Bloomberg News

Skadden, Cravath, Gibson Dunn, Simpson: Business of Law

December 12, 2012

Skadden, Arps, Slate, Meagher & Flom LLP advised Spectra Energy Corp. (SE:US), the fourth-largest U.S. pipeline company, on the agreement to buy its first oil system from Kinder Morgan Energy Partners LP and two other owners for $1.25 billion in cash.

Sullivan & Cromwell LLP, Shearman & Sterling LLP and Blakes, Cassels & Graydon LLP are advising the sellers.

Spectra will buy the Express-Platte pipeline, which runs from Canada and North Dakota’s Bakken Shale to refineries in Montana, Wyoming and Illinois, the Houston-based company said in a statement yesterday. The agreement includes the assumption of $240 million of debt.

The 1,717-mile (2,760-kilometer) pipeline, owned by Borealis Infrastructure, the Ontario Teachers’ Pension Plan and Kinder Morgan, can transport 280,000 barrels of oil a day. The system is one of three major pipelines that bring oil to Midwest refineries from expanding onshore North American production.

The Skadden team includes partners Michael Rogan and Marc Gerber, corporate; Ann Hawkins and Clifford (Mike) Naeve, energy; Cliff Gross and Sean Shimamoto, tax; and John H. Lyons, antitrust.

Sullivan & Cromwell represents Borealis Infrastructure, which is the infrastructure investment arm of the OMERS pension plan, and the Ontario Teachers’ Pension Plan board. Joseph Frumkin, head of the firm’s mergers and acquisitions practice group, led the S&C team. Additional partners include David Spitzer, Andy Solomon and Ron Creamer, tax; and Yvonne Quinn, antitrust.

Shearman & Sterling is advising Singapore Airlines. The Shearman & Sterling team included partners James Comyn, mergers and acquisitions; Trevor Soames and Dale Collins, antitrust/competition; and Iain Scoon, tax.

Blakes advised Kinder Morgan. (KMP:US) The team was led by Mungo Hardwicke-Brown and Katie Jamieson and included partners Jason Gudofsky, investment Canada /competition; Brian Thiessen, employment; and John Eamon, energy.

Spectra currently operates 19,000 miles of natural gas pipelines in North America.

Spectra said the deal would add $130 million to 2013 earnings before interest, taxes, depreciation and amortization and 3 cents to 5 cents to earnings per share annually. Spectra is expected to earn $1.64 a share in 2013, excluding one-time items, the average of 11 analysts’ estimates compiled by Bloomberg.

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Cravath, Simpson Thacher Advise on Delta, Virgin Atlantic Deal

Cravath, Swaine & Moore LLP advised Delta Air Lines Inc. (DAL:US) on its agreement to buy a 49 percent stake in Richard Branson’s Virgin Atlantic Airways Ltd. for $360 million to boost its share of the lucrative trans-Atlantic travel market.

Simpson Thacher & Bartlett LLP served as Virgin Atlantic’s U.S. antitrust counsel on the transaction.

The carriers will begin a joint venture on 31 daily round- trip flights between the U.K. and North America as they use Virgin Atlantic’s base at London’s Heathrow airport, Europe’s busiest, according to a statement yesterday. The Virgin Atlantic stake has been held by Singapore Airlines Ltd. (SIA) since 1999.

The Cravath team was led by mergers and acquisitions partners Scott A. Barshay and George F. Schoen and included partners Christine A. Varney, antitrust, and Lauren Angelilli, tax.

Antitrust partner Kevin Arquit is leading the Simpson Thacher team on behalf of Virgin.

The deal positions Atlanta-based Delta to grab a bigger slice of flights across the North Atlantic, the world’s richest lode of premium passengers. Delta’s 10 daily U.S. nonstop flights to the U.K. would be added to the 21 that Virgin Atlantic plans to operate under its summer 2013 schedule.

While the Virgin Atlantic brand will remain and founder Branson will retain control, the deal marks the end of a go-it- alone strategy for the Crawley, England-based carrier the 62- year-old U.K. billionaire established almost three decades ago.

Delta and Virgin Atlantic said they will seek antitrust immunity from regulators, letting them coordinate schedules and pricing and share costs and revenue from joint-venture flights regardless of whose plane operates the route. They also will offer reciprocal frequent-flier benefits and allow elite-level loyalty-program members to use each other’s airport lounges.

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Gibson Dunn, Simpson Thacher Advise on TNS Deal with Siris

Gibson, Dunn & Crutcher LLP acted as legal counsel to the special committee of the board of directors of TNS Inc. (TNS:US), a maker of networking products, which agreed to be acquired by an investor group led by Siris Capital Group in a deal valued at about $862 million.

