February 26, 2012 11:08 AM
Dealmaker of the Week: Donald Greenfield of Bennett Jones
Posted by Tom Huddleston Jr.
Bennett Jones Calgary-based partner Donald Greenfield, who cochairs the firm's energy practice.
Flint Energy Services, a Calgary-based provider of midstream services and oil sands equipment to the oil and gas industry.
Flint announced Monday that it has agreed to be acquired by San Francisco construction and engineering company URS for almost $1.5 billion, including assumed debt.
Terms of the deal call for URS to pay $25 per share—roughly $1.25 billion—in cash for Flint, while also assuming $225 million in debt. URS predicts the deal, which is expected to close in the second quarter of this year, will result in pretax cost savings of as much as $15 million in 2012.
With Flint employing 10,000 people and serving oil and gas companies that operate in the Southwest, Appalachian, and Rocky Mountain regions of the United States, as well as in Western Canada, URS plans to use the acquisition to expand its own presence in the North American oil and gas market.
THE BIG PICTURE
News of the transaction sent Flint's stock prices soaring. It becomes the latest Canadian company to cash in on the spike in deal activity that has sprung up in recent years as a result of intense interest in the country's lucrative oil sands, with Asian buyers among the most prominent players, as The American Lawyer reported in 2010. The magazine identified Bennett Jones as one of several Canadian firms landing key roles on the spate of energy deals, and noted that the firm had even opened a Beijing office in 2010 in a bid to attract more outbound Chinese work.
A week before the Flint deal was announced, Bennett Jones represented Japanese conglomerate Mitsubishi on its $2.9 billion acquisition of a 40 percent stake in a British Columbia shale project from Canadian natural gas exploration and production company Encana. The firm has a long-standing relationship with Mitsubishi, advising the company, for instance, on its $850 million shale gas joint venture in British Colombia with Calgary-based Penn West Petroleum in 2010.
Greenfield and Patrick Maguire—the second cochair of Bennett Jones's energy practice and a lead partner on the Mitsubishi deal—say it is normal for multiple deals in the energy sector come to fruition at the same time. "That is our life," Greenfield says. "We had a particularly busy Q4 and Q3. We saw activity really wrap up. . . . We acted for Sinopec when they bought Daylight. We were involved in Quicksilver [entering a midstream partnership with KKR]."
Both the Mitsubishi deal and the Flint sale continue what Maguire calls "a fairly comfortable cycle" in Canada in which foreign investors pump money into domestic companies, with the latter then "taking the rewards of that foreign investment and finding new places to invest Canadian dollars." Adds Maguire: "We just expect that cycle to continue."
According to Bennett Jones corporate partner David Spencer—who took a lead role on the Flint deal—the firm's ties to Flint date back more than a decade, originating with its work for longtime client SCF Partners, an energy investment company that is Flint's former parent. Among the recent Flint matters Bennett Jones has handled in its capacity as the company's go-to deal counsel: the October purchase of Canada's Carson Energy Services for $112 million, a deal on which Spencer took a lead advisory role.
Today, a former Bennett Jones partner, Stuart O'Connor, serves as the independent chairman of Flint's board of directors.
Greenfield played key roles on both Mitsubishi's deal with Encana and the Flint sale, which signed within days of each other. On the former, Greenfield was brought in to work on competition applications, as well as on aspects of the final agreements. On the Flint deal, he was put to work in another specialty area: applications related to the Investment Canada Act, which covers transactions involving foreign investors. "I [just] showed up on both deals," he jokes, referring to the fact that specialty work landed him a role in both matters.
Mitsubishi began eyeing the shale assets after a $5.5 billion joint venture between Encana and PetroChina collapsed last June. Encana decided to sell the assets from that terminated venture in pieces, and Mitsubishi called in Bennett Jones to prepare a bid for a piece of the Encana stake in the Cutbank Ridge natural gas project.
Greenfield and Maguire say that transaction took about four months to put together, in part because the partnership agreement between Mitsubishi and Encana required greater due diligence and tax structuring work than a full acquisition would have. "In the Mitsubishi case, that's a deal where the relationship was going to last perhaps decades once it was set up," Greenfield says.
Meanwhile—as a straightforward all-cash, public markets deal—the Flint sale came together within "a matter of weeks," Greenfield says. That the two deals started on two completely different tracks, but still signed within days of each other, is a testament to the wealth and range of Canadian energy work finding its way to Bennett Jones lawyers at the moment.
"They're very different transactions in the same industry, but . . . the energy industry up here has so many bifurcations—between gas, conventional, oil sands, and the services side—and we're blessed to be very active in all of those," Maguire says.Make a comment