tag:www.thedeal.com,2008-03-11:/magazine/34 2012-11-03T17:59:07Z Movable Type Pro 4.23-en tag:www.thedeal.com,2012:/magazine//34.50356 2012-11-02T21:10:50Z 2012-11-03T17:59:07Z

Delek Logistics Partners LP's shares jumped 6.4% in their debut on the New York Stock Exchange Friday, Nov. 2, to close at $22.35 per unit....

tag:www.thedeal.com,2012:/magazine//34.50357 2012-11-02T21:05:16Z 2012-11-03T18:00:46Z

This report is an exclusive compilation of advance intelligence gathered by The Deal Pipeline's editorial staff. Today's highlights include: • A123 Systems case presages deeper...

• A123 Systems case presages deeper CFIUS participation in bankruptcy proceedings
• Innospec reiterates interest in spoiler bid for TPC
• Potash Corp. makes poorly timed approach to ICL Israel Chemicals
• Chesapeake adds to the energy asset inventory
• Credit Suisse raises $420M Mexico investment fund
• Highlights from Friday's First Take: Netflix, Southcross Energy, Eloqua

The full report follows.

A123 Systems case presages deeper CFIUS participation in bankruptcy proceedings

By asking a government national security panel to investigate a Chinese company's plan to provide $50 million in debtor-in-possession financing to bankrupt battery maker A123 Corp., Republican Senators Chuck Grassley of Iowa, and John Thune of South Dakota have highlighted what is likely to become a more frequent obligation of the Treasury Department-led committee charged with review purchases of U.S. assets by foreign buyers. The lawmakers on Nov. 1 sent a letter to Treasury Secretary Timothy Geithner asking him to direct the Committee on Foreign Investment in the U.S. to examine reports that China-based Wanxiang Group Corp. intends to provide DIP financing to lithium-ion battery company A123, which has received approximately $130 million of a $249 million federal stimulus grant from the Department of Energy as well as Department of Defense contracts. One CFIUS expert noted that even amid a spate of unfavorable CFIUS rulings regarding would-be Chinese buyers of U.S. assets, bankrupt companies offer an enticing target for slaking China's appetite for investments here and will draw increasing attention of U.S. regulators. "More and more bankruptcy courts will have to deal with CFIUS issues," said the attorney, who asked not to be named. "Investment in bankrupt companies fits with the classic Chinese investment strategy -- there are companies with good technology and the Chinese zone in on them." Full report

Innospec reiterates interest in spoiler bid for TPC

Innospec Inc. remains committed to making a bid for TPC Group Inc. On its earnings call Thursday, Innospec said its due diligence to date on TPC reinforces its interest and views on value and the suitor continues to devote time and effort to the bidding process. TPC manufactures chemical products, such as butadiene, that have applications in synthetic rubber, fuels, lubricant additives and plastics. The company has agreed to a $630 million merger with First Reserve Corp. and SK Capital Partners priced at $40 per share. That deal has been criticized on value by 7% TPC shareholder Sandell Asset Management Corp. Innospec, a chemicals enterprise based in Littleton, Colo., has a spoiler bid offering a range of $44 to $46 per share. Blackstone Group LP is an equity partner in that offer. TPC shares traded Friday for $45.44 roughly 55 cents beneath the top end of Innospec's stated interest. Butadiene pricing is typically volatile and TPC said that backing out the effects of that pricing puts its adjusted Ebitda for the quarter at $39 million compared to $28 million for the same period last year. TPC declined to comment on its sale process during its earnings call. The TPC board determined in early October that the Innospec-Blackstone bid could lead to a superior proposal and authorized negotiations. If TPC changes its recommendation of the First Reserve deal, First Reserve and SK Capital would have a three-day period to alter their offer. Full report

Potash Corp. makes poorly timed approach to ICL Israel Chemicals

The Israeli government has blocked a $16 billion bid by Canadian fertilizer giant Potash Corp. of Saskatchewan Inc. to acquire rival ICL Israel Chemicals Ltd., hinting a takeover would not be in the national interest. "The Israeli government, which holds a golden share in Israel Chemicals, will not allow any deal that endangers or hurts the economic and environmental interests of the state of Israel and its citizens," the Ministry of Finance said in a statement. The announcement came just one day after Israel Chemicals parent, Israel Corp. conceded that Potash Corp. had been in touch with Israeli premier Benyamin Netanyahu about a possible acquisition of its separately listed subsidiary. Israel Corp. owns 52.3% of ICL and Potash holds 13.84%, according to the ICL website, while the remainder is held by institutions and the general public and freely traded on the Tel Aviv Stock Exchange. Control of the Israeli company would give Potash about 25 per cent of global potash production capacity, making it the biggest producer and boosting sales to China and India. But Potash Corp., itself the target of a controversial and ultimately failed takeover bid by BHP Billiton plc two years ago, may have chosen a politically inopportune moment to make a pitch for Israel Chemicals. Israel faces general elections in January, and reports said a foreign takeover of one of the country's best known resources companies would be a difficult sell for any government. Full report

Chesapeake adds to the energy asset inventory

Asset sales have become the talk of the energy industry, and beleaguered Chesapeake Energy Corp. is offering the latest evidence. After announcing a $2 billion net loss in the third quarter on write-downs of its natural gas assets yesterday, its biggest in three years, the oil and gas explorer said it is selling more assets. The company it is considering a sale of Eagle Ford leasehold north of its core play that produces 10,000 to 11,000 barrels of oil equivalent per day, hiring Jefferies & Co. to advise it. Simmons & Co. International wrote in a note Friday that Chesapeake isn't the only oil and gas company selling assets. The firm said a growing number of international oil companies and recently disintegrated large cap exploration and production companies have historically above average divestiture initiatives underway, citing BG Group, BP plc, ConocoPhillips Co., Hess Corp., Marathon Oil Corp., Murphy Oil Corp., Royal Dutch Shell plc and Total SA. The reason for the purge? Quite simply, they need the money. "Funding capital spending programs and maintaining dividend streams, even in a world of triple-digit oil prices, requires capital," the firm said, "and surplus cash flow generation isn't exactly generous as the industry is essentially reinvesting everything back into the business after meeting its dividend obligations." Doesn't Chesapeake know it. Full report

Credit Suisse raises $420M Mexico investment fund

Credit Suisse raised about $420 million in Mexican pesos for its Credit Suisse Mexico Credit Opportunities Trust, the bank said Thursday, Nov. 1. The vehicle is set up as a closed-end structured credit trust known as a development capital certificate fund, or CKD, which allows Mexican pension funds to invest in private equity, infrastructure and real estate funds. Credit Suisse said it will seek to capture opportunities presented by structural inefficiencies in the Mexican credit market through investments in a diversified portfolio of alternative assets with debt-like characteristics. The trust will be managed by a team based in Mexico and New York led by Andres Borrego, who was previously in the bank's Emerging Markets Group. He will be joined by Manuel Ramos, formerly head risk manager and trader for the LatAm Financing Group, also in the investment banking division. Full report

Highlights from Friday's First Take: Netflix, Southcross Energy, Eloqua
 
THE DIFFICULTY OF PAIRING NETFLIX WITH MICROSOFT: From Chris Nolter: If Netflix Inc. follows the advice of shareholder Carl Icahn and pursues a sale, there is a broad array of potential suitors. Richard Greenfield of BTIG LLC presented a list in a Friday report that examined the "Big Four" of Amazon Inc., Google Inc., Microsoft Corp. and Apple Inc., but also looked at a broader list including Comcast Corp., Time Warner Inc., Dish Network Corp., AT&T Inc. and others. For most candidates, there is a catch arising from Netflix's subscription and delivery models. Microsoft, of course, drew attention after Reed Hastings resigned from the software company's board. Greenfield suggested that Microsoft could find Netflix attractive as a way of luring customers to its new devices. "However," hes suggested, "we suspect consumers would simply hate Microsoft, rather than switch to their devices to get Netflix."

