In an effort to expand its offering of satellite-network products, a spinoff company of Rockwell Automation reached an agreement to acquire a Gwinnett County satellite-technology company.

This month Rockwell Collins Inc. agreed to acquire DataPath Inc. of Duluth for $130 million in cash. The deal is pending regulatory approval. Nelson Mullins Riley & Scarborough partners Steve Berson and Brian Galison represented DataPath. They worked with DataPath's general counsel, Steven Wilson. Chadbourne & Parke advised Rockwell Collins.

Rockwell Collins, of Cedar Rapids, Iowa, makes cockpit display systems, flight deck avionics, cabin electronics and mission communications for the aviation industry and the military. DataPath makes satellite communications networks for the military and for commercial customers.

A group of four Nelson Mullins Riley & Scarborough attorneys in Atlanta advised Videolarm Inc. on its acquisition by Moog Inc. for $45 million in cash.

Partner Rhys Wilson was lead counsel to Videolarm’s founder, Ray Pagano. Wilson was joined by of counsel David Goldberg and Jim Holmes and associate Hemant Dutta, according to the law firm. Hodgson Russ in Buffalo, N.Y. advised Moog. The deal closed Feb. 13.

Videolarm makes closed-circuit television cameras and vandal resistant protective housings for surveillance systems. The Decatur, Ga. company had 2008 sales of $19.5 million. Moog, of East Aurora, N.Y., makes “motion and fluid controls and systems for a broad range of applications in aerospace and defense, industrial and medical markets,” according to the company’s annual report.

Moog Inc. is not to be confused with Moog Music Inc., the successor company to a firm founded by electrical engineer Bob Moog in the late 1970s. Moog Music manufactured the world’s first analog synthesizer, which was called the Moog and was invented by Bob Moog.

Work in most areas of corporate law may be moribund, but not every segment is kaput. One active segment is venture capital investments in high-tech startups.

Consider the deal 2080 Media Inc. of Atlanta just made for a digital media company developed at Turner Broadcasting. 2080 Media of acquired PlayON! Sports from Turner last month for undisclosed terms. PlayON produces and distributes Internet broadcasts of untelevised college and high-school sports events. PlayON’s clients have included the Atlantic Coast Conference and Raycom Media.

Because of a variety of factors, tech startups actually thrive during economic downturns, said DLA Piper partner Jeffrey M. Leavitt, who was involved in the 2080 Media-PlayON Sports deal.

“Resources, like office space and salaries, are cheaper now,” Leavitt said. “Big companies are not really focused on research and development in this period. So, if you’re a startup developing some technologies, when the economy recovers, big companies will be looking to acquire the technologies they didn’t develop themselves.”

Amgen, Apple Computer and Microsoft all went through their incubation phases during economic recessions, Leavitt said.

2080 Media financed its deal for PlayON Sports partly through a $3 million fund it raised from local investors, Leavitt said. Leavitt and colleagues at DLA Piper, including associates Brian M. Gordon and S. Kiran Lingam, advised the fund’s lead investor, Imlay Investments Inc. and a second investor group, Noro-Moseley Partners. 

Another investor group, Buckhead Investment Partners, took legal advice from McKenna Long & Aldridge partner Michael J. Cochran and associate Bill C. Wainwright III.

Nelson Mullins Riley & Scarborough partners Donna K. Lewis and Brian S. Galison and associate Hemant D. Dutta represented 2080 on the acquisition of PlayON.

The recession has meant a precipitous drop in the number of M&A deals this year, meaning less work for investment bankers and lawyers.

But one segment of law firms’ corporate practice groups remains strong—advising banks and financial institutions. In the past month, two South Carolina banks turned to Nelson Mullins Riley & Scarborough for legal counsel on securities offerings.

Nelson Mullins partners Neil Grayson and John Jennings were counsel to SCBT Financial Corp. of Columbia and First Community Corp. of Lexington on securities work. Grayson works out of Nelson Mullins’ offices in Atlanta and Greenville, S.C. Jennings works in Greenville.

SCBT Financial raised about $27 million in a private placement of 1.01 million shares of common stock.

