Lawyers from Autry, Horton & Cole and McKenna Long & Aldridge worked opposite sides of a $55 million power company transaction with philosophical roots dating back to the Franklin D. Roosevelt administration.

The deal involved selling Sowego LLC, which owns a 100-megawatt power plant in Mitchell County, to the Georgia Energy Cooperative, or GEC, which is a coalition of energy producers providing power for rural areas.

Kenneth T. Horton Jr. of Autry Horton, who represented GEC, and Robert E. Tritt of McKenna Long, who represented Sowego, both said the deal took more than a year to put together because of the numerous approvals the parties had to obtain from entities including the Rural Utilities Service, the U.S. Department of Agriculture and the Federal Energy Regulatory Commission.

“It was not an asset purchase,” said Horton, but a purchase of the limited liability company which owns the plant. If his client bought only the plant, he said, it would not have preserved Sowego’s existing contracts for water, gas and other services.

The parties also had to get the approval of pre-existing lenders. The Sowego plant had been financed by Ambac Assurance Corp., and in 2001, Sowego issued bonds that Ambac purchased, said Horton, who worked on the deal with partners Charles T. Autry and Roland F. Hall. By purchasing the limited liability company instead of the plant itself, he added, GEC essentially agreed to repay the bonds through power purchase agreements but did not have to directly assume—or refinance—the loan.

The purchase was part of a larger transaction that brought two electric membership corporations, or EMCs—Grady EMC in Cairo and Three Notch EMC in Donalsonville—into the previously 13-member GEC. The two new EMCs were indirect, part-owners of the Sowego plant, Tritt said, and they inked additional power purchase contracts with GEC as part of the deal.

Each member of GEC will pay a pro rata share of the cost of acquiring the Sowego company based on their electricity usage. Payments will be made via a decades-long power purchase agreement, according to Horton.

The deal’s Roosevelt-era roots come from the creation of electric cooperatives, a power production structure that had its beginnings in Georgia when Roosevelt visited Warm Springs for polio treatments and discovered that power costs there were high because of the cost of transmitting electricity to rural areas.

His realization led to the Rural Electrification Act of 1936, which prompted the creation of cooperatives initially designed to generate reliable, affordable power for farmers.

Georgia now has 42 electric cooperatives, which Horton said serve about 70 percent of the state’s land area. The Sowego plant, he said, is a gas-fired “peaking plant,” which means it runs only during extremely hot or cold weather, when lower-cost, coal-fired plants cannot keep up with peak customer demand. All 15 GEC members, he said, will use the plant.

Lawyers from King & Spalding offices around the East Coast helped pharmacy benefits manager BioScrip Inc. put together a cash, stock and debt payoff deal valued at $343 million to purchase Critical Homecare Solutions.

Although most aspects of the deal were handled out of the firm’s New York office under the leadership of partner E. William Bates II—who practiced at K&S’s Atlanta office before decamping to the firm’s Big Apple outpost in 1993—local lawyers worked on tax, benefits and other parts of the transaction.

“From a tax standpoint, the primary consideration is making sure that the transaction qualifies as a tax-free reorganization,” said Atlanta tax partner Robert G. Woodward, explaining that shareholders must receive at least 40 percent of their compensation in stock; the rest can come from cash or warrants. “The key issue is compliance with what’s called the continuity of interest requirement, so that the stock that’s issued to the target company shareholders is not taxable to them, and the transaction doesn’t trigger a tax liability at the corporate level,” he said.

Elmsford, N.Y.-based BioScrip will pay $242 million—including $132 million to retire the company’s debt—and will issue $101.2 million in common stock, based on BioScrip’s Jan. 22 closing share price, according to information from the company. BioScrip also will issue more than 3 million warrants with a $10 exercise price and a five-year term to Critical Homecare shareholders.

Jefferies Finance provided $375 million in financing.

Atlanta partner Donald S. Kohla, who handled benefits issues, said the primary challenge for his team came from trying to figure out how Critical Homecare’s numerous acquisitions over the past few years had been integrated into the entity that BioScrip was purchasing. Another challenge, he said, was Critical Homecare’s workforce structure, which includes both regular and contract employees.

Critical Homecare is a Conshohocken, Pa.-based provider of home health care services whose controlling shareholder is Kohlberg & Co., a private equity firm that will hold about one-quarter of BioScrip’s common stock on a fully diluted basis.

Bryan Cave lawyers—though none from Atlanta—provided regulatory counsel for BioScrip, and Sonnenschein Nath & Rosenthal provided regulatory counsel for Critical Homecare. Lawyers from Paul, Weiss, Rifkind, Wharton & Garrison represented Kohlberg in the deal.

The deal, which is subject to regulatory approval, is expected to close by March 31.