CHARLESBANK IN LINE FOR DIVIDEND AFTER SOUTHCROSS ENERGY IPO: Southcross Energy Partners LP priced its initial public offering at $20 per unit late Thursday, the mid-point of its hoped-for $19 to $21 range. It's expected to open on the New York Stock Exchange Friday under the symbol SXE. On Oct. 22 the Dallas-based midstream company said it planned to sell 9 million units for $19 to $21 apiece and would use $171 million to $189 million in gross proceeds to trim debt and pay a $38.5 million distribution to its general partner, which Boston private equity shop Charlesbank Capital Partners LLC controls. Charlesbank created Southcross in 2009 to buy natural gas transportation, gathering and processing assets in South Texas for $220 million. According to the IPO prospectus, it and other backers paid $176 million, an average of $11.05 a unit, for 15.93 million common, subordinated and general partners units, none of which they will sell in the offering. Post-IPO the backers will own 64% of Southcross' units and the public 36%. The company posted $226.3 million in revenue in this year's first half, down from $247.5 million a year earlier, while adjusted Ebitda rose 51% to $19 million. Underwriters led by Citigroup Global Markets, Wells Fargo Securities, Barclays Capital and JPMorgan Securities would have a 30-day option to purchase up to an additional 1.35 million common units to cover overallotments. RBC Capital Markets, Raymond James, Baird, Stifel Nicolaus Weisel and SunTrust Robinson Humphrey are co-managers for the offering. William Finnegan and Ryan Maierson at Latham & Watkins LLP are advising Southcross and Douglass Rayburn and Joshua Davidson at Baker Botts LLP are assisting the underwriters.

ELOQUA FILES FOR SECONDARY OFFERING TO RAISE $155M: Software company Eloqua Inc. [Nasdaq: ELOQ] filed for a follow-on offering late Thursday, to sell 6 million shares. At the proposed top offering price of $22.40 per share, it would raise up to $155 million for the company's private investment owners and others. J.P. Morgan and Deutsche Bank are joint underwriters; JMP Securities, Needham & Co. and Pacific Securities are co-managers. Vienna, Va.-based Eloqua, which specializes in software that analyzes revenue is backed by a private funds consortium of JMI Equity, Bay Partners and Bessemer Venture Partners that collectively own 58% of the company. The company's IPO in August priced at $11.50 per share, at the high point of the expected range and was one of a number of successful summer tech IPOs including Palo Alto Networks Inc. and Kayak Software Corp. Full report

]]> tag:www.thedeal.com,2012:/magazine//34.50355 2012-11-02T20:31:28Z 2012-11-02T21:15:05Z

Debt financingThis report is an exclusive compilation of financing intelligence gathered by The Deal Pipeline's editorial staff.Deal warchestsMicrosoft launches $2.25B notes offeringMicrosoft launched its offering...

This report is an exclusive compilation of financing intelligence gathered by The Deal Pipeline's editorial staff.

Deal warchests

Microsoft launches $2.25B notes offering

Microsoft launched its offering for a total of $2.25 billion in senior unsecured notes, according to people familiar with the matter. The offering includes a $600 million five-year tranche at T+27; a $750 million 10-year tranche at T+47; and $900 million in 30-year notes at T+67, all tight to guidance, sources said. Proceeds will be used for potential acquisitions, as well as other purposes such as capital expenditures, stock buybacks and refinancing. The investment grade offering will include five-year, 10-year and 30-year notes. Barclays, JPMorgan and UBS are acting as joint underwriters. Microsoft has been active on the M&A front lately as both a buyer and a seller. The software giant sold the 50% of MSNBC.com that it owned to NBCUniversal Media LLC in July for $300 million, allowing the network to take full control of the news site. In June, Microsoft bought software company Yammer Inc. for $1.2 billion.

Restructuring

Clear Channel Outdoor proposes $2.7B notes offering to rework debt

Outdoor advertiser Clear Channel Outdoor Holdings Inc. [NYSE: CCO] is proposing   to offer $735.75 million, through a subsidiary, in series A senior notes due 2022 and nearly $2 billion in series B senior notes due 2022, the company said in a regulatory filing Friday. Proceeds from the offering will help pay for a tender offer for the company's $2.5 billion in senior notes due in 2017. The latest offering is part of an ongoing effort by the company's parent, broadcaster Clear Channel Communications Inc., which holds an 89% stake, to restructure its debt by pushing out maturities. Earlier this year, Clear Channel Outdoor paid a $1.9 billion dividend to its parent to help it reduce its senior credit facility. Clear Channel Communications is backed by Bain Capital LLC and Thomas H. Lee Partners LP. Clear Channel Outdoor also reported Q3 2012 net income of $17 million or $0.05 per diluted share as compared to $3 million or $0.01 per share the same time the year before. Revenues were down to $731 million for Q3 2012 from $748 million in 2011. The company traded down 6% soon after opening to $6.44 per share.

Bankruptcy

Rhode Island sues Curt Schilling, advisers over loan

Rhode Island has sued 38 Studios LLC owner and former Boston Red Sox pitcher Curt Schilling, among other defendants, alleging it was misled in relation to a $75 million loan for the video game company. The Rhode Island Economic Development Corp. on Thursday, Nov. 1, filed a 95-page complaint in the Rhode Island Superior Court against Schilling, certain 38 Studios board members and executives, bond placement agents Wells Fargo Securities LLC and Barclays Capital LLC and several employees of and advisers to the RIEDC. The RIEDC provided 38 Studios with a $75 million loan on Nov. 1, 2010, financed with an equivalent amount of bonds, to fund the company's development of a video game, Copernicus, and enable the company to move from Maynard, Mass., to Rhode Island. The game was never released. The RIEDC said in its complaint that it was provided with information that funding 38 Studios had "a reasonable probability of bringing high-quality jobs and creating a new industry in Rhode Island." The complaint asserted the defendants did not disclose various risks, including knowledge that even with the loan from the RIEDC, 38 Studios would be undercapitalized by millions of dollars and was likely to run out of money in 2012. 38 Studios defaulted on the loan on May 1 and owes the RIEDC $115.9 million, including principal, interest and guarantee fees. (The debtor cured the initial default on May 18 but was in default again when it filed for Chapter 7 on June 7.) The RIEDC seeks punitive damages from various groups of defendants on charges including breach of fiduciary duty, fraudulent misrepresentations and omissions, legal malpractice, negligence, civil conspiracy, unjust enrichment and alleged hidden commissions paid to Wells Fargo by 38 Studios.

