to be acquired in a going-private transaction valued at approximately $278 million.

The Melville, N.Y.-based Allion, a provider of specialty pharmacy and disease management services focused on HIV/AIDS patients, is slated to be sold to an affiliate of HIG Capital, a private investment firm with offices throughout the U.S. and Europe, for about $199 million, plus $79 million in assumed debt.

But just two days after that agreement was announced, on Oct. 20, New York law firm Levi & Korsinsky filed a putative shareholders’ class action against Allion in the Supreme Court of Suffolk County, New York. The supreme court is a state trial court.

The action alleges, among other things, that the price to be paid to holders of Allion common stock is “unfair” because the company is “poised for growth” and its shares are trading at a “huge discount to its intrinsic value.” The purchase price in the sale agreement, $6.60 per share, represents a 30 percent premium over the average price at which the shares traded in the five days preceding the going-private announcement, according to information from Allion.

The suit also alleges, among other things, that the agreement contains a “no shop” provision prohibiting the members of Allion’s board from soliciting competing proposals.

At least two other law firms and a San Diego-based advocacy group, the Shareholders Foundation, Inc., are investigating the agreement.

Pottle called the suit “baloney.” He said it was a standard, plaintiffs’ lawyers’ class action strike based only on information in a press release, given that Allion has not yet filed its proxy.

He said his partner, securities litigator Scott P. Hilsen, will represent Allion in the suit.

Pottle said he did not expect the litigation to delay closing, calling this type of action “fairly customary in a going-private transaction.”

Closing is expected to occur in the first quarter of 2010, subject to regulatory, antitrust and shareholder approvals. The holders of about 41 percent of Allion’s outstanding shares of common stock have signed agreements with HIG to vote in favor of the merger; the company must garner the approval of the holders of a majority of the outstanding shares in order to close the deal.

Pottle said he helped advise the board and a special committee about the sale and their fiduciary duties; he also negotiated the deal. He said he first connected with Allion when he represented the company’s underwriters, Thomas Weisel Partners Group, in Allion’s initial public offering in 2005, and then in a follow-on offering a year later.

In 2008, he said, he represented Allion in what amounted to a “merger of equals” with Biomed America Inc. The transaction was valued at $99.4 million.

In the current deal, Pottle said senior and mezzanine debt financing already have been committed to fund HIG’s purchase of Allion.

HIG, which has some $7.5 billion in capital under management, was represented by Kirkland & Ellis. Raymond James & Associates, which served as financial adviser and dealt with possible strategic partners, was represented by Morrison & Foerster.

Invesco uses NY counsel on Morgan Stanley deal

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Fri, 23 Oct 2009 12:41:00 -0400

Invesco, Ltd., the Atlanta-based global investment management company, announced plans to acquire Morgan Stanley’s retail asset management business in a deal valued at $1.5 billion.

The transaction, which will include the acquisition of Van Kampen Investments, will be financed with cash and stock providing Morgan Stanley with a 9.4 percent equity interest in Invesco.

Invesco was represented in the transaction by attorneys from Wachtell, Lipton, Rosen & Katz.

An Invesco spokesman said no Atlanta firms or lawyers worked on this deal.

Alston energizes Chinese clean coal deal

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Thu, 22 Oct 2009 09:52:03 -0400

The next time Alston & Bird partner William H. Hughes flips on a light switch in a hotel room in China, where he travels on business, the electricity illuminating his room may come from a clean-coal project he helped set in motion.

In a project that will implement the first commercial use of a technology that allows the production of low-emission coal-based electricity and carbon capture and sequestration, Hughes represented Chinese client Beijing Guoneng Yinghui Clean Energy Engineering Co. in its licensing and engineering services contract with U.S.-based KBR Inc.

The technology, called Transport Integrated Gasification, or TRIG, was developed by Southern Co., KBR Inc. and other partners, including the U.S. Department of Energy, at a DOE facility operated and managed by Southern Co. in Wilsonville, Ala.

The deal involves two power plants. One, a 120-megawatt plant that burns diesel, will be retrofitted to produce gasified coal and will have the capacity to serve 700,000 Chinese homes. The other plant, which will be built on an undeveloped site, will serve some 4 million Chinese homes with its 800 megawatt capacity. The new plant will use Integrated Gasification Combined Cycle, or IGCC, technology to take carbon-containing fuels such as coal or biomass and gasify them.