If you’ve ever bought a copy of The New York Times, a doughnut and a read-it-in-an-hour paperback from airport concessionaires, chances are that you were buying from The Paradies Shops Inc., a 50-year-old Atlanta-based business.

Now, with the help of its lawyers at Paul, Hastings, Janofsky & Walker and Nelson Mullins Riley & Scarborough, Paradies—which has more than 500 stores in airports and hotels in the U.S. and Canada—has entered into an agreement to receive a significant investment and form a new partnership with private equity firm Freeman Spogli & Co.

Terms of the deal were not disclosed, but Paul Hastings partner Walter E. Jospin said his client’s ability "to obtain an investment from one of the leading private equity shops in the country reflects that the private equity business is vibrant, but they’re looking for quality.”

Karen K. Leach, a partner at Nelson Mullins, said Paradies was attracted by Freeman Spogli’s history of working with family-owned businesses.

Jospin, who has represented Paradies since 1997, and Leach, who spent almost a decade representing the company with Jospin, reunited to handle this deal. Leach left Paul Hastings in April, and said she’d handled some restructuring work in past years for Paradies—which she said had more than 50 legal entities and a complex organizational structure—in preparation for the right opportunity. 

Paul Hasting’s Philip J. Marzetti handled tax matters, and Nelson Mullins lawyers from several offices also were in on the deal, including partner William R. Gaines Jr. on lending matters and associates Bradley M. Burman and Steve B. Park, all in Atlanta. Leach said that Genesis Capital served as the investment bank for the transaction.

Freeman Spogli’s lawyers were from Bingham McCutchen’s New York, Los Angeles and Orange County, Calif., offices.

Crawford Communications Inc. has inked the first-ever sale of one of its divisions in a deal likely worth more than $100 million.

Los Angeles-based media services company Broadcast Facilities Inc. acquired Crawford’s Satellite Services Division, which includes television network origination, teleport, satellite uplink trucks, Internet, production services and media services to government clients in late January.

Crawford, an Atlanta-based company founded by Jesse Crawford in 1984, was represented by King & Spalding partners John J. Kelley III and Rahul Patel. Neither returned calls seeking comment. Broadcast Facilities was represented by attorneys from Latham & Watkins.

Terms of the deal were not disclosed. But in a Form D Notice of Exempt Offering of Securities that is part of an 8-K that Broadcast Facilities filed with the Securities and Exchange Commission, the company indicated that it was issuing $128 million in securities in connection with a business combination “such as a merger [or] acquisition” and as “additional consideration for the extension of credit.”

Ellis Jones, CEO of Wasserstein & Co., the private equity firm which owns Broadcast Facilities, said in a statement that financing came from Tennenbaum Capital Partners.

William Sherman, managing director of VRA Partners, an Atlanta-based investment bank which advised Crawford on the deal, said, “I think there was a strong rationale for this transaction because of the benefits available to Broadcast Facilities in combination with the satellite services division of Crawford. It gave them additional capability … and their first East Coast property.”

The combined company’s client base includes ABC, NBC Universal, DIRECTV Sports Networks, Hallmark, NFL Network, ESPN, NASCAR Media Group and government entities such as the U.S. Department of Defense, NASA and the CDC.

A major New York firm headed South recently to help with the acquisition of a troubled Georgia bank.

Wachtell, Lipton, Rosen & Katz lawyers represented Columbia, S.C.-based SCBT Financial Corp. in its agreement with the Federal Deposit Insurance Corp. to assume all deposits and some of the liabilities of Community Bank & Trust, based in Cornelia.

The Georgia Department of Banking and Finance closed the bank in January, and appointed the FDIC as receiver. Community Bank & Trust was founded in 1900 and operates 36 banks in 10 Georgia counties. Based on a June 2009 FDIC summary of deposits, ranked 7^th in market share statewide.

According to a transaction overview SCBT provided in a Securities and Exchange Commission filing, the bank purchased approximately $1 billion in assets and $753 million in loans, with the FDIC assuming 80 percent of losses—which include acquired loans and foreclosed real estate—up to a threshold of $233 million. The FDIC will assume 95 percent of losses in excess of that. The filing also said SCBT assumed approximately $1.1 billion in deposits, for which the bank did not pay a premium.

Matthew M. Guest, the lead Wachtell partner for SCBT on the deal, did not return a call seeking comment. Community Bank & Trust was represented by FDIC in-house counsel.

The transaction closed Jan. 29.

Hunton & Williams lawyers on Jan. 15 helped Spanish client Banco de Sabadell close on its more than $142 million purchase of Mellon United National Bank, the Miami outpost of Bank of New York Mellon Corp.