ATP unsecureds set out to pursue fraudulent transfer claims

ATP Oil & Gas Corp.'s official committee of unsecured creditors is seeking standing in the bankruptcy of the oil and gas property developer so that it can prosecute certain fraudulent conveyance claims it believed occurred before the company filed for Chapter 11. Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas in Houston will weigh the panel's request on Nov. 15. The committee filed a motion on Oct. 31, seeking leave, standing and authority to pursue certain fraudulent claims on behalf of the ATP's estate. The unsecured creditors alleged that over the past four years, ATP and certain unnamed counterparties entered into transactions where royalty, net profit and other similar interests in certain offshore oil and gas leases that were owned by the debtor were cancelled. The transfers of certain valuable APT assets and royalty interests occurred during a time when ATP was insolvent and didn't have much capital. The counterparties knew or should have known the transactions would have increased ATP's insolvency, the committee alleges. As a result, the panel reasons, the transactions should be probed. The unsecureds believe Diamond Offshore Co., which is involved in an adversary proceeding with ATP, was one of the counterparties involved in the transfers with debtor. Diamond sued ATP on Oct. 2 in the Houston, alleging ATP has been hoarding cash owed to the drilling contractor.

IRS appeals Solyndra confirmation

The U.S. government, on behalf of the Internal Revenue Service, has appealed the order confirming the liquidation plan of former solar panel maker Solyndra LLC. The government filed a notice of appeal in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on Thursday, Nov. 1.  Judge Mary F. Walrath confirmed Solyndra's liquidation plan on Oct. 22. During the hearing, the U.S. had requested a stay of the confirmation order for at least 10 days. The court complied, saying that any additional stay would have to be granted by the U.S. District Court for the District of Delaware in Wilmington. The IRS had fought against Solyndra's plan, asserting in an Oct. 10 objection its sole purpose was to avoid certain taxes. The objection said the plan was designed to allow the owners of "an empty shell corporation with nearly $1 billion in tax attributes to exit bankruptcy with their ownership--and future ability to use the tax attributes--unimpaired." Under Solyndra's plan, Solyndra would be liquidated, while its parent, 360 Degrees Solar Holdings Inc., would emerge from bankruptcy as a shell company. The IRS said the only reason for Solyndra's parent to emerge from bankruptcy would be so that its owners could exploit the tax attributes that would be lost in a liquidation. Solyndra's disclosure statement valued the tax attributes at $350 million, which the IRS noted dwarfs the $7 million to $8 million the plan allotted to unsecured creditors. The IRS said prepetition and debtor-in-possession lenders Madrone Partners LP and Argonaut Ventures I LLC would control nearly 100% of 360 Degrees Holdings thanks to warrants they would receive under the lender-sponsored plan.

]]> tag:www.thedeal.com,2012:/magazine//34.50353 2012-11-02T19:48:51Z 2012-11-02T19:54:36Z

Redf Marketing LLC is now seeking to reorganize its advertising and marketing agency through a voluntary Chapter 11 proceeding after it lost a two-year litigation...

Judge J. Craig Whitley of the U.S. Bankruptcy Court for the Western District of North Carolina in Charlotte, where the debtor is based, signed an order converting Redf's involuntary Chapter 7 case to a voluntary Chapter 11 proceeding on Oct. 29.

Bridgetree Inc., owed $4.18 million, filed an involuntary Chapter 7 petition against Redf on Oct. 12. The  information technology company, also based in Charlotte, sued Redf on May 18, 2010, in the U.S. District Court for the Western District of North Carolina in Charlotte. Judge Frank D. Whitney presided over the case. After a 10-day jury trial, Bridgetree was awarded $4.18 million in damages on Aug. 10.

Bridgetree accused Redf of misappropriating certain trade secrets, which caused Bridgetree economic loss. Bridgetree alleged Redf was involved in a conspiracy to defraud and raid the company's trade secrets, employees and other competitive information to unlawfully establish a competing enterprise.

Meanwhile, Redf sought to convert the involuntary proceedings filed by Bridgetree, now its lender, to a voluntary Chapter 11 case on Oct. 24. Redf said the conversion was for the benefit of its creditors and because there was a "strong possibility of reorganization" in its case.

Whitley also signed an order Oct. 30 authorizing Redf to use cash collateral from senior secured lender Bank of America NA. As of the petition date, the lender was owed approximately $1.45 million. The loan is secured by interests in Redf's accounts receivable, which currently total approximately $1.65 million.

The company said it would suffer immediate and irreparable harm without the hasty cash collateral relief because it would be unable to pay its operating expenses and be forced to cease operations. Redf said its assets and collateral, especially its receivables, would deteriorate rapidly if it couldn't access the cash. Redf reiterated its desire to reorganize its business to maximize the value of its bankruptcy estate for its creditors.

Redf is an advertising and marketing agency and is historically profitable, the company said in court documents. According to its website, Redf has a wide variety of clients including Geico, Coca Cola, SunTrust Bank, United HealthCare and the U.S. Postal Service, its website shows. The company has 36 employees.

Debtor counsel Andrew T. Houston, Richard S. Wright and Travis W. Moon of Moon Wright & Houston PLLC did not return calls on Friday. Glenn C. Thompson of Hamilton Stephen Steele & Martin is legal counsel to Bridgetree in the bankruptcy proceedings and also could not be reached for comment.
]]> tag:www.thedeal.com,2012:/magazine//34.50352 2012-11-02T19:25:28Z 2012-11-02T19:30:20Z

The alternative debtor-in-possession financing lender for government-backed A123 Systems Inc., is also interested in buying the bankrupt lithium-ion battery maker .Prepetition lender Wanxiang America Corp.,...

Prepetition lender Wanxiang America Corp., which is hoping to provide the debtor with a $50 million DIP loan that will replace a postpetition financing from proposed stalking-horse bidder Johnson Controls Inc., is interested in buying more of A123's assets than Johnson Controls is. In addition, Wanxiang is willing to pay more for the assets than Johnson Controls, provide a greater consideration for them, Wanxiang said in court documents filed Nov. 1.

Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware in Wilmington is set to consider approval of Wanxiang's alternate DIP loan, as well as bidding procedures for the sale of the debtor's automotive assets on Nov. 5 with Johnson Controls as the stalking horse.

Johnson Controls has made a $125 million offer for A123 Systems' automotive business, but Wanxiang America is objecting to the proposed bidding procedures and said it wants to be the stalking horse bidder for the sale of substantially all of the debtor's assets.

An A123 company spokesman refused to comment on the Wanxiang America bid.