Once the gas exists, Hughes said, the technology will extract the CO2 from it. “You then can burn the gas to fire a gas-fired turbine and use the waste heat to fire a steam turbine,” Hughes said. “You get very, very efficient use of your fuel because you have these two different cycles of power generation and you can get down to virtually carbon-free emissions if you extract the CO2” and if other flue gases such as sulfur, mercury and nitrogen dioxide are removed.

The plants will be built in Dongguan, a city of 8 million in the Southern Chinese province of Guangdong, which is part of the Pearl River Delta, a well-known manufacturing district.

“It's just filled with factories, most of which have been built in the last 10 or 15 years,” Hughes said, explaining that those factories tend to have individual coal-fired boilers or on-site diesel generators.

“Air pollution really is a serious problem,” said Hughes, who worked on the deal with Atlanta partner David C. Keating and associate T. Timothy Wang, as well as lawyers and consultants from the firm's Washington office. “You go to a manufacturing center like Dongguan and I think the air is similar to what you had in Pittsburgh or Birmingham, Alabama, in the 1950s and '60s. There's just a pall that hangs over the place.”

The area not only needs to clean up its air, he said, it also has an inadequate power supply and needs to ramp up electricity production.

Because of those problems, Hughes said the Chinese government lent its support to the deal. Such support is consistent with a speech President Hu Jintao gave to the United Nations in September, in which he discussed China's commitment to cutting its carbon dioxide emissions per unit of gross domestic product by a “notable margin” by 2020, and its intent to “step up” the country's efforts to establish a green economy. Hughes also pointed out that one of the country's motivators is to develop technology it can export.

He said he flew to China in August to put the deal together, spending four days with 40 to 50 other people in a large meeting room at a hotel, participating in negotiations that took place in a mix of English and Chinese.

One of the major cultural aspects of getting the deal done, he said, was sharing mealtimes with the other participants. He recalled one typical South China country-style dinner at a restaurant in Dongguan where diners were seated at large tables with Lazy Susans in the center. The meal, he said, was delicious and involved lots of seafood and vegetables with the trademark “umami,” or Chinese protein-type flavoring reminiscent of mushrooms or a good steak, and “a whole roast chicken on a plate kind of looking you in the eye as it came around.”

Then, he said, he returned to the United States and, with in-house lawyers for KBR, put everything in writing before his Chinese clients flew over to sign the papers in one of Alston & Bird's conference rooms. The transaction is governed by U.S. law.

The deal, he said, went smoothly thanks in part to the support of the Chinese government. “When the central government decides to do something,” he said, “it typically gets done.”

Jones Day's $1.3 billion HR deal

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Wed, 21 Oct 2009 09:56:45 -0400

In a rare $1 billion-plus transaction for these deal-starved times, Jones Day's Timothy Mann Jr. helped client MPS Group Inc. enter a definitive agreement to be acquired by Adecco Group.

Both companies provide specialty staffing, human resources and consulting services. Adecco, based in Zurich, Switzerland, is a Fortune 500 company with operations in more than 60 countries. MPS, based in Jacksonville, Fla., provides staffing and consulting in the U.S. and overseas related to, among other things, the information technology, finance, accounting, engineering and legal fields.

Both are public companies. In 2008, MPS posted revenue of $2.2 billion; Adecco's most recently reported revenue was $31 million.

Adecco agreed to acquire MPS for $13.80 per common share in a cash transaction valued at approximately $1.3 billion. That price represents a premium of 24 percent over the MPS closing stock price on Monday.

According to information from MPS, the deal is not subject to a financing contingency and will be financed with Adecco's current cash resources and existing financing capabilities. The Wall Street Journal reported that Adecco would finance the acquisition with a 900 million Swiss franc ($888 million) convertible bond.

Mann, through a firm spokesman, declined to comment for the story as the deal has not yet closed. It is expected to close in the first quarter of 2010, subject to MPS Group shareholder approval, antitrust clearance and other regulatory approvals.