First Community sold $11.4 million in preferred stock to the U.S. Treasury as part of its Troubled Asset Relief Program Capital Purchase Program. First Community also sold 195,915 in 10-year warrants to Treasury.

SCBT Financial operates South Carolina Bank and Trust, as well as four offices of The Scottish Bank in North Carolina. First Community operates 11 offices of First Community Bank in the Columbia, S.C. area.

Nelson Mullins Riley & Scarborough partner Michael Hollingsworth and associate Brian Galison advised Premiere Global Services Inc. on its $20 million acquisition of Soundpath Conferencing Services LLC.

Soundpath, of Washington, provides audio conferencing and Internet conferencing services to the legal industry. Atlanta-based Premiere sells teleconferencing and web conferencing software and services, as well as software used to automate business process activities.

Hollingsworth and Galison worked with Premiere Global General Counsel Scott Askins Leonard. Skadden, Arps, Slate, Meagher & Flom advised Soundpath.

Nelson Mullins Riley & Scarborough partner Rusty Pickering in Atlanta advised a Chicago hedge fund on its proxy battle for control of the board of apartment developer Post Properties Inc. Skadden, Arps, Slate, Meagher & Flom partner Daniel E. Stoller in New York advised Post.

Last week, Atlanta-based Post Properties said it reached an agreement with Pentwater Capital Management LP to support the nomination of Chicago real estate investor David R. Schwartz as director. Post and Pentwater also agreed to nominate another director who has yet to be named. Pentwater also said it would vote for the eight incumbent Post directors up for re-election this year. Previously, Pentwater had sought to replace five Post directors. One of the incumbent Post directors up for re-election is King & Spalding senior counsel Herschel M. Bloom.

In January, Pentwater launched the proxy battle in an attempt to force Post to put itself up for sale. In response, Post said it was doing just that. But on June 25, Post said it was dropping its attempt to find a buyer, citing an “increasingly difficult market environment.”

Nelson Mullins Riley & Scarborough partner William Gaines and associate Keri Chayavadhanangkur were counsel to Global Payments Inc. on negotiating a 5-year, $200 million credit agreement with JPMorgan Chase Bank, Wells Fargo Bank, Bank of America and Regions Bank.

Global Payments, of Atlanta, said it will use the loan proceeds “to pay for a portion of the $439 million purchase price for its 51% ownership in the recently announced limited liability partnership with HSBC Bank,” according to a regulatory filing. Global Payments announced on June 30 that it formed a joint venture with HSBC Bank PLC to provide payment card processing services in the United Kingdom. Global Payments paid HSBC $439 million in cash to acquire a 51 percent ownership in the joint venture. As part of the deal, Global Payments and HSBC also formed a 10-year marketing alliance. King & Spalding partner Mark Thompson in London advised Global Payments on the HSBC joint venture. Global Payments’ general counsel is Suellyn P. Tornay.

Now is not a good time to be a bank.

Losses on residential construction loans and the ongoing credit crunch has hit banks of all shapes and sizes, from super-regionals like SunTrust Banks and Wachovia, to community banks like Alpha Bank & Trust in Alpharetta. And with debt financing more difficult to obtain, banks are struggling to raise capital.

Investors have taken note of banks’ problems. On Monday, SunTrust shares fell to $30.92, their lowest price since September 1995. Shares of First Horizon National Corp., the biggest bank in Tennessee, at one point Monday dropped to $5.88, its lowest since September 1991.

Other banks are also struggling mightily. Shares of Wachovia, BB&T Corp. and National City Corp. of Ohio have all declined this year. Shares of Washington Mutual Inc., the biggest U.S. savings and loan, have fallen 85 percent in the past 12 months. Fifth Third Bancorp shares have dropped 69 percent in the same period.

Deal Watch Blog spoke with Nelson Mullins Riley & Scarborough partner  Brennan Ryan about the state of the banking industry. Ryan, whose clients have included Congaree State Bank of South Carolina and Atlantic Southern Bank of Macon, Ga., said the worst isn’t over and he expects some Georgia banks to fail this year. Here is an edited transcript of the discussion.

Why is now such a bad time for banks?