Although A123 hasn't \engaged in negotiations with Wanxiang America over the details of that proposal, Wanxiang America is hopeful that such negotiations will commence as soon as possible and that significant progress will be made prior to the start of the hearing, the objection said. The involvement of Wanxiang America, however, is also drawing scrutiny. Republican Senators Chuck Grassley of Iowa, and John Thune of South Dakota have asked Treasury Secretary Timothy Geithner to direct the Committee on Foreign Investment in the U.S. to examine reports that Wanxiang America's Chinese parent, Wanxiang Group Corp., intends to provide A123 with DIP financing.

Wanxiang America is a manufacturer of automotive components based in the U.S. and is a subsidiary of Wanxiang Group.

The lender also said the proposed bidding procedures would chill competitive bidding and the timeline for the sale process was too short. Under the proposed bidding procedures for the sale, Johnson Controls would receive a $3.75 million breakup fee and up to $4 million in expense reimbursement if it were not the winning bidder. Competing bidders would have until Nov. 16 to deposit 10% and offer at least $10.25 million more than the stalking-horse bidder, which includes the breakup fee, expense reimbursement and a $2.5 million initial overbid. If A123 Systems received at least one rival bid, it would hold an auction on Nov. 19, at which bids would have to increase in increments of at least $500,000. Carey would consider approval of the sale on Nov. 26.

The deal would include all of A123 Systems' automotive technology, products and customer contracts; its facilities in Livonia and Romulus, Mich.; its cathode powder manufacturing facilities in China; and A123 Systems' equity interest in Shanghai Advanced Traction Battery Systems Co. Milwaukee-based Johnson Controls, a manufacturer of automotive components and building controls, would license back certain technology to A123 Systems for its grid, commercial and government businesses.

A123 Systems originally had a $72.5 million DIP loan from Johnson Controls, but is now seeking approval of the alternative DIP from Wanxiang on Nov. 5. Carey on Oct. 18 approved interim use of the $72.5 million Johnson Controls DIP, priced at 15% per annum. The loan matures when the proposed sale of A123 Systems' transportation business to the lender closes or on Dec. 31, whichever comes first. The new $50 million DIP from Wanxiang will repay the amount outstanding on the Johnson Controls DIP and fund the debtor's operations in Chapter 11. The new DIP is priced at 12% per annum and, like the first loan, matures on the earlier of Dec. 31 or when the sale of the automotive business closes. If the debtor defaulted on the DIP, the interest rate would increase by 200 basis points. The replacement DIP carries a $1.25 million upfront fee and a 0.5% exit fee. The debtor also must reimburse the lender for its expenses.

A123, a Waltham, Mass., designer, developer, manufacturer and seller of rechargeable lithium-ion batteries and energy storage systems, filed for Chapter 11 on Oct. 16 with affiliates A123 Securities Corp. and Grid Storage Holdings LLC. The debtor, which has received numerous grants and awards from state and federal governments, won joint administration of the cases on Oct. 18.

The company's petition came after A123 Systems missed an almost $2.7 million interest payment on its 3.75% convertible subordinated notes due Oct. 15. The missed interest payment caused it to default on its debt, filings with the Securities and Exchange Commission said. Before filing for Chapter 11, A123 received an investment offer from Wanxiang America,, but because of certain closing conditions, only a portion of the agreement was funded. A123 then couldn't find additional funding before its liquidity fell below the amount needed for operations outside of bankruptcy.

Wanxiang America would have provided the company with $200 million in 8% senior convertible notes, warrants and a $75 million senior secured bridge loan. Instead, it provided the company with a $12.5 million initial cash advance and a $10 million letter of credit. Wanxiang America is owed $22.67 million in prepetition debt.

A123 has suffered from contract and warranty issues in the past several years, along with increased competition in the battery industry, that affected its liquidity, court papers show. The company primarily focuses on developing new lithium-ion batteries and battery systems for hybrid electric vehicles, plug-in hybrid electric vehicles and electric vehicles, as well as electrical grid services and industrial and commercial products, according to court filings.

The debtor also looks to sell its grid energy storage and commercial businesses as going concerns during its bankruptcy case. It has 1,763 employees at 10 facilities in the U.S., China and Germany. Its U.S. manufacturing facilities are in Michigan and Massachusetts.

A123's products include starter batteries and lead acid replacement batteries, as well as packaged modules and multi-megawatt and prismatic battery systems. The batteries are made from a patented nanophosphate material.

D. Jan Baker, Caroline A. Reckler and Adam S. Ravin of Latham & Watkins LLP and Mark D. Collins and Michael J. Merchant of Richards, Layton & Finger PA are debtor counsel. Lazard is the debtor's financial adviser, and Alvarez & Marsal North America LLC is its restructuring adviser. Joshua A. Feltman, Andrew R. Brownstein and David K. Lam of Wachtell, Lipton, Rosen & Katz represent Johnson Controls. John R. Box, Thomas P. Brown and Bojan Guzina of Sidley Austin LLP are counsel to Wanxiang America. ]]> tag:www.thedeal.com,2012:/magazine//34.50351 2012-11-02T18:48:04Z 2012-11-02T18:52:32Z

Rhode Island has sued 38 Studios LLC owner and former Boston Red Sox pitcher Curt Schilling, among other defendants, alleging it was misled in relation...

 
The Rhode Island Economic Development Corp. on Thursday, Nov. 1, filed a 95-page complaint in the Rhode Island Superior Court against Schilling, certain 38 Studios board members and executives, bond placement agents Wells Fargo Securities LLC and Barclays Capital LLC and several employees of and advisers to the RIEDC.
 
The RIEDC provided 38 Studios with a $75 million loan on Nov. 1, 2010, financed with an equivalent amount of bonds, to fund the company's development of a video game, Copernicus, and enable the company to move from Maynard, Mass., to Rhode Island. The game was never released. The RIEDC said in its complaint that it was provided with information that funding 38 Studios had "a reasonable probability of bringing high-quality jobs and creating a new industry in Rhode Island."
 
The complaint asserted the defendants did not disclose various risks, including knowledge that even with the loan from the RIEDC, 38 Studios would be undercapitalized by millions of dollars and was likely to run out of money in 2012.
 
38 Studios defaulted on the loan on May 1 and owes the RIEDC $115.9 million, including principal, interest and guarantee fees. (The debtor cured the initial default on May 18 but was in default again when it filed for Chapter 7 on June 7.) The RIEDC seeks punitive damages from various groups of defendants on charges including breach of fiduciary duty, fraudulent misrepresentations and omissions, legal malpractice, negligence, civil conspiracy, unjust enrichment and alleged hidden commissions paid to Wells Fargo by 38 Studios.
 
Other defendants include First Southwest Co., financial adviser to the RIEDC; Starr Indemnity and Liability Co., which issued an insurance policy for 38 Studios; Thomas Zaccagnino, a member of 38 Studios' board of directors; Jennifer MacLean, president and CEO of 38 Studios; Richard Wester, CFO of 38 Studios; Robert I. Stolzman of Adler Pollock & Sheehan PC and Antonio Afonso Jr. of Moses Afonso Ryan Ltd., the RIEDC's attorneys; Keith Stokes, executive director of the RIEDC; and J. Michael Saul, deputy director of the RIEDC.
 