In addition to Mann, according to the firm, other Jones Day Atlanta lawyers who worked on the transaction for MPS are mergers and acquisitions lawyers John E. Zamer, Heith D. Rodman, Daniel S. Fishbein, James T. Hsiung, Marla E. Nicholson and Brendon K. Durkin; employee benefits and executive compensation lawyers Rory D. Lyons, Arthur G. Kent and Sara E. Hanig; and finance lawyer Douglas S. Gosden, as well as attorneys from three of the firm's other offices.

MPS Group's senior vice president and chief legal counsel, Gregory D. Holland, also worked on the deal, along with local counsel in Jacksonville from Fowler White Boggs.

Adecco was represented by Latham & Watkins. Bank of America Merrill Lynch acted as financial adviser.

Local firms work different sides of New Vision restructuring

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Wed, 14 Oct 2009 16:57:02 -0400

New Vision Television is one of the first media companies to emerge from bankruptcy in an era that has seen many television, radio and newspaper conglomerates file for—and remain in—reorganization.

So say attorneys at Locke Lord Bissell & Liddell, who represented New Vision in its restructuring, and attorneys at Paul, Hastings, Janofsky & Walker, who represented UBS AG Stamford, the agent for the company’s primary creditors.

In a deal that moved extremely quickly—New Vision emerged from bankruptcy after only 80 days, and its plan was confirmed after only 59—the company, which owns or provides services to 14 network-affiliated and three non-affiliated television stations, was able to erase $400 million in debt by giving equity positions and representation on the board of directors to its first- and second-lien holders.

“The really interesting point of this whole transaction, at least in the media space, is, I think, New Vision is ahead of the curve,” said Locke Lord partner Neil H. Dickson, who’s been involved with the company since its inception and helped it acquire its first stations in 2006. “Just in my opinion, there could be some more of these transactions coming down the pike.”

The media outlets that have entered and remained in bankruptcy in the past two years include: Pappas Telecasting Inc., the largest privately held commercial broadcast operator in the country; Tribune Co., owner of the Chicago Tribune newspaper and a variety of television and radio assets; Young Broadcasting Inc., owner of 10 television stations; Ion Media Networks, owner of more than 50 television stations; and Freedom Communications, owner of The Orange County Register and more than 30 other dailies and several television stations.

“Because we were one of the first, we were able to move more quickly and the lenders were more … willing to work with us,” said Dickson, who worked on the deal with Atlanta partners Jeffrey A. Yost and Philip A. Cooper, as well as associates Alexis Summers and Vita E. Zeltser.

Dickson added that the company paid off its trade creditors in full and emerged with just $20 million in debt. “I’m not sure you’ll see that in future deals.”

Jesse H. “Jess” Austin III, the Paul Hastings partner who led the deal for UBS, said he’s worked on about eight similar bankruptcies just in the last year. “Broadcast properties really have been hammered, although not as badly as newspapers,” he said.

His client, he said, has been watching other media bankruptcies closely. “In all those other cases, they’ve been burning a lot of legal costs. It’s not cheap to go through bankruptcy, and if you’ve got a contested case, that is taking cash flow out of the bottom line,” he said. His clients, he added, “recognized that speed and certainty added value to the case.”

That didn’t mean his clients’ equity stake gave them the equivalent of 100 cents on the dollar in exchange for releasing claims for $400 million owed by New Vision. “They definitely took losses,” he said. “The midrange value of what the company was [worth] upon exit was about $112 million.”

Also, he said, the first-lien holders—whose identity he declined to reveal—put up $28 million in debtor-in-possession financing to provide working capital.

He said his client agreed to the deal because it seemed the best way to recover value on the assets especially given that ad revenue is projected to fall over the next 18 to 24 months. “You could sell [assets] right now, but you’d get pennies on the dollar and people aren’t willing to take that kind of loss right now,” he said.

Instead, the multiple lien holders—64 were in the bank group alone, and most of them are offshore hedge funds—agreed to a prearranged bankruptcy via a lockup agreement in which the parties effectively negotiated the term sheets for most of the operative documents prior to filing.

Austin said the deal was a complex one, with bankruptcy taking only about a quarter of the focus and the rest of the attorneys’ energy being spent on corporate, tax, finance and Federal Communications Commission matters.

