Kilpatrick Stockton's Ben Barkley got the first draft of the merger agreement memorializing a planned $110 million acquisition of his client, EyeWonder Inc., by Limelight Networks Inc., at 6:30 a.m. on Thanksgiving Day.

“I thought this deal would go to Christmas Eve,” he says now, recalling that he spent hours at his cabin in the North Georgia mountains looking over the 100-plus-page agreement. His team got lucky: The deal closed on Dec. 21—just in time to free up the lawyers for the holiday weekend.

EyeWonder is a privately held Atlanta-based provider of interactive digital advertising technology. The company helps Forbes 2000 companies and smaller advertisers and publishers deliver and track video and various types of interactive ads. One of its products, according to a filing with the Securities and Exchange Commission, is a “pre-game ad product” which offers viewers an interactive video ad while they wait to play online games available on the Cartoon Network and Adult Swim.

Limelight, a public company based in Tempe, Ariz., offers a global infrastructure that allows users to bypass public Internet pathways and gain faster access to content.

The deal, which is expected to close in the first half of 2010, involves a $62 million cash payment, subject to EyeWonder's financial condition and closing, plus about 12.74 million shares of Limelight common stock. It also includes an earn out, Barkley said, which is increasingly common these days, providing that up to 4.86 million additional shares of Limelight common stock will be issuable in 2011 if EyeWonder achieves certain financial results in 2010.

Earn outs “have pretty much been in every M&A deal I've worked on in the last 12 months to two years,” Barkley said. “There's just a lot more perceived value gap out there.”

Barkley said one of the complicating factors of this deal was that EyeWonder had a handful of European subsidiaries that were not wholly owned. In order to move the deal along, he and his team spent a weekend rolling up the companies, working straight through from 9 a.m. on Sunday, Dec. 20, to 9 a.m. on Monday, Dec. 21. During that long day and night, he said, they held a shareholders' meeting at 10 a.m. German time—which was 4 a.m. for him in Atlanta, 2 a.m. for the buyer in Arizona and 1 a.m. for the buyer's attorneys at Wilson Sonsini in California.

“Anytime you have a transaction across that many time zones, the logistics and the hours are a challenge,” he said.

Barkley worked on the transaction with associate Jessica Nash, along with partners Lynn Fowler, Jerry Smith and Jennifer Schumacher.

Kilpatrick Stockton has represented EyeWonder since the company got start-up funding about a decade ago, Barkley said. A former Kilpatrick lawyer, Jerome F. “Romey” Connell Jr., is now EyeWonder's general counsel and chief operating officer, and he contacted Barkley for help with the deal.

“It was really kind of a high-energy deal,” Barkley said, adding that even though his team clocked a lot of hours in difficult negotiations, the Wilson Sonsini lawyers were such a good group that “It makes doing a transaction like that a lot of fun, even if it is 4 o'clock in the morning.”

Bill Rowland and a team of Jones Day lawyers just put the finishing touches on what's become an almost-unheard-of transaction these days: a private equity deal.

Rowland represented TorQuest Partners, a Canadian private equity fund manager, in its agreement to purchase a Brunswick, Ga.,-based refined wood rosin and natural wood terpenes business from a subsidiary of Ashland Inc. for about $75 million.

“The exciting thing for us is to see some activity in the market,” said Rowland. “It's a private equity buyer, and there's acquisition financing. Those are good signals for a return to health in the market. … Private equity in general has been very quiet.”

This transaction, which is expected to close in about 60 days, involves $60 million in cash and a $15 million note from the buyer, payable over time, which Rowland said essentially functions as seller financing and will serve as security for any post-closing claims, and will help bridge any valuation gap.

That valuation gap—not uncommon in today's market, where businesses sell for less than their actual or perceived value—comes into play here because the wood rosin business, owned by Covington, Ky.-based Ashland's subsidiary, Hercules Inc., generated revenues of about $85 million in fiscal year 2009.

The business, which will be called Pinova once the transaction closes, is touted as the world's only supplier of wood rosin, which is used in a variety of applications in the adhesives, construction, beverage, personal care and agriculture markets.