David R. Yates, the Atlanta associate who served as second-in-command on the deal team, which was led by Hunton Miami partner Fernando C. Alonso, said an exact value has not been released on the all-stock deal because the price turned in part on the value of the Mellon deposits.

“Because the deposits increased, the purchase price ended up increasing as well,” he said. Because Sabadell had to file with the Bank of Spain, that country’s equivalent of the Federal Reserve Bank here, he added, “the final amount is still not entirely public.”

The transaction, first announced in July, included the acquisition of Mellon United’s $1.68 billion in deposits and 60 percent of its loans, which amounted to $875 million. Mellon United on Wednesday changed its name to Sabadell United Bank N.A.

Bank of New York Mellon’s most recent 8-K, filed with the Securities and Exchange Commission on Wednesday, indicates that at least some of the 40 percent of the loans that Sabadell did not purchase may have been real estate loans retained by the seller. Bank of New York Mellon in the fourth quarter of 2009 “recorded an after-tax loss of $119 million largely related to additional write-downs primarily for retained South Florida real estate loans,” the SEC filing says in a paragraph discussing the bank’s discontinuance of operations at Mellon United National Bank.

Yates said that most of the loans his client purchased were commercial mortgages, with “very, very few residential mortgages” thrown into the mix. As to why Sabadell did not buy the entire loan portfolio, Yates would say only, “It was a phenomenal deal that was negotiated by Sabadell, and in this current environment with all the regulatory scrutiny, that’s what the parties really believed was necessary and was in the best interest of the target bank in order to make it a very, very attractive transaction to Sabadell.”

This is Sabadell’s third major purchase of a U.S. bank. Sabadell purchased Miami-based TransAtlantic Bank in 2007, followed by Spanish bank BBVA’s private banking business in Florida in 2008. Hunton lawyers also worked on the latter of those deals. Together, the acquisitions bring Sabadell’s total business volume in the United States to approximately $6.4 billion—$4.3 billion in managed assets and $2.1 billion in loans.

Yates said that he spent most of the week prior to closing in a conference room overlooking Biscayne Bay, finalizing documentation and going through a signing round with Sabadell executives.

“Given that there were certain loans that were being transferred, assigned out or participated out of the target bank, there was a lot of dialogue and exchange on that,” he said. But, he added, “in general, both sides were well-prepared. They’d been communicating regularly between signing and closing.”

He added that he and the other lawyers and executives on the deal celebrated over churrasco, a specially cooked steak, at an Argentine restaurant in Miami.

Sabadell’s internal legal team was led in the U.S. by Anna Oestereicher, its U.S. general counsel, and in Spain by the bank’s general counsel, Oriol de Nadal Alier. Bank of New York Mellon was represented by in-house counsel, led by Marcia Wallace and Becket Sorce.

A $400 million deal is rare game these days, but Alston & Bird partner Janine Brown was fortunate enough to bag one.

She and associate David A. Wender, along with Canadian firm Lang Michener, represent Georgia-Pacific in its recently announced deal to purchase four compressed-board facilities from Grant Forest Products, a Canadian company that in June received judicial protection from creditors after a General Electric Co. unit tried to force it into bankruptcy.

The transaction, which is expected to close in the first half of this year, is subject to approval from the Canadian court overseeing Grant’s agreement under the Companies’ Creditors Arrangement Act, which protects Grant from lawsuits and creditors, but allows it to continue operations.

A Georgia-Pacific spokesman said that the deal also will be subject to approval by a U.S. bankruptcy court, but he could not immediately identify which one.

Brown and Wender could not be reached for comment by this blog’s posting deadline.

The deal also is subject to U.S. and Canadian regulatory review.

The factories, which produce what is called oriented strand board, an engineered wood product used for, among other things, subflooring, are located in Englehart and Earlton, Ontario, and in Allendale, S.C., and employ about 300 workers. When market conditions allow, Georgia-Pacific plans to complete construction on another plant, in Clarendon, S.C., which could employ 100 more people. The company, in a statement, also said it plans to make capital investments of “several million dollars” to improve facilities.

Grant’s financial troubles, which were exacerbated by the lagging construction market, had about $516.8 million in secured debt, according to a Bloomberg story published in June. The article said that General Electric asked a judge to put Grant into bankruptcy because of debts related to airplanes Grant leased from a GE division.

The wave of foreclosures that swept across Florida is beginning to yield some deals in the battered commercial real estate sector.

Arnall Golden Gregory partner Scott A. Fisher knows that firsthand, because he just closed a $32.5 million deal representing Bay Isle Key LLC, which includes Atlanta-based real estate investor Pollack Partners among its backers, in the purchase of 510 foreclosed apartment and condominium units in St. Petersburg.