The restructuring involved eight other lawyers from Paul Hastings’ Atlanta office, including partners Philip J. Marzetti, Frank Layson, Erik L. Belenky and Ted E. Smith III and associates J. Craig Lee, Elizabeth C. Arnett, Jeremy S. Corcoran and David J. Burch. It also involved lawyers from out-of-town offices at both Paul Hastings and Locke Lord; lawyers from Brown Rudnick also represented the second-lien holders in the transaction.

SGR engineers reverse merger for medical device company

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Wed, 14 Oct 2009 16:45:18 -0400

Smith, Gambrell & Russell has helped engineer a reverse merger for a regenerative medicine company whose products can be applied to wound healing, the reduction of atherosclerotic plaque and cellulite smoothing.

Corporate partners John C. Ethridge Jr. and Terry Ferraro Schwartz, along with counsel Toni H. Burgess and associate Emily R. Cacioppo, represented Alpharetta-based Sanuwave Inc. in a deal which used a Nevada-based shell company that ran a music library before ceasing operations, Rub Music Enterprises, to take Sanuwave public.

In this transaction, the attorneys used a triangular reverse merger—meaning the merger occurred between three entities—to get the deal done. Sanuwave, a private company, merged with a subsidiary of the public company Rub Music, and simultaneously became a wholly-owned subsidiary of Rub Music. The deal is termed a reverse merger because, from an accounting perspective, Sanuwave is considered the acquirer; from a legal perspective, it is considered the surviving corporate entity.

“A reverse merger with a public shell is one way a company can become a publicly traded company or at least a reporting company to the [Securities and Exchange Commission] … without raising a lot of money in a traditional IPO-type of public offering,” said Schwartz.

Reverse mergers have been used by companies wanting to avoid the SEC’s rigorous going-public processes. Now, said Schwartz, “The SEC has pretty much closed the door on that.”

She explained that companies going public via a reverse merger now must file what’s called a Super 8-K, which requires the same sorts of audited financial statements and other documentation needed for a traditional IPO; they also must requalify for trading on Nasdaq or the New York Stock Exchange.

She said that the Sanuwave shareholders had been thinking about a reverse merger with a public shell for several years. “When an appropriate public shell was identified as being a good vehicle—a clean shell, if you will, that had made all its filings with the SEC so there would not be a problem from a legal standpoint—they moved forward.”

The Smith Gambrell lawyers drafted and negotiated the merger agreement, helped with a $1.8 million private placement and handled securities filings connected with the deal. Cletha A. Walstrand, a sole practitioner in Ivins, Utah, represented Rub Music.

The deal also involved a change in control. Sanuwave shareholders took ownership of nearly 90 percent of Rub Music, which had $3.3 million in cash or cash equivalents at closing. The former Rub Music shareholders, along with the private placement investors, own portions of the remaining 10 percent of the company.

Ethridge, who represented Sanuwave’s Chief Executive Officer Chris Cashman in an earlier acquisition of a surgical device company, said that Sanuwave’s investors wanted to go public so that once their products receive Food and Drug Administration approval, they’ll be able to move quickly to raise money, and so that they could get more information to the general public via their public filings.

The company’s current public filing explains that its products are non-invasive and use acoustic pressure waves—similar to those which have been used for some 20 years in lithotripsy treatments to break up kidney stones—to promote an inflammatory response that can lead to enhanced new blood vessel formation and tissue regeneration.

The company already uses the technology for some FDA-approved treatments of chronic tendonitis. Expanding its repertoire to include more medically complex uses such as the treatment of diabetic foot ulcers and the like, Ethridge said, would offer the opportunity for better insurance reimbursement.

The company’s 8-K indicates that the anticipated launch for its lead product candidate of this type is about two years away.

Wyche Burgess advises textile maker Milliken on deal

editor.nospam@nospam.dealwatchblog.com (Andy Peters) — Fri, 09 Oct 2009 14:04:00 -0400

One of the largest U.S.-based textile manufacturers recently relied on a Greenville, S.C. law firm for advice on acquiring a private equity fund’s portfolio company.

Milliken & Co. was advised by a legal team from Wyche, Burgess, Freeman & Parham on its acquisition of carpet maker Constantine LLC. Heading up the Wyche team was partner Kevin Hendricks, a former associate in Jones Day’s Atlanta office. The deal closed on Tuesday and terms weren’t disclosed.