Rowland said that Ashland acquired the wood rosin business when it purchased Hercules about a year ago. “Ashland was looking to dispose of nonstrategic business lines that they inherited when they bought Hercules,” he said. “Hercules had previously disposed of other parts of its rosins business, and coincidentally we were involved in that [sale representing] Eastman Chemical.”

Jones Day lawyers handled a variety of issues for TorQuest, including antitrust advice, employment, corporate, tax and transactional work. A big part of the deal, he said, involved representation by the firm's environmental team.

“The kindest way to put it is, it's a very messy site; it's an old chemical site with a wide range of issues,” Rowland said. TorQuest, he said, particularly as a financial buyer looking to build the business and then sell it in a few years, was concerned with understanding and resolving environmental issues.

The other challenges of the deal, he said, were the typical ones that arise when a business and assets are carved out of an entity that is not a free-standing corporation.

TorQuest also was represented in the deal by Canadian law firm Stikeman Elliott. Ashland was represented by its in-house counsel. Other Jones Day lawyers who worked on the deal included TorQuest's longtime environmental counsel, Charles Perry, as well as partners Scott Specht, Mike Lee, Doug Gosden and Tim Bratcher; of counsel Chris Morgan, Elaine Rogers Walsh and Arthur Kent; and associates Casey Fernung and Sarah Watts.

Sea Launch Co., a bankrupt Boeing subsidiary that propels into space rockets carrying private payloads, on Dec. 3 landed court approval for $12.5 million in debtor-in-possession financing.

The company, represented by debtors' counsel Dennis J. Connolly and Matthew W. Levin at Alston & Bird and attorneys from Young Conaway Stargatt & Taylor in Wilmington, Del., filed an emergency motion for DIP financing with the U.S. Bankruptcy Court for the District of Delaware, claiming that it needed $5 million immediately to continue operations. Sea Launch, which is based in Long Beach, Calif., and has launched the “Rock,” “Roll” and “Rhythm” satellites for XM Satellite Radio as well as satellites serving entities including DirecTV and NATO, sought authority to borrow $25 million, but presented the court with a negotiated commitment for $12.5 million.

It's not easy to get DIP financing these days, and Connolly credited investment bank Jefferies & Co. with conducting a global search for the money. The lender, whose principal investors are financial entities and players in the space and telecommunications industries, is Houston-based Space Launch Services. It was represented by attorneys from Baker Botts and Edwards Angell Palmer & Dodge. Boeing, which is a guarantor on some of the loans, is represented by Richards, Layton & Finger.

Bankruptcy Judge Brendan L. Shannon approved the $12.5 million loan, writing that Sea Launch may use the money to fund operating expenses, working capital, transaction fees associated with the loan and professional fees and expenses—including legal fees—subject to court approval and not exceeding $350,000 per month in the aggregate.

Shannon also noted in his order that the debtors were unable to obtain unsecured credit, or secured credit at better terms, elsewhere.

That's not surprising, given Sea Launch's financial state. The company reported in its bankruptcy petition and other documents liabilities in excess of $1 billion and assets that were less than $500 million.

According to an affidavit filed early in the bankruptcy by Sea Launch's chief financial officer, the company owes Boeing more than $760.8 million; Boeing's most recent 10-Q, filed with the Securities and Exchange Commission in October, indicates that Boeing has recourse to $971 million in receivables from Sea Launch and its partners. Sea Launch also racked up an additional $119 million in cost overruns during its development phase, among other debts.

Another factor pushing the company to reorganize, according to the court file, is a failed launch, which took place in January 2007 when an accident destroyed a rocket and a Dutch telecommunications satellite before they even left the launch pad. That unsuccessful launch delayed other scheduled launches, costing the company money and customers.

The customer on the failed launch, Hughes Network Systems, demanded a refund of its advance payments and interest. This spring, a panel of arbitrators concluded that Sea Launch owed Hughes $52.3 million. Connolly said Hughes filed to confirm the arbitral award in superior court in California, but that action is stayed during the pendency of the bankruptcy litigation.

With debts looming, Sea Launch filed for Chapter 11 reorganization in June, and asked the court for DIP funding in November.