38 Studios and three subsidiaries filed for Chapter 7 on June 7 in the U.S. Bankruptcy Court for the District of Delaware in Wilmington, listing $21.7 million in assets and $150.7 million in liabilities. Judge Mary F. Walrath is assigned to the case.
 
The RIEDC and Bank of New York Mellon Trust Co. NA, trustee on the $75 million loan, received permission on Aug. 8 to foreclose on 38 Studios' intellectual property. The creditors filed for relief from stay on July 25, saying they were concerned that the IP could have been damaged by the Chapter 7 trustee's liquidation efforts.
 
The Rhode Island Superior Court on Aug. 9 appointed Richard J. Land of Chace Ruttenberg & Freedman LLP as receiver to dispose of the assets released by the bankruptcy court.
 
Schilling founded 38 Studios, also known as Green Monster Games LLC, in 2006. The company aimed to develop online and console video games, toys, novels, comics, films and other media products. It released its only game, Kingdoms of Amalur: Reckoning, in February.
 
Documents show Schilling owns 82.9% of the company's equity. (Its name is derived from the uniform number he wore from 1992 until his retirement.)
 
Stephen P. Sheehan of Wistow & Barylick Inc., counsel to the RIEDC, declined comment on the case. Max Wistow and Benjamin Ledsham of Wistow & Barylick also represent the RIEDC. Chapter 7 trustee Jeoffrey L. Burtch of Cooch and Taylor PA did not return calls.
]]> tag:www.thedeal.com,2012:/magazine//34.50350 2012-11-02T18:35:55Z 2012-11-02T18:40:09Z

Back Yard Burgers Inc. has cooked up a reorganization plan that would give the quick-service restaurant chain's debtor-in-possession lenders all of its reorganized equity in...

Judge Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware in Wilmington will consider approval of the plan's disclosure statement on Dec. 5. Under the plan, filed Oct. 31, Nashville-based Back Yard Burgers would swap its $2.9 million DIP loan from its major equity holders, Pharos Capital Partners II LP and Pharos Capital Partners II-A LP, for 100% of the debtor's reorganized stock. The equity holders are affiliates of Dallas private equity firm Pharos Capital Group LLC.

The chain received interim access to use $700,000 of the DIP loan on Oct. 19. The final DIP and cash collateral hearing is scheduled for Nov. 8.

Meanwhile, holders of Back Yard Burgers' senior secured prepetition debt would receive a restructured senior secured note. Back Yard Burgers owes more than $8.87 million to an affiliate of Birmingham, Ala., alternative investment management firm Harbert Management Corp. The prepetition debt was set to mature on Nov. 5, 2013, and was priced at 17% per annum.

The restructured $6 million senior secured note would be priced at 5% per annum from the plan's effective date until Jan. 31, 2014. After that, pricing would increase to 8.5% per annum. It was unclear from court filings when the note would mature.

Under the plan, Back Yard Burgers would repay its administrative and other priority claims in full in cash on the plan's effective date, while priority tax claims would be repaid in full over a period of five years. Other priority claims would be reinstated with the reorganized company or paid in full in cash. General unsecured creditors and prepetition equity holders would be wiped out.

The chain filed for Chapter 11 on Oct. 17, with subsidiaries BYB Properties Inc., Nashville BYB LLC and Little Rock Back Yard Burgers Inc. The cases are being jointly administered. The debtor, which has 89 locations mainly in the Southeast and Midwest, owns 25 restaurants and has an additional 64 franchised locations.

Back Yard Burgers blamed its bankruptcy filing on the downturn in the economy and high operating costs, which left it unprofitable. Specifically, the debtor has been affected by declining restaurant sales, increased commodity costs and exorbitant lease rates. The company's liquidity was further constrained by the high interest rate on its secured debt, which prevented Back Yard Burgers from meeting debt service requirements, court filings said.

Finally, the chain faulted frequent management turnover and the resulting lack of leadership needed to address its problems. The debtor said that leadership void actually aggravated it woes because staff was reduced to levels that detracted its customers from their dining experience.Also hurting Back Yard Burgers was the fact that some of the chain's restaurants also worked out their own terms with suppliers and ended up paying different prices for items.

For the first eight months of 2012, the debtor had $18.4 million in revenue and $2.4 million in negative Ebitda. Roughly $1.3 million of its revenue during the period came from franchisee fees. Back Yard Burgers has been relying on funding from its major equity holders, Pharos Capital Partners II  and Pharos Capital Partners II-A, which have provided more than $14 million to the company.

"While Pharos has supported the debtors' business with substantial cash infusions and has provided the debtors an opportunity to develop a restructuring plan, Pharos has indicated that it cannot indefinitely fund the debtors' losses," court filings said.

Before filing for Chapter 11, Back Yard Burgers closed 19 of its company-owned locations because of underperformance and prohibitive costs.

Back Yard Burgers restaurants operate in Alabama, Arkansas, Georgia, Florida, Illinois, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Pennsylvania, South Carolina and Tennessee. The company has 512 employees.

The company  began its operations with a single restaurant in Cleveland, Miss., in 1987. Pharos led a group of investors that purchased the debtor's equity on June 10, 2007. As of the petition date, Pharos held 78% of the debtor's nonbankrupt parent, BBAC LLC.

The company offers Black Angus hamburgers and chicken grilled over charcoal to provide flavors similar to those delivered by neighborhood backyard grills. The debtor also offers chicken sandwiches, turkey burgers, hot dogs, salads, sides and desserts at its restaurants.

Debtor counsel is Nancy A. Mitchell and Maria J. DiConza of Greenberg Traurig LLP.
]]> tag:www.thedeal.com,2012:/magazine//34.50349 2012-11-02T18:31:57Z 2012-11-02T18:33:56Z

Baidu Inc. said Friday, Nov. 2, it will buy Providence Equity Partners' stake in online video services provider iQiyi.com. Financial terms weren't disclosed. The dominant...

Baidu Inc. said Friday, Nov. 2, it will buy Providence Equity Partners' stake in online video services provider iQiyi.com. Financial terms weren't disclosed. The dominant Chinese-language online search platform Baidu launched iQiyi.com in April 2010 with $50 million in financing from Providence Equity, a Providence, R.I., private equity firm. "Online video is a key strategic vertical for Baidu as user numbers and time-spend continue to increase exponentially, underscoring the tremendous potential in the sector," Baidu chairman and CEO Robin Li said in a statement. "We are very pleased with the progress iQiyi has made and have confidence that iQiyi's management will continue to grow its leading position." tag:www.thedeal.com,2012:/magazine//34.50348 2012-11-02T18:26:55Z 2012-11-02T18:30:18Z

tag:www.thedeal.com,2012:/magazine//34.50347 2012-11-02T18:20:13Z 2012-11-02T18:26:19Z

 
Judge A. Benjamin Goldgar of the U.S. Bankruptcy Court for the Northern District of Illinois in Chicago signed an order Oct. 29 confirming ALT Hotel LLC's second modified reorganization plan. The plan must go effective by no later than Jan. 18, or the hotel will be sold through auction procedures outlined in the plan.
 