Milliken, a privately held company that’s headquartered in Spartanburg, S.C., manufactures modular carpet, apparel, fabrics and chemicals. Constantine is based in Calhoun, Ga., and is owned by the Boston private equity fund Lineage Capital LLC. Constantine makes broadloom and modular carpet tile, as well as other types of floor-covering products.

Working with Hendricks on the Milliken deal were Wyche partner Cary Hall and associates John Harvey, Maurie Lawrence and Rita Barker, all located in Greenville. Ropes & Gray advised Lineage Capital.

Wyche, a 38-lawyer firm, has weathered the economic downturn well because there were few examples of companies and lenders in the Greenville area that became overextended leading up to the recession, Hendricks said.

“Greenville never went crazy in the last few years in terms of growth and massive deal flow,” Hendricks said.

With an even split between litigation and transactional work, Wyche is able to handle clients’ needs on most deals, in spite of its size, Hendricks said. Occasionally Wyche will partner with a Washington firm when a client needs specific regulatory advice.

The Wyche firm is known for its work in some specific areas. Founding partner Tommy Wyche has authored several books about the South Carolina mountains, and he helped lead the redevelopment of downtown Greenville, including the creation of a park centered on the Reedy River waterfalls. Wyche’s office is situated on a parcel overlooking the falls. The Wyche firm has also carved out a niche, led by partner Wallace Lightsey, as a specialist in representing architectural firms in copyright infringement litigation.

Virgin eyed other suitor before choosing Sprint

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Fri, 09 Oct 2009 13:11:00 -0400

Virgin Mobile USA Inc. was winking at another suitor while dancing with ultimate merger partner Sprint Nextel Corp., according to a recent filing with the Securities and Exchange Commission.

Sprint, represented by attorneys at King & Spalding, acquired Virgin, represented by lawyers at Simpson Thacher & Bartlett, for $731 million on July 28. Sprint and Virgin, according to the former’s registration statement, filed Sept. 3, first began merger-related talks in the autumn of 2008, eventually meeting for valuation discussions at King & Spalding’s New York offices in December.

But in a segment of the registration statement entitled “Background of the Merger,” Sprint reveals that just a few months later, in March, Virgin executives and their financial advisers at Deutsche Bank AG, began discussing how to approach “Company X.”

Company X, the SEC filing said, “would be the company most interested in acquiring Virgin Mobile USA other than Sprint Nextel, based on its perceived financial strength, similar business model and past management dialogue with Virgin Mobile USA.”

TheDeal.com, which first reported the news about Virgin’s dealings with Company X earlier today, noted that Virgin asked Company X “numerous times” for terms on a trademark license agreement and additional matters, but that Virgin’s transaction committee eventually decided that Company X’s “flaky nature made Sprint’s offer more favorable.”

Atlanta lawyers on the deal from King & Spalding include business litigators Daniel J. King, Michael R. Smith and Shelby S. Guilbert; tax lawyers Robert G. Woodward and James H. Lokey Jr.; employee benefits lawyer Donald S. Kohla; environmental lawyer Les Oakes; and corporate attorney Donald Meyer.

Alston helps Aflac ink first-ever acquisition

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Wed, 07 Oct 2009 16:34:53 -0400

When, for the first time in its 54-year history, Columbus-based insurance provider Aflac Inc. decided to acquire another company, Alston & Bird lawyers were on hand to help.

Aflac, known for its loudmouthed duck mascot, closed on the $100 million purchase of Columbia, S.C.-based Continental American Insurance Co., or CAIC, on Sept. 30. The deal was funded with internal capital.

“This was a strategic move for Aflac,” said Susan J. Wilson, an Alston & Bird corporate partner who, along with corporate partner Andrew M. Stephenson and real estate partner Mark C. Rusche, worked on the transaction. “They wanted a platform and a particular expertise that the company in South Carolina had.”

Aflac, which offers supplemental dental, vision, disability and other insurance policies, was interested in CAIC because the smaller company focuses on group insurance policies that are distributed by brokers at employees’ work sites, Wilson said.

Wilson said the legal team spent about five months working on the deal, beginning in May. Aflac also worked with investment bank Sandler O’Neill; CAIC was represented by attorneys from Nexsen Pruet in Columbia.

