Bloomberg News

Shearman & Sterling, Freshfields, MoFo, Cravath: Business of Law

December 24, 2012

Shearman & Sterling LLP is representing General Electric Co. (GE:US), the biggest maker of jet engines, which agreed to buy the aerospace-parts business of Avio SpA for $4.3 billion, tightening control over its supply chain as plane makers boost output. Freshfields Bruckhaus Deringer LLP is advising Avio.

“We are extremely pleased to have represented GE on this deal, which required us to put together a team of lawyers from across our offices in Europe and the U.S., including Milan, Rome, London, Paris and New York,” Michael McGuinness, a Shearman & Sterling New York-based mergers and acquisitions partner said in a statement. “Supporting GE and GE Aviation in structuring and negotiating this complex transaction required the full use of our platform -- a platform built to support corporates like GE in the U.S. and internationally.”

The Shearman & Sterling global mergers and acquisitions team advising GE on the transaction was led by partners Fabio Fauceglia, Laurence Levy and Michael McGuinness. Additional partners included: Creighton Condon, Jeremy Kutner and Guillaume Isautier, mergers & Acquisitions; Don J. Lonczak, tax; Clare Breeze, real estate; and Philip Urofsky, litigation.

Also advising GE were Italian counsel Gianni, Origoni, Grippo, Cappelli & Partners’ Chiara Gianni and Italian environmental counsel, Maschietto Maggiore’s Eva Maschietto, Shearman & Sterling said.

Freshfields London corporate partners Adrian Maguire and David Sonter, together with Milan corporate partner Nicola Asti led the team advising on the transaction.

The purchase from Cinven Ltd. and Finmeccanica SpA (FNC) values Turin-based Avio at 8.5 times estimated earnings for 2012 before interest, tax, depreciation and amortization, according to GE, which won’t be acquiring the Italian company’s space assets.

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MoFo Advises Pinnacle on Buying Ameristar for $900 Million

Morrison & Foerster LLP is advising Pinnacle Entertainment Inc. (PNK:US) on its agreement to buy Ameristar Casinos Inc. (ASCA:US) for about $900 million, making its biggest acquisition to more than double in size to 17 casino resorts. Gibson, Dunn & Crutcher LLP’s represents Ameristar.

MoFo’s deal team is led by San Francisco corporate partner Robert Townsend, co-chair of the firm’s global M&A practice. Additional partners include San Francisco partner Eric T. McCrath, Washington partners David P. Slotkin and Roxann Henry, and New York partners Domnick Bozzetti and Peter C. Dopsch.

Gibson Dunn’s core corporate team includes partners Jonathan Layne and Mark Lahive. Specialists include Sean Feller, executive compensation/employee benefits; Paul Issler, tax; and David Kennedy, IP.

Robert Knauss of Munger, Tolles & Olson LLP represents Lazard and Centerview Partners, which acted as financial advisers to Ameristar.

Latham & Watkins LLP is representing Goldman Sachs & Co. as financial adviser to Pinnacle in the transaction with a corporate deal team led by Los Angeles partner Steven B. Stokdyk and Chicago partner Michael Pucker.

Ameristar will bring eight properties in gambling cities including St. Charles, near St. Louis; Kansas City, Missouri; Council Bluffs, Iowa; Black Hawk, Colorado; and Jackpot, Nevada. Pinnacle is paying about 8 times Ameristar’s earnings before interest, taxes, depreciation and amortization, less than a median of 11 for similar deals compiled by Bloomberg.

Pinnacle expects the deal to close by the end of the third quarter of 2013. The Las Vegas-based gaming company said it has obtained committed financing for the transaction from JPMorgan & Chase Co. and Goldman Sachs Group Inc. (GS:US)

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Prudential Capital Raises $1.15 Billion for Mezzanine Offering

Debevoise & Plimpton LLP advised Prudential Capital Partners, the middle-market mezzanine fund business of the second-largest U.S. life insurer, which has exceeded the $1 billion goal for its latest fund that will provide financing to mid-sized companies.

The Debevoise team was led by partner Erica Berthou and included partner Adele M. Karig.

Prudential Capital IV LP, which will invest primarily in North American companies, raised $1.15 billion, the Chicago- based unit said Dec. 21 in a statement.

Prudential Capital’s fourth fund will deploy $10 million to $100 million per deal, investing as part of acquisitions, recapitalizations and growth financings. The firm expects to make investments over the next three to five years.

The mezzanine unit is part of Prudential Capital Group, the private fixed-income investment business of Prudential Financial Inc. (PRU:US), which manages a portfolio of more than $65 billion as of Sept. 30.

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Moves

Corporate Partner Joins Sheppard Mullin in Orange County

Megan N. Gess joined Sheppard Mullin Richter & Hampton LLP as a partner in the firm’s corporate practice group, in the Orange County, California, office. Gess joins from O’Melveny & Myers LLP in Newport Beach, the firm said.

Gess represents public and private clients in mergers and acquisitions, dispositions, public offerings and private placements. She also counsels clients on securities law reporting and compliance, corporate governance and general contract matters.