Simpson Thacher & Bartlett LLP is representing an investor group led by Siris.

Gibson Dunn’s team is led by Stephen Glover, co-chairman of the firm’s mergers and acquisitions practice group, and includes corporate partner Anne Benedict. Additional partners are Aaron Adams, finance; Michael Collins, benefits; Benjamin Rippeon, tax; David Kennedy, intellectual property; and John Millian, litigation.

Simpson Thacher corporate partner Dan Clivner is leading the team for Siris. Additional partners include Katharine Moir, tax; Tristan Brown, executive compensation and employee benefits; and Lori Lesser, intellectual property.

Siris, a private-equity firm, will pay $21 a share in cash, a 47 percent premium over the stock’s average price during the past month, according to a statement yesterday. The companies expect the deal to be completed in the first quarter.

TNS, founded in 1990, supplies networking products and services to retailers, banks and telecommunications providers. Amid slowing sales, the company is changing its focus from selling older, so-called legacy networks to newer data- communication applications. TNS said it will maintain this shift as a closely held affiliate of Siris.

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Moves

Foley Hires Partners in California and Florida Offices

Foley & Lardner LLP hired three new partners: Jose L. Patino and Nicola A. Pisano have joined the intellectual property litigation practice in the San Diego/Del Mar office, and Robert Q. Lee joined the Orlando and Miami offices, where he will be a part of the transactional and securities, China and Latin America practices.

Patino and Pisano were previously partners at Jones Day, the firm said. Before joining Foley, Lee was a partner with Diaz, Reus & Targ LLP.

Patino represents companies in commercial and intellectual property disputes. He has experience with patent litigation proceedings, including before the International Trade Commission, and as special intellectual property counsel in bankruptcy court. Pisano has litigated patent and trade secret matters in federal district courts and in proceedings before the U.S. Patent and Trademark Office.

Pisano has experience litigating software, wireless communications, encryption, semiconductor, telephony, Internet- based, mechanical and medical device technologies, and also advises startup and mid-sized technology companies in connection with patent portfolio management, procurement and investment diligence.

Lee focuses on the representation of public, private and emerging growth companies in corporate and commercial matters, such as mergers, asset and stock acquisitions and divestitures, reorganizations and roll-ups.

Foley has about 900 attorneys in 21 offices in North America, Europe and Asia.

Barnes & Thornburg Adds Franchise Partner in Los Angeles

Corporate lawyer Matthew B. Gruenberg joined Barnes & Thornburg LLP’s Los Angeles office as a partner in the corporate department and will chair the franchising and distribution law practice group. He was formerly with Gruenberg Garnett Harris LLP.

Gruenberg has focused his practice on domestic and international franchising, licensing and distribution matters. His practice also includes general corporate, trademark and real estate matters.

“His addition continues the expansion of our practice by adding corporate and real estate transactional capabilities to our Los Angeles office,” David Allen, managing partner of Barnes & Thornburg’s Los Angeles office, said in a statement.

The Los Angeles office, which opened in February 2011, has 22 attorneys who practice in a number of areas, including complex litigation, labor and employment, intellectual property, corporate and an entertainment and music practice.

Barnes & Thornburg has more than 600 attorneys and other legal professionals at 12 U.S. offices.

Energy & Resources Partner Harrison Joins Minter Ellison

Minter Ellison hired Michael Harrison as a partner based in Sydney, though he will spend time in Perth and the Asia region. He was previously a partner at Corrs Chambers Westgarth.

Harrison focuses his practice on energy, resources and infrastructure projects. He has handled work in the power, oil and gas, mining, natural resources, transport and waste sectors, and is has pan-Asian experience.

Harrison’s client base includes industry participants and project sponsors as well as governments, government-owned corporations and state-owned enterprises, regulatory authorities and financiers.

Minter Ellison has 15 offices in Australia, Hong Kong, mainland China, Mongolia, New Zealand and the U.K.

Litigation

Goldman Says Financial Diligence ‘Not Our Job’ in Dragon Sale

A lawyer for Goldman Sachs Group Inc. (GS:US) said it wasn’t the firm’s job to do financial due diligence for its client, Dragon Systems Inc., in the company’s 2000 sale to a Belgian company that collapsed in an accounting scandal.

John Donovan Jr., a partner at Ropes & Gray LLP and a lawyer for the New York-based bank, told a jury in federal court in Boston yesterday that Goldman was hired to negotiate the terms of the transaction for Dragon, not to uncover the fraud at the acquirer, Lernout & Hauspie Speech Products NV. The founders of Dragon are suing Goldman for what they claim is bad advice that led to a disastrous $580 million all-stock transaction.

“Financial accounting diligence was not Goldman’s job,” Donovan told six jurors and six alternates in his opening statement. “You turn to auditors and accountants to ask questions about auditing and accounting.”