Wilson said that prior to this acquisition, Aflac always had grown organically.

Laura Kane, Aflac’s spokeswoman, said that the company had vetted a lot of potential acquisition targets over its more than half-century in business. “Believe it or not … this was just the first time that we found one that was the perfect fit for us,” she said.

Aflac, now a worldwide business, was founded as American Family Life Insurance Co. in 1955 by three brothers: John, Paul and Bill Amos. Operating out of a one-room office in Columbus, the brothers signed 6,426 policyholders and accumulated $388,000 in assets their first year in business. In the early 1970s, John Amos lost a coin toss with an executive at another insurance company with the same name, and as a result, changed one word in his company’s moniker, creating American Family Life Assurance Co. The resulting acronym, Aflac, some 30 years later became the trademark squawk of one of the best-known marketing icons in the U.S.: the Aflac duck. That duck now presides over a company, which still is owned by the Amos family, with more than $59 billion in assets and more than 40 million insureds around the world.

Kane also said that this acquisition does not mark a change in Aflac’s expansion philosophy. “The timing just seemed to be right in terms of wanting to get a group product,” she said.

CAIC, a private company founded nearly 30 years ago, posted $79 million in revenue in 2008. Aflac’s 2008 revenue topped $16.5 billion.

Aflac, a longtime client of Alston & Bird’s, has over the years tapped the firm to handle matters related to litigation, immigration, labor and employment, and, of course, trademarks for the famous fowl.

But as for other acquisitions in the pipeline now, Wilson said only, “I wish.”

Medical data companies unite, with help from Greenberg and Skadden

editor.nospam@nospam.dealwatchblog.com (Janet Conley) — Wed, 07 Oct 2009 16:26:50 -0400

While politicians in Washington have been arguing about health care reform, lawyers at Greenberg Traurig have been busy putting together a deal between health care data technology companies whose analytical products enable managed care organizations to assess both quality of care and financial outcomes.

In the deal, Bowie, Md.-based MedAssurant Inc., represented by attorneys at Skadden Arps, Slate, Meagher & Flom, purchased Greenberg Traurig client, Atlanta-area Catalyst Information Technologies Inc. Both are private companies.

MedAssurant provides a variety of analytic tools that allow health care organizations to compile disparate data into information that can be used to assess clinical care, operational efficiency and financial performance.

“The Catalyst tools and analytical processes are designed to allow managed care organizations and health care providers to assess the quality of their outcomes, the quality of patient care, the quality of their organizations’ overall efficiencies at a time when all of society is grappling with the intersection of health care outcomes versus cost,” said Theodore I. Blum, the lead Greenberg Traurig partner on the deal.

Financial terms of the purchase, which MedAssurant financed itself with cash and common stock, were not disclosed. MedAssurant’s last significant cash infusion, according to press reports, occurred a year ago when Roche executive Andre Hoffmann bought $175 million of the company’s shares, giving him a 15 percent ownership stake and making him the largest outside shareholder.

“The value of what they do is very high,” Blum said of his client and its acquirer. “The value of the deal is going to be significant for everyone.”

Blum, who worked on the deal with Atlanta corporate and securities partners Stephanie Ratcliffe and Channing H. Cline as well as attorneys from three other Greenberg offices, said he’s been representing Catalyst almost since its founding in Snellville in 1996.

Although Catalyst used investment bank Harris Williams & Co. as an adviser on the deal, Blum said his client and MedAssurant also knew each other from the market. “Out of the investment bank auction process, where several potential suitors looked at the company, this emerged as the clear best fit culturally … to expand on what Catalyst wanted to do,” he said.

He described the Catalyst team as young “math-computer science geniuses” seeking a broader platform for their product, and said they had launched a serious search for a merger partner at the beginning of the year.

“We helped them step back, analyze and assess for themselves what outcome they wanted,” he said. “And then we helped them analyze and assess what kind of transaction would make the most sense to achieve their outcome and then we helped them analyze and assess what kind of partner would be the right partner from a business compatibility standpoint.”

Then, he said, the Skadden lawyers came to Atlanta and both sides went through a “spirited but very, very efficient negotiation process” to get the deal done.