The debtor reached a settlement regarding the treatment of its senior lender's claim in the plan. The debtor's senior lender DiamondRock Allerton Owner LLC, an affiliate of lodging REIT DiamondRock Hospitality Co. had a disputed $71 million claim. "This settlement allows DiamondRock to receive a meaningful return on its original distressed debt investment in the Allerton Hotel," Mark W. Brugger, DiamondRock Hospitality's CEO, said in an Oct. 31 statement released by the lender. "We look forward to generating a strong cash yield from our investment in the Allerton Hotel mortgage debt."
 
ALT and DiamondRock had battled during a 5-day confirmation hearing, which began on July 23 and wrapped up on July 27. The trial was scheduled to resume on Oct. 29, but the plan was confirmed in light of the settlement.
 
Under the company's second modified reorganization plan, filed Oct. 29, all creditors will be repaid in full over time, including DiamondRock, and all outstanding litigation between ALT and the lender will be settled. Administrative and priority tax claims will be paid in full in cash on the effective date.
 
Through the settlement, DiamondRock will have an allowed $71 million secured claim. After a $5 million principal payment, which will be paid in cash on the plan's effective date, the balance of the lender's claim will be amended and restated into a new loan agreement between the parties. The new $66 million loan will accrue interest at 5.5% per annum, which will be payable monthly for a period of four years from the plan's effective date, when the loan will mature. The loan can be extended by one year if ALT pays a 1% extension fee of the principal balance of the loan. The lender will retain its liens and security interests on ALT's property.
 
All litigation, including the lender's foreclosure suit against the debtor, will either be dismissed with prejudice, or the parties will seek to dismiss all litigation between them, court documents said.
 
DiamondRock had objected to ALT's reorganization plan asserting that the debtor's previous plan paid ALT's junior lenders before it. The lender also objected to the treatment of its claim under the old plan. The revised plan settled the objection.
 
Meanwhile, other secured claims, if any, will be reinstated on the effective date. General unsecured creditors will receive half of what they are owed on the plan's effective date and the other half six months later. The latter portion of the claims would accrue 5% per annum interest. It was unspecified what the unsecured creditors are owed. Hotel Allerton Mezz LLC is the debtor's sole equity holder and will retain its interest.
 
For the plan to go effective, ALT must pay DiamondRock its initial $5 million payment and file the amended and restated loan documents with the court. If those conditions are not satisfied by Jan. 18, the plan would not go effective and the hotel would be sold in Chapter 11. An auction for the hotel would occur no later than Feb. 28 and a hearing to approve the sale would occur no later than March 15. DiamondRock would be allowed to credit-bid the full amount of its claim and ALT would not be permitted any further exclusivity extensions for purposing or soliciting alternative Chapter 11 plans.
 
Goldgar signed an order on April 9 approving the debtor's disclosure statement.
 
The debtor had two prepetition loan tranches -- a $69 million piece held by DiamondRock and a one-time $10 million mezzanine loan held by Hotel Allerton Mezz. It does not appear that Hotel Allerton Mezz will recover anything under the new plan.
 
ALT filed for Chapter 11 on May 5, 2011, because of the pending foreclosure action by DiamondRock. Court documents cited the decline in Chicago's hotel market as one reason for the Allerton's poor financial state and pointed to the timing of a renovation as another.
 
The Allerton, located on Michigan Avenue in downtown Chicago, has 443 rooms, 12,000 square feet of meeting and function space, a business center, a restaurant, a cocktail lounge and a fitness center.
 
Debtor counsel Neal L. Wolf of Neal Wolf & Associates LLC did not respond to requests for comment Friday. Nor did David W. Wirt of Locke Lord LLP and James R. Irving of DLA Piper LLP, who counsel DiamondRock.
]]> tag:www.thedeal.com,2012:/magazine//34.50346 2012-11-02T18:15:54Z 2012-11-02T18:18:48Z

British electrical retailer Comet Group Ltd. called in the bankruptcy administrators on Friday, Nov 2, despite earlier indications the move would not happen until the...

British electrical retailer Comet Group Ltd. called in the bankruptcy administrators on Friday, Nov 2, despite earlier indications the move would not happen until the following week, after consumers began to fear for their cash. Neville Kahn, Nick Edwards and Chris Farrington of Deloitte LLP took over the running of the company, which private equity turnaround specialist OpCapita LLP bought for just £2 ($3.20) earlier this year, as staff at the group's 236 stores prepared for a pre-Christmas fire sale of the remaining stock. The administrators said the stores would continue trading, employees would be paid, while customers have been told pre-paid orders would be fulfilled. "Our immediate priorities are to stabilize the business, fully assess its financial position, and begin an urgent process to seek a suitable buyer which would also preserve jobs," Kahn said in a statement. Reports said Deloitte has already received approaches from Comet's main U.K. rivals, DSG Retail Ltd., which does business as Dixons and Currys, and Maplin Electronics Ltd. tag:www.thedeal.com,2012:/magazine//34.50345 2012-11-02T18:09:19Z 2012-11-02T18:14:36Z

Eastman Kodak Co.'s official committee of unsecured creditors wants to pursue and possibly settle claims against the one-time photography giant's second-lien noteholders to avoid their...

 
Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan is set to consider the committee's request on Nov. 14.
 
The committee's motion, filed Wednesday, Oct. 31, seeks to avoid the second-lien lenders' security interest in certain collateral including numerous patents issued by both foreign and domestic governments and several bank accounts. The committee said Kodak has waived its rights to pursue the claims, and the avoidance of the claims would benefit Kodak's estate.
 
Kodak has $750 million outstanding in second-lien secured notes, consisting of $500 million in 9.75% senior secured notes due 2018 and $250 million in 10.625% senior secured notes due 2019. Bank of New York Mellon NA is the indenture trustee.

On Nov. 14, meanwhile, Gropper also is scheduled to consider settlement between Kodak and ATLC Ltd. The agreement, filed Oct. 24, resolves ATLC's purported $58.6 million secured claim and allows ATLC a $40.5 million unsecured claim. ATLC had represented Kodak in certain licensing negotiations for Kodak's digital imaging patents from July 30, 1998, to May 2006. ATLC received a percentage of net proceeds from the negotiations for its services, according to the settlement.
 
Kodak also seeks to terminate its retiree benefits. Gropper was scheduled to consider the motion on Monday, but he rescheduled the hearing for Nov. 5 due to Hurricane Sandy. The Manhattan court has been closed since the storm hit.
 