“My client said to me … 'You know, this is the first deal we've closed in 18 months,'” recalled Fisher, who has represented Pollack Partners for years. “I said, 'You don't need to tell me that.' The fact that [the client] could find an equity partner to do the deal with is indicative of a recovery in the market.”

Fisher said competition for good real estate deals is keen these days. His client was able to land this one in part because it is a so-called “fractured condo deal,” meaning some of the units are condominiums and others are apartments. That structure, Fisher said, tends to discourage buyers looking for a simple deal.

He said the Bay Isle Key community, which includes a lake, three swimming pools, tennis courts and other amenities, initially was designed as an apartment complex. Then an investor bought it and began converting it to condos. About 70 units had been sold when the market collapsed and lender GE Capital foreclosed. A GE affiliate, Echelon Acquisition Co. LLC, represented by lawyers from Greenberg Traurig's Fort Lauderdale office, sold the units to Fisher's client.

The foreclosed units, Fisher said, sold for an average of about $63,700 each. Atlanta developer McRae & Stolz paid $59.4 million for the property in 2006, or $150,000 per unit, and then added nearly 200 units, according to a report in the Tampa Bay Business Journal.

“My understanding is that the property had been under contract before, but it was Pollack's ability to close quickly that facilitated their ability to buy the property,” Fisher said. He added, “Hopefully, this is indicative of what we will see in 2010. I would call 2009 … the year of indecision, primarily by banks.”

This year, he said, if banks get more decisive, “You're going to see more transactions like this available where you have an opportunity to buy foreclosed property or to buy loans from banks that will generate more transactional business. But in the end, the volume is going to depend on what happens in the financing market.”

Bankrupt Mesa Air Group Inc. wants to keep Jones Day as its outside lawyers, according to an application Mesa filed with the U.S. Bankruptcy Court for the Southern District of New York.

Jones Day, according to the filing, represents Mesa in a wide range of pre-petition litigation against Delta Air Lines and United Airlines Inc. In the past year, the firm has billed Mesa nearly $1.7 million for its services.

The filing lists the primary Jones Day lawyers expected to work on the litigation, along with their hourly rates. Among them are four Atlanta lawyers: partners G. Lee Garrett Jr. ($675) and David M. Monde ($625); and associates Robert A. Schmoll ($400) and Jason Burnette ($325).

According to the filing, Jones Day represents the beleaguered airline in four separate legal actions in three states.

Three of those suits were initiated in 2008 in U.S. District Court for the Northern District of Georgia. In one, Mesa and its subsidiary, Freedom Airlines, sued Delta seeking to enjoin Delta's termination of a jet operation agreement. The court issued a preliminary injunction in favor of Mesa, which was upheld by the 11th U.S. Circuit Court of Appeals. The parties now are awaiting a trial date in the district court. In another suit, Mesa and Freedom allege that Delta wrongfully terminated another agreement and are seeking $40 million in damages. The third Georgia suit involves Delta's allegation that Mesa and Freedom breached a “most favored nation” contract provision. In that case, the file of which is sealed, the court has not ruled on Mesa's motion to dismiss.

Mesa also sued Delta in August in federal court in Arizona over the termination of an engine maintenance agreement and Delta's allegedly unauthorized retention of seven aircraft engines. Delta filed a mechanics' lien on the engines and a counterclaim seeking to foreclose on the liens, but the court found that Delta had forfeited its lien claims. Delta has filed a notice of appeal to the 9th U.S. Circuit Court of Appeals; Mesa has a pending motion for summary judgment.

And United, in October, sued Mesa over the parties' code-sharing agreement about the in-service dates for certain aircraft in federal court in Illinois. The suit is pending.

Mesa's bankruptcy court filing seeking to retain Jones Day in these and related actions notes that Mesa's success in restructuring turns on the outcome of these suits, because 96 percent of its passenger revenues for fiscal year 2009 were derived from code-share revenue guarantee agreements with Delta, United and US Airways. “Accordingly, preserving or defending these relationships, and related rights and claims, will be a critical component of the Debtors' overall restructuring in these cases,” the application notes.

Mesa and 10 subsidiaries petitioned for Chapter 11 reorganization on Jan. 5, citing assets of $975 million and liabilities of $869 million. The suit is In re: Mesa Air Group Inc., No. 10-10018.

Smith, Gambrell & Russell lawyers are working on a military housing joint venture slated to be valued at $14 million when it is completed.

Partner Malcolm D. “Mac” Young and associates Jonathan M. Gallant and Eugene D. Bryant represented Atlanta-based Place Properties in a joint venture to capitalize Place's military housing division, Place Base Housing. Gallant said that Place's partner in the joint venture, which has requested anonymity, provided all the funding for the projects.

“We have acquired, built and are operating a number of projects, and are on schedule to develop More...