Sheppard Mullin has 60 attorneys based in its Orange County office. The firm’s corporate practice group includes 150 attorneys firmwide. The firm has more than 600 attorneys in 16 offices in the U.S., Europe and Asia.

Lowenstein Adds Specialty Finance Partner from McDermott

Lowenstein Sandler PC hired Seth T. Goldsamt as a partner in its specialty finance practice in the firm’s New York office. He was previously at McDermott Will & Emery LLP, where he was a partner, the firm said.

Goldsamt focuses his practice on public and private securities offerings as well as private equity and mergers and acquisitions. He has served as lead counsel in international corporate transactions, including public and private mergers and acquisitions, equity bridges, and venture capital investments.

Lowenstein Sandler has about 270 attorneys at three U.S. offices.

Litigation

IBM Judge Refuses to Rubber Stamp SEC Foreign Bribery Deal

A federal judge said he won’t “rubber stamp” the U.S. Securities and Exchange Commission’s settlement of foreign bribery allegations brought last year against International Business Machines Corp. (IBM:US)

U.S. District Judge Richard Leon, during a hearing Dec. 20 in Washington, criticized the SEC and IBM for opposing his proposed reporting requirements for the company. He said IBM and the SEC need to prove statistically that his disclosure obligations are too burdensome.

“I’m not just going to roll over like the SEC has,” Leon told IBM’s lawyer, Peter Barbur, of Cravath, Swaine & Moore LLP, during the 25-minute hearing. “You’re going to need data to satisfy me.”

Leon, who has had the case under review for 22 months, wants reporting on a broader range of possible wrongdoing than the company is willing to turn over. There is a growing awareness among federal judges of the need for more rigorous review of corporate settlement agreements, he said.

Leon, who spoke loudly and angrily, asked why the regulator would agree to limit such requirements for a company with a history of books-and-records violations. He threatened to hold Barbur in contempt for talking over him.

Barbur didn’t respond to an e-mail seeking comment on the hearing.

IBM and the SEC submitted a “reasonable resolution” and “both parties continue to urge the court to approve the settlement,” Robert Weber, IBM’s general counsel, said in an e-mailed statement. “The parties have previously told the court that they are opposed to certain reporting provisions that are unrelated to the allegations in the complaint.”

IBM, based in Armonk, New York, said in March 2011 that it had settled with U.S. regulators over allegations that it bribed Chinese and South Korean officials to win at least $54 million in government contracts.

The company, without admitting or denying wrongdoing, agreed in 2011 to pay $10 million in disgorgement and penalties to settle alleged violations of the books-and-records and internal-control provisions of the Foreign Corrupt Practices Act.

The judge scheduled a hearing for Feb. 4.

The case is SEC v. International Business Machines Corp., 11-cv-00563, U.S. District Court, District of Columbia (Washington).

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Fees

Lehman’s Year-End Fees, Filings Match Up With Biggest Bankruptcy

Lehman Brothers Holdings Inc., which aims to pay creditors $65 billion by 2016 or so, enters the New Year with statistics to match the biggest-ever bankruptcy it filed more than four years ago.

The defunct investment bank added 10,000 filings to its court docket in 2012, bringing the total toward 33,000, as it slashed 67,000 payment demands for $1.2 trillion by almost 70 percent to $370 billion. It paid advisers $600 million in its last year of bankruptcy, or a total of $1.8 billion since 2008.

By contrast, Bernard Madoff’s brokerage, which also collapsed in 2008, counts 5,162 filings and 16,519 claims for $17.3 billion of lost principal; its advisers took $646 million. AMR Corp., the American Airlines parent that filed for bankruptcy a year ago, has more than 5,800 filings and accrues professional fees of about $15 million to $20 million a month.

“The Lehman case is and was the most unique and different bankruptcy/restructuring case to emerge since the inception of a bankruptcy law in the U.S.,” said Harvey Miller, the Weil Gotshal & Manges LLP partner who has been Lehman’s lead lawyer since the bankruptcy. “It was the case of a lifetime, both frustrating and gratifying, sometimes almost concurrently.”

Lehman’s fee bills are “not excessive,” Miller said, considering the “almost miraculous result” of the case, which ended with Lehman winning creditors’ backing for its liquidation plan.

The U.S. Trustee who supervises bankruptcies for the Justice Department, Tracy Hope Davis, has objected to the Lehman fee bonanza. Using Gleacher & Co. as an adviser for months without officially hiring the firm, Lehman ran up fees that were “not reasonable,” Davis said. She criticized creditors such as Goldman Sachs, who fought Lehman to improve their own payout, then asked the bankrupt estate to pay their lawyers.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

For more, click here.

To contact the reporter on this story: Elizabeth Amon in Brooklyn, 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

  • GE
    (General Electric Co)
    • $26.0 USD
    • -0.02
    • -0.07%
  • PNK
    (Pinnacle Entertainment Inc)
    • $24.07 USD
    • -0.34
    • -1.39%
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