Under an agreement, announced Oct. 10, Kodak would stop providing medical, dental, life insurance and survivor income benefits on Dec. 31 to its 56,000 retirees. Kodak would provide its official committee of retirees with $7.5 million in cash to support initial administration and benefit obligations. The retirees would also be allowed a $635 million unsecured claim and a $15 million administrative claim in Kodak's bankruptcy case. The committee would be able to use these funds to subsidize future benefit costs, according to a Kodak statement.
 
As of Dec. 31, Kodak owed $1.2 billion for its retirees' benefits. Kodak also pays about $10 million per month for their benefits. The company has been making those payments throughout the bankruptcy case, resulting in $90 million in expenditures.
 
Founded in 1880 by George Eastman, Kodak was once the world's leading producer of film and cameras. Since it filed for bankruptcy on Jan. 19, the Rochester, N.Y., company has been seeking to reposition its business to focus on commercial, packaging and functional printing solutions and enterprise services.
 
Andrew G. Dietderich, John J. Jerome, Michael H. Torkin and Mark U. Schneiderman at Sullivan & Cromwell LLP and Pauline K. Morgan and Joseph M. Barry at Young Conaway Stargatt & Taylor LLP are debtor counsel. Lonie A. Hassel and Edward J. Meehan of Groom Law Group Chtd. are Kodak's special counsel relating to the retiree negotiations. James A. Mesterharm of AlixPartners LLP is Kodak's chief restructuring officer. David Descoteaux of Lazard is the company's investment banker.
 
Dennis F. Dunne, Tyson M. Lomazow and Stacey J. Rappaport of Milbank, Tweed, Hadley & McCloy LLP represent the creditors' committee. Andrew I. Silfen, Beth M. Brownstein, Carol Connor Cohen and Caroline Turner English of Arent Fox LLP and R. Scott Williams and Jennifer B. Kimble of Haskell Slaughter Young & Rediker LLC represent the retiree committee. Jorian C. Rose of Baker & Hostetler LLP is counsel to ATLC.
]]> tag:www.thedeal.com,2012:/magazine//34.50344 2012-11-02T17:56:23Z 2012-11-04T12:27:11Z

By asking a government national security panel to investigate a Chinese company's plan to provide $50 million in debtor-in-possession financing to bankrupt battery maker A123...

 
The lawmakers on Nov. 1 sent a letter to Treasury Secretary Timothy Geithner asking him to direct the Committee on Foreign Investment in the U.S. to examine reports that China-based Wanxiang Group Corp. intends to provide DIP financing to lithium-ion battery company A123, which has received approximately $130 million of a $249 million federal stimulus grant from the Department of Energy as well as Department of Defense contracts.
 
"A123 has received millions of taxpayer dollars to develop technology and intellectual property that should not simply be shipped to China," Thune said in a statement announcing the letter. "Considering A123's grid energy storage activities and active military contracts, the Obama administration must thoroughly scrutinize any transaction that would lead to A123 being owned by a foreign company."
 
One CFIUS expert noted that even amid a spate of unfavorable CFIUS rulings regarding would-be Chinese buyers of U.S. assets, bankrupt companies offer an enticing target for slaking China's appetite for investments here and will draw increasing attention of U.S. regulators. "More and more bankruptcy courts will have to deal with CFIUS issues," said the attorney, who asked not to be named. "Investment in bankrupt companies fits with the classic Chinese investment strategy -- there are companies with good technology and the Chinese zone in on them."
 
For months, Grassley and Thune have been have been demanding the Obama Administration to reveal more about its investment in struggling A123 and have expressed concerns about Wanxiang's plans to invest in the battery company. On Aug. 14 they sent a letter to DOE after A123 announced a $450 million investment deal with Wanxiang. Then on Oct. 9, a week before A123 filed for Chapter 11, Thune and Grassley sent a letter to A123 expressing concerns about company's potential agreement to grant Wanxiang majority control of the company.
 
Although Wanxiang appeared to withdraw from the deal after the Chapter 11 filing, a new plan to provide the $50 million DIP loan and Wanxiang's apparent plan to bid on A123's assets as part of the bankruptcy proceedings rekindled the lawmakers' efforts to press the White House to take a stand on the deal.

Wanxiang's loan would replace a loan from Johnson Controls Inc., which is expected to bid on A123's automotive business. Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware in Wilmington is scheduled to consider the replacement financing on Monday, Nov. 5.
 
In his statement, Thune also charged that the Obama Administration has refused to answer questions about the government's investment in A123 even as it was clear the company was in poor financial shape. "After several attempts, Senator Grassley and I have yet to receive straightforward answers from the administration on taxpayer-backed A123. Given the urgency of the bankruptcy process, we expect the administration to respond to our questions without delay."
 
Although the experts in CFIUS reviews see both politics and competitive rivalry playing a role in the lawmakers' efforts, they say the concerns raised by Grassley and Thune are legitimate areas for the national security panel to investigate. That Republicans have been pounding the White House for making investments in green companies that subsequently went bankrupt -- Solyndra LLC is another -- or that Johnson Controls would like to see Wanxiang's investment blocked do not diminish those concerns, they said.
 
Grassley and Thune's request to CFIUS "seems to me a reasonable, appropriate and careful inquiry," said Stephen Mahinka, a partner in the competition practice at Morgan, Lewis & Bockius LLP. "We don't know what government contracts, intellectual property -- classified work or other wise -- A123 is doing with DOE but to the extent the company has them they thought ought to be reviewed ahead of time."
 
Mahinka also noted that CFIUS regulations provide for reviews of lending transactions, which would include DIP financing, but that at this point Wanxiang's DIP would not trigger one because the lender is not obtaining control of A123. CFIUS approval would be needed if Wanxiang ultimately bids on A123 assets, however.
 
CFIUS's authority to block purchases of assets out of bankruptcy is stronger than that of antitrust regulators, Mahinka said.  "There are disputes over whether bankruptcy judges' power to approve deals supersedes any Department of Justice or Federal Trade Commission antitrust concerns," he noted. "But CFIUS takes the position that other statutes do not control its actions, so even if the bankruptcy court says yes to Wanxiang in the bidding, the CFIUS review still will be an additional required clearance."
 
A review of an A123 purchase by Wanxiang could possibly mirror another purchase of a battery maker several years ago by a Chinese buyer. The CFIUS review went unnoticed at the time and the lawyer involved would not identify the companies. However, he said the buyer had to make sure it relinquished technologies covered by International Traffic in Arms Regulations (ITAR) and government contracts that raised concerns. "We had to convince the government we had stripped it clean, which was not easy," he said.
]]> tag:www.thedeal.com,2012:/magazine//34.50343 2012-11-02T17:46:29Z 2012-11-02T17:49:53Z

Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas in Houston will weigh the panel's request on Nov. 15. The committee filed a motion on Oct. 31, seeking leave, standing and authority to pursue certain fraudulent claims on behalf of the ATP's estate.

The unsecured creditors alleged that over the past four years, ATP and certain unnamed counterparties entered into transactions where royalty, net profit and other similar interests in certain offshore oil and gas leases that were owned by the debtor were cancelled.