The commitment letter and the term sheet for Sea Launch's DIP facility, which are exhibits in the court file, show that this is a super priority priming secured term loan, meaning that its repayment takes precedence over Sea Launch's other secured debts. The interest rate is based on a minimum 3 percent London Interbank Offered Rate, or LIBOR, plus 300 basis points, and Sea Launch will pay a closing fee of 2 percent. If at some point the company elects to get credit from another lender instead of completing its commitment with Space Launch Services, it will pay a break-up fee of $250,000.

Connolly said his client expects to receive the remaining $7.5 million in DIP financing within the next 30 to 60 days. He said the search is on for more funding.

“This is a unique debtor,” he said. “There really isn't another provider quite like it in the world.”

Mentioning the specialized skill sets necessary to operate the business, not just from a scientific standpoint but from the perspective of dealing with multinational treaty obligations related to Sea Launch's peaceful use of rockets that possess weapons-potential technology, he added, “I think there will be interest among equity players because there's an amalgam of assets that isn't easily replaceable and has a value that will be of interest. The challenge is figuring out how to translate that into a financing structure.”

Sea Launch was founded in 1995 by Boeing Commercial Space and Communications, Norwegian investors and corporations owned by the governments of Russia and Ukraine. The company was designed as a private, low-cost alternative for launching satellites, most of which, at that time, were launched out of government facilities with long waiting lists.

To date, the company has completed about 30 launches, including one for Georgia-based Intelsat on Nov. 30. The launches either take place from a land-based launch pad at a space center in Kazakhstan or from the Odyssey, a huge, sea-based, floating launch pad at the equator (satellites launched at the equator get the biggest boost from Earth's rotation and travel the shortest route into orbit).

But the economy has changed since the company's founding in the go-go mid-1990s.

“The debtors are actively pursuing launch opportunities with numerous customers,” Brett A. Carman, Sea Launch's vice president and chief financial officer, said in an affidavit filed with the court. “However, the Debtors' operating results have been negatively impacted by the worldwide economic recession, a glut of available launch slots operated by competitors, and the Debtors' precarious finances.”

Two Miller & Martin partners closed two management buyouts recently for separate clients—both of whom purchased assets related to the same bankrupt company.

One of those partners, A. Josef DeLisle, said that he wishes he could call the dual transactions the result of marketing brilliance but admitted the truth is closer to “blind luck and someone unloading a whole lot of assets.”

That someone is Glen Allen, Va.-based LandAmerica Financial Group Inc., and its related entities. LandAmerica, which underwrites title insurance and handles other real-estate-related business, saw revenue decline 40 percent between 2006 and 2008 when the real estate and credit markets crashed. The company filed for Chapter 11 reorganization in U.S. Bankruptcy Court for the Eastern District of Virginia in November 2008.

“LandAmerica had several loser companies, but they also had some profitable lines of business that were caught up in the bankruptcy,” said Joseph R. Delgado Jr., the other Miller & Martin partner.

In both Delgado's and DeLisle's deals, the management teams at LandAmerica or its subsidiaries found financing and bought the companies for which they had worked.

For DeLisle's client, the purchase process was a long one. DeLisle said Revell Fraser, then the president of LandAmerica Home Warranty Co. and LandAmerica Property Inspection Services, called him a year ago to discuss buying the companies for which he worked. By January, DeLisle had helped Fraser form his own company, Buyers Protection Group, and connect with investment bankers at Croft & Bender, who in turn found financing for the deal through The Stephens Group.

By March, DeLisle's client was going through the process necessary to become a so-called stalking horse bidder. A stalking horse bidder is one chosen by the bankrupt company from a pool of other contenders that—in exchange for some downside protections if it doesn't tender the winning bid—launches bidding on the asset at an agreed-upon starting price, effectively protecting the seller from lowball offers.

By early April, LandAmerica and Buyers Protection Group had inked a definitive agreement. An auction was held in May, DeLisle said, and the time between May and November was spent waiting on regulatory approval of the sale from the California Department of Insurance.

After an initial bid of about $10 million, DeLisle said, his client has agreed to pay $12.2 million for the stock of both companies, with a purchase-price adjustment that's still in process. The deal closed Nov. 30.