Jim and Janet Baker, pioneers in computer speech recognition, claim Goldman’s failure to pursue red flags cost them their company and access to technology they spent their professional lives creating, including the rights to Dragon NaturallySpeaking, the company’s popular dictation software.

Within months of the sale’s June 2000 close, Lernout & Hauspie filed for bankruptcy after an investigation found the firm had fabricated customers and reported phony revenue. Several executives were prosecuted and jailed in the scheme.

“Lernout & Hauspie was a fraud,” Donovan argued. “They cooked the books and it was a highly sophisticated scheme that took years to unravel.”

The case is Baker v. Goldman Sachs & Co., 09-cv-10053, U.S. District Court, District of Massachusetts (Boston).

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News

Copper Users Urge U.S. to Examine LME Warehouse Wait Times

Copper consumers including Encore Wire Corp. (WIRE:US) urged U.S. regulators to examine waiting times for withdrawing the metal from London Metal Exchange inventories, citing concern about possible repercussions on supply.

“Lucrative incentives” to store copper offered by warehouse operators including JPMorgan Chase & Co. (JPM:US) may result in “a devastating impact” on the U.S. supply chain, Eaton & Van Winkle LLP said in a letter to the Securities and Exchange Commission dated Dec. 7. Members of the group represented by the New York-based law firm also include AmRod Corp., Southwire Co., Luvata and hedge fund RK Capital LLC.

Withdrawing metal may take as long as about 39 weeks in New Orleans, the world’s biggest repository for LME zinc stockpiles, Bloomberg calculations based on minimum delivery rules established by the exchange show. The city also holds 58,275 metric tons of copper. Encore and Southwire are concerned they may be unable to supply enough copper products to customers including Home Depot Inc. (HD:US), the law firm said.

“The financial incentives make delivery to warehouses more profitable than selling to industrial end users and the scarcity of metal that is created by the forced wait for delivery likewise drives up premiums that producers can charge above prevailing LME prices,” the law firm said. “The situation became most alarming in the past few months in New Orleans.”

Miriam Heywood, a spokeswoman for the LME, declined to comment. The exchange, the world’s biggest marketplace for industrial metals, was taken over this month by Hong Kong Exchanges & Clearing Ltd.

JPMorgan’s plan to introduce an exchange-traded fund backed by physical copper may increase consumers’ difficulty in finding metal as it removes more supplies from the market, according to the letter. The SEC should investigate the warehouse backlogs before approving the marketing of copper-backed ETFs, Eaton & Van Winkle’s Robert Bernstein said by phone yesterday.

Detroit Won’t Run Out of Cash as Council Clears Lawyer Deal

The Detroit City Council approved a $300,000 contract for a law firm to advise it on a recovery plan, clearing the way for Michigan to release $30 million to stabilize municipal finances and ensure that the city won’t run out of cash this month.

The decision yesterday to hire Miller Canfield Paddock & Stone Plc was part of a November agreement with the state to avert the possibility of an emergency manager takeover. The firm was named in the agreement at the insistence of Mayor Dave Bing. The city, whose annual budget is $1.6 billion, continues to amass a deficit that may top $400 million by June.

The council had balked at the contract with Miller Canfield, saying the firm’s role in designing the agreement was a conflict of interest. It was the most contentious of about 20 measures required before the state would release money from a $137 million bond sale.

Bing had warned that without the state money, he’d fire as many as 500 workers and place others on unpaid furloughs in January. The $30 million won’t solve the deficit, which grows despite steps including a 10 percent pay cut for city workers. Bing’s administration has struggled to implement a five-year plan to wipe out the deficit.

For more, click here.

Video

Filmmaker’s Lawyer Asserts Privilege to Oppose NYC Subpoena

John Siegal, partner at Baker & Hostetler LLP, talks about his representation of filmmakers Ken Burns, Sarah Burns, David McMahon and their company, Florentine Films, in a battle with the City of New York over unused footage from their new documentary, “The Central Park Five.”

Siegal, speaking with Bloomberg Law’s Spencer Mazyck, also discusses “journalistic privilege” and distinguishes his case from a ruling by the U.S. Court of Appeals for the Second Circuit that upheld subpoenas against filmmaker Joseph Berlinger for footage from his film “Crude.”

This is a Bloomberg podcast. To download, watch or listen to this report, click here.

To contact the reporter on this story: Elizabeth Amon in New York at eamon2@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • SE
    (Spectra Energy Corp)
    • $40.44 USD
    • 0.16
    • 0.4%
  • KMP
    (Kinder Morgan Energy Partners LP)
    • $92.15 USD
    • -0.11
    • -0.12%
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