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February 3, 2012 7:30 PM

Energy Clients Continue to Keep Am Law Corporate Lawyers Busy

Posted by Brian Baxter

League tables for 2011 ranking outside legal advisers showed that M&A and transactional work continued to stay hot in the energy, mining, power, and utility sectors, as companies compete over access to natural resources and emerging markets.

That trend appears to have continued into 2012, as a series of proposed mergers, bond sales, investments, and takeovers provided corporate work for lawyers from an array of Am Law 200 and leading international firms.

Glencore / Xstrata

Zug, Switzerland–based mining giant Xstrata confirmed this week that it is in merger talks with Glencore International, the world's largest commodities trader, for a potential deal that would create a combined company with a market value of more than $100 billion.

Magic Circle firms Linklaters and Freshfields Bruckhaus Deringer are advising Glencore and Xstrata, respectively, on the negotiations, according to U.K. publication Legal Week. The product of the proposed all-share merger of equals would be one of the largest mining companies in the world.

Both firms have longstanding ties to their respective clients. Freshfields corporate partner Julian Makin, whom Legal Week reports is leading a team from the firm advising Xstrata on its talks with Glencore, previously represented the company on its unsuccessful takeover bids for rivals Anglo American and Lonmin.

Legal Week reports that Glencore, which is also based in Zug and already owns more than a third of Xstrata, has turned to Linklaters corporate partner Charles Jacobs. Jacobs and a team of lawyers from Linklaters and Swiss firm Pestalozzi advised Glencore last year when the company raised more than $12 billion through an initial public offering.

While Glencore and Xstrata share a common history—the latter was formed in 2002 when it bought Glencore’s coal assets—the regulatory issues surrounding a potential merger are so complex that any deal could could take up to a year to complete, according to a Bloomberg interview this week with Norton Rose antitrust partner Marc Waha.

Xstrata's chief legal counsel is Benny Levene, while Glencore's general counsel is Richard Marshall. Both Levene and Stuart Cutler, a member of Glencore's management committee, began their careers at top South African firm Werksmans.

Exxon Mobil / TonenGeneral Sekiyu

Hogan Lovells is helping the world's largest integrated oil company offload its Japanese arm in a $3.9 billion deal announced this week under which a subsidiary of Tokyo-based refiner TonenGeneral Sekiyu will take a 99 percent stake of Exxon Mobil's soon-to-be-former local unit.

TonenGeneral, advised on the deal by leading Japanese firm Nishimura & Asahi, was formed more than a decade ago through the merger of Exxon Mobil affiliates Tonen and General Sekiyu. The latest transaction will see Exxon Mobil relinquish control of the combined company, one of the largest refinery operators in Japan.

Hogan Lovells advised Irving, Texas–based Exxon Mobil last year on its $1.75 billion sale of oil and gas fields in the North Sea to Apache Corporation. Hogan Lovells enjoys a longtime relationship with Exxon, having advised the predecessor company on its $81 billion merger with Mobil in 1999.

Co-CEO J. Warren Gorrell, Jr., corporate partners Waajid Siddiqui and Elizabeth Donley, and corporate counsel Roberto Zapata are now leading a team from the firm working with Exxon Mobil on the sale of its Japanese retail and storage operations as the company focuses on the more lucrative businesses of oil exploration and development. The current transaction is expected to close in June.

Japanese firm Nagashima Ohno & Tsunematsu is serving as local counsel to Exxon Mobil, whose top in-house lawyer is general counsel S. Jack Balagia, Jr., appointed to the position in early 2010 after the retirement of predecessor Charles Matthews, Jr.

SandRidge Energy / Dynamic Offshore Resources

Oklahoma City–based oil and gas producer Sandridge Energy announced this week its $1.28 billion cash-and-stock acquisition of Dynamic Offshore Resources, a Houston-based company that owns and develops oil and gas reserves in the Gulf of Mexico.

Vinson & Elkins M&A partner James Hanna and tax partners David Peck and Shane Tucker are leading a team from the firm advising Dynamic Offshore on the deal. The firm also advised Dynamic Offshore, whose general counsel is Thomas Lamme, on its plans last year to raise $400 million through an IPO.

SEC filings last month show that legal fees and expenses related to the IPO, which has now been shelved with Dynamic Offshore's proposed sale to SandRidge, were $1.5 million.

Vinson also has a previous client relationship with SandRidge, having advised that company last year on its $500 million joint venture agreement with South Korea's Atinum Partners to drill for oil and gas in Oklahoma and Kansas. Sandridge general counsel Philip Warman is a former Vinson partner.

