June 2, 2011 6:50 PM

Skadden, Weil Advise on Private Equity Bank Investments

Posted by Brian Baxter

Two top Am Law 100 firms have taken lead roles on a pair of notable banking deals this week.

Skadden, Arps, Slate, Meagher & Flom financial institutions cohead William Rubenstein, financial institutions regulatory and enforcement head William Sweet, Jr., financial institutions partner Brian Christiansen, and tax partner Stuart Finkelstein are advising Miami Lakes, Fla.-based BankUnited on its $71.4 million acquisition of New York's Herald National Bank. BankUnited's general counsel is Jeffrey Starr.

While small in size, the deal, which should be completed by the fourth quarter of this year, represents the latest chapter in the recent turbulent history of BankUnited.

Rubenstein, Sweet, and a team from Skadden previously advised on a groundbreaking deal two years ago that helped predecessor BankUnited Financial, then the eighth-largest bank in Florida, survive after it was seized by the Office of Thrift Supervision and turned over to the Federal Deposit Insurance Corporation.

The failure of BankUnited was one of the biggest bank busts of 2009, and reportedly cost the FDIC's insurance fund $4.9 billion, before it was subsequently sold off to a consortium of private equity investors. The new ownership group--led by The Blackstone Group, The Carlyle Group, and W.L. Ross, a holding company controlled by distressed investor Wilbur Ross, Jr.--put former North Fork Bancorp executive John Kanas in control and injected $900 million in capital to help turn the bank around. (Simpson Thacher & Bartlett advised Blackstone and Carlyle on the deal, while Wachtell, Lipton, Rosen & Katz took the lead for W.L. Ross.)

Skadden advised BankUnited earlier this year when it raised $780 million through an initial public offering. SEC filings show BankUnited's estimated legal bills and expenses related to the IPO to be $2.5 million. Bank estimates put the amount paid in legal fees and expenses between 2007 and May 2009 for work related to "loan closing, foreclosures, litigation, corporate, and other matters" at $15.2 million, according to SEC records.

The acquisition of Herald National, which opened in 2008, gives BankUnited a presence in the New York market. Herald National has three branches in Brooklyn, Manhattan, and Melville, N.Y., where it manages $501 million in assets. According to a Herald National press release, the bank is represented on the BankUnited acquisition by Luse Gorman Pomerenk & Schick, a 21-lawyer firm based in Washington, D.C.

Also this week, private equity firm Thomas H. Lee Partners announced a $180 million investment in Santurce, Puerto Rico-based First BanCorp. The deal gives Boston-based THL a 24.9 percent ownership stake in the bank--the largest amount permissible under U.S. law. First BanCorp has 50 branches in Puerto Rico and owns more than 20 other banks throughout the U.S. and Caribbean.

Weil, Gotshal & Manges corporate partners James Westra and Marilyn French and tax partners Jared Rusman and Amy Rubin are representing THL on the deal. Westra, the cohead of the firm's private equity group and the managing partner of its Boston office, is a longtime legal adviser to THL. Weil senior corporate counsel Charles Robins helped THL namesake Thomas Lee start a predecessor company in Boston more than 30 years ago. (THL's current general counsel is Shari Wolkon.)

A spokesman for First BanCorp did not immediately respond to a request for comment on the bank's legal advisers. SEC filings by the bank show that K&L Gates securities partner David Bernstein and Puerto Rican firm Martinez Odell & Calabria are advising First BanCorp on the investment by THL. Martinez Odell senior partner Lawrence Odell serves as general counsel for First BanCorp.

SEC filings also show that Davis Polk & Wardwell financial institutions partner John Douglas is advising THL on its purchase of common stock in First BanCorp, which is seeking to raise at least $500 million in capital, according to The Associated Press.

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