Delgado's deal was smaller and quicker. In mid-September, he said, he got a call from client UnitedTech Lender Services, saying there was an opportunity to help facilitate a transaction. By early October, UnitedTech, which served as the financial conduit for a management buyout group, had closed the deal for $2.8 million in cash. UnitedTech purchased LandAmerica OneStop, a financial group which acts as trustee holding title to foreclosed properties, and BackInTheBlack, a technology platform that services defaulted loans.

Debtors' counsel Willkie Farr & Gallagher represented the LandAmerica entities in both deals.

A new joint report from J.P. Morgan and Thomson Reuters examines which industry sectors are likely to see increased mergers and acquisitions activity as world economies begin to emerge from the recession.

The report, called “Deal making in high definition,” identifies four primary areas it says are likely to experience M&A growth: consumer durables and apparel; telecommunications, media and technology; insurance; and food, beverages and tobacco.

The consumer durables and apparel sector has seen 12 months of earnings per share growth of more than 113 percent, with strong convertible and corporate bond issuance, the report said. It also noted that corporate bond issuance in the media sector during the first nine months of the year already exceeds volumes from the last two years at $40.8 billion—almost double 2008 figures. Earnings in the information technology sector, according to the report, are expected to grow by 36 percent over the next year with emerging Asia and developed Europe offering the best prospects. And the insurance sector, the report said, is likely to see regulatory changes that will promote consolidation.

The report is available at Online.thomsonreuters.com/DealsIntelligence/. The site requires free registration.

Hunton & Williams partners G. Roth Kehoe II and David R. Yates have spent so much time in Connecticut recently that they joke about being entitled to vote there.

The lawyers, who have spent about 18 months putting together a public-private concessions deal that will involve investment of about $178 million, may one day be able to enjoy the fruits of their labors in the form of a full tank of gas, a meatball marinara sandwich from SUBWAY or a cup of coffee and a chocolate glazed from Dunkin' Donuts when driving Connecticut's highways.

That's because the deal gives Hunton's client, Project Service LLC, the right to redevelop, operate and maintain 23 highway service areas across the state for a 35-year term in exchange for bankrolling all improvements and renovations. The transaction includes a revenue-sharing agreement with the state, and what Kehoe describes as other “minimum payments” from Project Service to the state throughout the life of the agreement.

Project Service is a joint venture comprised of private equity firm The Carlyle Group; Doctor's Associates Inc., the parent company of SUBWAY Restaurants; and SubCon Inc., the development company for SUBWAY in Connecticut and New York, which serves as franchisee for some 400 SUBWAY locations.

Kehoe said the state, which was represented by Connecticut law firm Halloran & Sage, issued requests for proposals for the project in July 2008. His client was chosen as the preferred bidder, and began negotiations with the state this spring. The parties struck a deal in mid-November.

Previously, Kehoe said, the state ran the service areas itself via contracts with ExxonMobil and McDonald's but wanted to upgrade its facilities, which were built in the 1940s and 1950s, and increase food and fuel offerings. The service areas that come under the agreement are spread along Interstate 95, which is the Connecticut Turnpike; I-395 and State Route 15, also known as the Wilbur Cross and Merritt Parkways.

“The state was very excited and creative in deciding that it wanted a single contractor to deliver the entire package,” Kehoe said, adding that while other states have entered similar public-private concessions agreements—including Florida and Massachusetts—Connecticut's is unique because of the large-scale redevelopment handled by a single provider.

Kehoe said the economy, which has taken a toll on many states' coffers as tax revenues have fallen, is influencing states to consider public-private partnerships instead of the bond deals they might otherwise do. “I think there are a lot of states that are giving careful thought to monetizing assets in ways that would ultimately improve service for their users,” he said.

For example, the Georgia Department of Transportation is slated to hold a forum today to give members of the transportation industry a comprehensive overview of the state's new Public Private Partnership program, known as P3, which is likely to focus on road construction and toll projects.

While Georgia has a statute governing public-private partnerships, Kehoe and Yates said Connecticut does not. “That actually makes things a little more challenging,” Kehoe said. “The [public-private partnership] statutes can be somewhat limiting, but they also give you a clear avenue in terms of how things should come together.”