Warman's company turned to Covington & Burling for counsel on its proposed purchase of Dynamic Offshore. Covington, too, is no stranger to SandRidge, having advised the company in 2010 on its $1.55 billion acquisition of oil and natural gas explorer Arena Resources.

Covington M&A and private equity head Scott Smith, corporate partner Stephen Infante, finance partner John Gourary, capital markets partner David Engvall, federal offshore gas and leasing partner Steven Rosenbaum, tax partner Robert Heller, employee benefits partner Michael Francese, and antitrust partner James Dean, Jr., are leading a team from the firm advising SandRidge, which is putting up $680 million in cash to fund the deal.

AltaGas / SEMCO Energy

Alaska's natural gas utility is set to fall into Canadian hands with AltaGas's $1.1 billion takeover this week of SEMCO Energy, a Port Huron, Michigan–based subsidiary of energy investment firm Continental Energy Systems.

A team of lawyers from Cravath, Swaine & Moore, Detroit-based Miller, Canfield, Paddock and Stone, and Anchorage's Ashburn & Mason are advising Continental Systems, a Troy, Michigan-based utility holding company that provides natural gas to 900,000 customers in Alaska, Michigan, and New Mexico.

Dykema Gossett and Canadian firm Stikeman Elliott are advising Calgary-based AltaGas on the proposed transaction, which includes $335 million in SEMCO debt. Two members of AltaGas's management and board of directors, David Wright and M. Neil McCrank, have ties to Canadian firm Borden Ladner Gervais. McCrank, the former chair of the Alberta energy and utilities board, is now counsel with the firm. Dennis Dawson serves as general counsel of AltaGas.

The company's acquisition of SEMCO is expected to close in the third quarter of this year. SEMCO's general counsel is Peter Clark.

PT Dian Swastatika / United Fiber System

Latham & Watkins and Singapore's Stamford Law Group have landed lead roles on a $1.2 billion reverse takeover by Indonesian energy and infrastructure group PT Dian Swastatika, according to sibling publication The Asian Lawyer.

The deal calls for Dian Swastatika to sell its 67 pecent stake in coal mining subsidiary Golden Energy Mines to United Fiber System in return for $1.2 billion in new shares in United Fiber, giving it a 93 percent stake in the company.

The Asian Lawyer reports that Jakarta's Makes & Partners and Latham's Singapore office head Sin Chei Liang are advising Dian Swastatika on the deal. Susi Susantijo, an Indonesia law professor, serves on Dian Swastatika’s board. United Fiber has turned to Stamford and Jakarta’s LasutLay & Partners.

EIG Global Energy Partners / China Investment Corporation

China's $410 billion sovereign wealth fund, the China Investment Corporation (CIC), has agreed to purchase a minority stake in Washington, D.C.–based EIG Global Energy Partners. Terms of the deal, which was announced this week, were not disclosed.

Debevoise & Plimpton private equity and investment management partner Jennifer Burleigh, energy and natural resources cochair Maurizio Levi-Minzi, and tax partner David Schnabel are advising EIG on the transaction. Robert Vitale serves as general counsel for EIG, which is a leading institutional investor to the global energy sector with $9.5 billion under management.

Outside counsel to CIC were not immediately available by the time of this story. Gao Xiqing, vice chairman and president of CIC, once worked as an associate at former New York firm Mudge Rose Guthrie Alexander & Ferdon.

Energy Future Holdings

After posting a $1.9 billion loss in 2011, Dallas-based electric utility Energy Future Holdings (EFH) is planning a $400 million bond sale to repay intercompany debt, according to Bloomberg. EFH was known as TXU until 2007, when private equity firms KKR and TPG Capital took the company private in a $44 billion leveraged buyout, one of the largest in U.S. history.

Gibson, Dunn & Crutcher corporate partner Robert Little, who worked on that deal and joined the firm last year from Vinson, and Simpson Thacher & Bartlett corporate partner Edward Tolley and capital markets counsel Kirsten Davis are serving as cocounsel to EFH on a private placement of 11.75 percent of senior secured second lien notes priced at $800 million.

Robert Walters, a former general counsel for EFH and senior Vinson partner, left the company a year ago for Gibson, Dunn at the same time Little joined the firm. EFH in-house lawyers working on the private placement include associate general counsel Andrew Wright, senior counsel Greg Santos, and counsel Kelly Frazier. David Bonderman, a billionaire who cofounded TPG in 1992 and now serves on EFH's board, was once a partner at Arnold & Porter.

Shearman & Sterling capital markets partner Jason Lehner and counsel Harald Halbhuber are providing counsel to the initial purchasers.

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