A multitude of reasons. One is the credit crunch, which created the mortgage crisis, which then created a lack of demand for developed properties. Also, the Fed’s rapid reduction in interest rates caused a margin squeeze for banks. Banks make money on the difference between what they lend out and what they have to pay their depositors. With the Fed’s rate reductions, banks’ loan rates re-set faster than their deposits.

Think of it this way: If you have a construction loan with a customer that’s at a prime rate, it resets when the Fed changes the prime rate. It will work itself out over time, as certificates of deposit and other borrowings re-set over time. It should spread back out where the banks can make money, but in 2008, banks have got credit and demand problems combined with very tight margins.

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Private-equity deals in the middle-market keep churning, quietly making profits for investors who are oblivious to the looming economic recession.

Offering evidence of the healthy environment for mid-market deals, Nelson Mullins Riley & Scarborough partner Rhys T. Wilson last month closed a deal in which his client, GranQuartz Holdings LLC of DeKalb County, was bought by St. Louis investment fund Harbour Group Industries Inc. for undisclosed terms. GranQuartz sells tools and supplies to contractors who renovate kitchen countertops.

The sale of GranQuartz comes four years after the company “recapitalized” with funding from two private-equity funds: Independent Bankers Capital LP of Dallas and Hamilton Robinson LLC of Stamford, Conn. Because GranQuartz's founder, Peter de Kok, kept an equity stake in the company during the recapitalization, he was able to profit from the latest deal along with the two private-equity funds, Wilson said.

Harbour Group won the auction for GranQuartz because the private-equity firm didn’t have a debt contingency attached to its offer, Wilson said. Harbour Group self-financed its purchase of GranQuartz and plans to shop the debt on the open market at a later date. Richmond, Va. investment bank Harris Williams & Co. ran the auction for GranQuartz.

The market for private-equity buyouts of middle-market companies remains active because these private-equity funds typically finance their purchases with debt from conventional lenders who don’t subsequently securitize the debt, Wilson said.

“These lenders are not dealing with the problems with the capital markets,” Wilson said. “They don’t have to worry about re-selling their debt.”

Nelson Mullins of counsel James E. Holmes Jr. and associate Aileen L. Nagy teamed up with Wilson to finalize the transaction. Dickstein Shapiro lawyers in Washington advised Harbour Group. Hallett & Perrin of Dallas was counsel to the Independent Bankers Capital Fund and Hamilton Robinson.

GranQuartz, headquartered in the Royal Atlanta Business Park in Tucker, bills itself as the largest U.S. distributor of tools and services to bath and kitchen-countertop contractors. GranQuartz specializes in products for granite, marble and concrete countertops and floors. GranQuartz operates seven retail stores in the U.S. and two in Canada. Privately held Harbour Group owns companies involved in diverse industries, including LED lighting systems, lubricating systems and jukebox manufacturers.

A row between an Atlanta insurance company and the homebuilders’ trade association that founded it is leading Georgia State Insurance Commissioner John W. Oxendine into uncharted legal territory.

“There are a lot of matters of first impression in this case, because we’ve never really had this type of dispute,” said Oxendine (see photo), adding that he and his staff have consulted with the state attorney general on the dispute.

At issue is Builders Insurance Group, an Atlanta-based company that sells workers’ compensation and general liability insurance to homebuilders. The company was founded in 1992 by the Homebuilders Association of Georgia (HBAG). The status of that affiliation – between Builders Insurance and HBAG – is at the heart of the groups’ current fight.

HBAG argues that the directors of Builders Insurance have overpaid themselves. HBAG counsel, Nelson Mullins Riley & Scarborough corporate partner Charles R. “Rusty” Pickering, is advising the group on a proxy battle for control of Builders Insurance, introducing a slate of six new directors.

Builders Insurance president Patrick Mitchell counters that HBAG is trying to seize control of the company as a way to protect its turf as the dominant trade organization for homebuilders. King & Spalding corporate partner Alan J. Prince is advising Builders Insurance on the matter.

An additional prong in HBAG’s strategy is to rewrite Builders Insurance’s charter. That’s where Oxendine comes in, and it’s also what the state Insurance Commissioner says is new territory.More...