In the absence of such a statute, he said, lawyers have to create their own structure for the deal, looking at procurement laws and hypothesizing about how various parts of the transaction should work under different scenarios.

Public-private partnership projects can be politically charged. Connecticut State Sen. Andrew McDonald has called for a financial analysis of the Project Service contract. A lease deal involving the Pennsylvania Turnpike that was supported by Gov. Ed Rendell died when the Legislature, which opposed the plan, failed to act on an outstanding bid.

But Yates said that as more public-private partnerships like this happen and succeed, “It's just going to become more and more comfortable … and there won't be as much resistance from a political standpoint.”

Also, he pointed out, there's a lot of benefit to be gleaned from public-private partnerships. For example, Connecticut's governor, M. Jodi Rell, has estimated that the benefit her state will gain over the life of the Project Service contract will be nearly $500 million.

Richard H. “Rick” Miller of Bryan Cave-Powell Goldstein came to his office one day in October to find his schedule completely blank.

Then the phone rang, and for the next month he was busy helping a health care real estate investment trust with an $860 million, three-part securities purchase agreement to acquire more than 140 long-term care facilities.

His client, Omega Healthcare Investors Inc. of Hunt Valley, Md., will purchase the net lease portfolio of CapitalSource Inc., a commercial lender based in Chevy Chase, Md. Omega is slated to pay for the deal with $280 million in cash, $51 million in Omega stock and the assumption or payoff of $529 million in debt.

Miller, whose firm has represented Omega for about two decades, said the deal happened because his client managed its balance sheet conservatively through the recent economic slump and has very little debt, which includes a $200 million revolving line of credit with only $9 million outstanding.

The deal, he said, moved very quickly—so quickly that its genesis caught him off guard. Miller said that on Oct. 14, he closed the case file on governance-related work for the estate of Martin Luther King Jr. prompted by the fight between the civil rights leader's children.

On Oct. 16, he said, “My phone rings. It's Taylor Pickett, CEO of Omega.” Pickett, he said, told him, “'I'm thinking of doing a deal. Do you have time for me?'

“We just launched headlong into this thing,” Miller said. Within 10 days, they'd gotten board approval of a letter of intent for the CapitalSource asset acquisition and were beginning a due diligence review of hundreds of thousands of pages of documents.

Miller said his multi-disciplinary team, which included Eliot W. Robinson, Frank A. Crisafi, Robert C. Lewinson, Joan R. Sasine and Matthew P. D'Amico, handled negotiations, environmental issues and document drafting—including some 90 pages of a single-spaced securities purchase agreement that Miller characterized as “one of those agreements that when you have to revise it, you couldn't revise it in less than six hours.”

CapitalSource was represented by its in-house counsel and outside lawyers at Hogan & Hartson.

The parties announced a final agreement Nov. 17, and Miller said one of the factors helping speed the transaction was that both sides wanted to “keep to the middle of the fairway” and not push the other too much in negotiations.

“That may be a new trend,” he said.

The deal essentially involves Omega buying the stock of the CapitalSource subsidiaries, which are leased to companies that operate them. Michigan lawyer Mark E. Derwent of Doran Derwent in Grand Rapids handled all the leasing work, and Wells Fargo Securities served as adviser to CapitalSource.

Miller said the transaction will involve three closings.

The first, a core portfolio of 40 unencumbered assets, is set to close in late December; the second, which includes 40 assets subject to U.S. Department of Housing and Urban Development regulations and indebtedness, is expected to close in April, once required HUD approvals have been secured. The third part of the deal gives Omega the option to close on an additional 63 facilities any time up until Dec. 31, 2011.

The advantage of the option, Miller said, is that Omega has two years to find the best way to finance that part of the deal. “It's completely reversed the competitive pressure,” he said, explaining that Omega now can get investment bankers to bid for its business instead of scrambling to find financing with a contingency provision hanging over their heads.

Because Omega likely will tap into the capital markets and register shares to complete the three parts of the deal, Miller said his firm's work will be ongoing.

Noting that he billed 110 hours on this deal in a 168-hour week, Miller said, “Thank goodness we got it done before Thanksgiving.”