The transfers of certain valuable APT assets and royalty interests occurred during a time when ATP was insolvent and didn't have much capital. The counterparties knew or should have known the transactions would have increased ATP's insolvency, the committee alleges. As a result, the panel reasons, the transactions should be probed.

The unsecureds believe Diamond Offshore Co., which is involved in an adversary proceeding with ATP, was one of the counterparties involved in the transfers with debtor. Diamond sued ATP on Oct. 2 in the Houston, alleging ATP has been hoarding cash owed to the drilling contractor.

ATP and Diamond first teamed up on Aug. 4, 2008, signing a deal through which Diamond would drill on offshore oil and gas leases owned by ATP. The two expanded their partnership about a year later, when ATP promised Diamond royalties from the profits derived from the oil and gas it helped extract from ATP's properties. Diamond alleged, however, that ATP hasn't paid its claims.

Meanwhile, the committee said ATP has refused the panel's "demand" to bring the avoidance claims. The panel said it believes the fraudulent conveyances were made outside ATP's ordinary course of business and on terms that were "onerous" to the debtor. ATP has declined to prosecute the avoidance claims in an effort to recover assets for the benefit of its estate.

Founded in 1991, ATP acquires and develops oil and natural gas properties, primarily in the Gulf of Mexico, and has production facilities on the sites. The company also operates through subsidiaries in the United Kingdom portion of the North Sea and in the eastern part of the Mediterranean Sea.

As of Dec. 31, ATP directly held leaseholds on 38 offshore blocks and 49 wells, including 23 subsea wells. About two-thirds of its wells are in the Gulf of Mexico and have reserves of 75.9 million barrels of crude oil equivalent.

ATP blamed its Aug. 17 bankruptcy filing on a liquidity crisis rooted in the aftermath of the BP plc oil spill in the Gulf of Mexico on April 20, 2010.

Debtor counsel Charles S. Kelley of Mayer Brown LLP did not respond to requests for comment Friday. Nor did James Matthew Vaugh of Porter Hedges LLP, who is legal counsel to the committee. Gerard H. Uzzi of Milbank, Tweed, Hadley & McCloy LLP also provides legal counsel to the unsecured creditors. Diamond's counsel is Berry D. Spears and Steve A. Peirce of Fulbright & Jaworski LLP and Paul J. Dobrowski of Dobrowski, Larkin & Johnson LLP. ]]> tag:www.thedeal.com,2012:/magazine//34.50342 2012-11-02T17:35:33Z 2012-11-02T17:45:53Z

It was a week of extremes dominated by Sandy, the monster storm that tore across the U.S. East coast, causing an estimated $50 billion in...

Walt Disney Co. led the M&A pack with one of the biggest deals of the week and one of the biggest in its own history, splashing out $4.05 billion in cash and stock for Lucasfilm Ltd., the producer of epic adventure films such as the Star Wars and the Indiana Jones series. The deal is Disney's second-biggest transaction after its $7.6 billion purchase of Pixar in 2006 and just ahead of its $3.9 billion acquisition of Marvel Entertainment in 2009. As for the 68-year-old George Lucas, who owns the production company, despite this being his first big merger he didn't retain a banker for the sale. Instead, he cast a large team of lawyers through the firm Latham & Watkins LLP. One of those lawyers, Christopher Kaufman, worked for the production company more than 20 years ago. A number of other lawyers in the deal have also worked with Lucasfilm.  

Activist investor Carl Icahn also grabbed headlines in the entertainment world after snatching a 10% stake in Netflix Inc. The online entertainment company has looked a bit more vulnerable following its misstep last September when CEO Reed Hastings briefly entertained the idea of spinning off the company's popular DVD business -- a plan the markets promptly trashed. In a filing, Ichan said the company should sell out to its bigger competitors, although he didn't say how he planned to force the issue.

Judging by some recent reports, Reed may be among a growing roster of CEOs who feel shareholder heat in months to come. Schulte Roth & Zabel LLP recently published its annual Shareholder Activism Insight report and found that shareholder activism is expected to rise through 2013 among companies that have had performance issues "The extent to which corporate executives take a dim view of shareholder representation on the board of directors is surprising and a significant change from prior surveys," the company noted. "This attitude suggests that there may be more contentious contests between companies and activists in the future as companies may be more likely to fight to keep shareholder representatives out of the board room."

Among other U.S. M&A news, PVH Corp., owner of brands including Tommy Hilfiger, Izod, Arrow, Bass and Van Heusen, plans to buy Warnaco Group Inc. for $2.9 billion in cash and stock. The deal will give the company full control of the Calvin Klein trademark and help expand PVH's global reach by aligning Warnaco's operations in Asia and Latin America with the company's operations in North America and Europe.

Another prominent U.S. deal included pipeline company Williams Partners LP, which will spend some $2.36 billion for the chemical and pipeline assets of parent Williams Cos. Williams Partners will pay almost $2.3 billion for an 83% interest in the Geismar olefins production facility, as well as Williams' refinery-grade propylene splitter and also, its pipeline in the Gulf region for $100 million. The deal is taking advantage of a recent ruling that cuts taxes on ethylene produced from natural gas-based raw materials, according to one report.

In the international energy markets, Russia's telecoms-to-utilities conglomerate Sistema JSFC is set to become the new owner of Rotterdam-based oil company Argos Group Holding BV, just one year after the target company was formed.  The Moscow-based buyer will acquire 100% of Argos, which claims to be the largest independent group in the Western European downstream oil market with annual revenue of about $14 billion. The companies did not disclose terms of the deal.
 
The U.S. private equity market had at least one big-ticket deal as RedPrairie Corp. said it would buy JDA Software Group Inc. for $1.9 billion, combining the two supply chain software management firms. Terms of the deal call for RedPrairie to pay $45 per share in cash for Scottsdale, Ariz.-based JDA, a premium of 33% over the target's close on Oct. 26, before word leaked it was exploring a sale. The deal will be funded with fully committed debt financing from Credit Suisse as well as new equity funding from RedPrairie owner New Mountain Capital LLC.

Among cross-border deals involving public and private companies, Germany's pharmaceuticals and chemicals giant Bayer AG swooped in to buy Schiff Nutrition International Inc. for $1.2 billion. The deal provides a profitable exit for the target's private equity shareholder TPG Capital, which two years ago paid $48.8 million buying a 25% stake at a price of $6.52 per share. That means the Texas buyout shop is making five times its money on the investment.  Bayer has been using acquisitions to strengthen its position in existing markets - this is its third acquisition in the U.S. this fall.

And in the U.S. IPO market, it was a a quiet week all things considered for storm-tossed U.S. exchanges, although investors did celebrate one notable offering for the aptly named Restoration Hardware. The specialty home furnishings retailer priced at the high end of its initial range, raising $124 million.  The specialty home furnishings retailer was taken private in 2008 in a deal valued around $175 million.

Finally, in the department of deals-that-continue-to-drag-on, EC regulators extended their review of Glencore International's near-$36 billion takeover of Xstrata to Nov. 22 after the companies offered unspecified concessions, which one source said involved the sale of zinc assets.
]]>