Two locally connected firms, Jones Day and DLA Piper, snagged the top two spots in Thomson Reuters’ most recent Mergers & Acquisitions Review, which ranks legal advisers by number of deals completed worldwide this year.

Jones Day closed 165 deals in the first six months of the year, though that’s one fewer than the firm closed during the same period in 2009.

DLA Piper came in at 102 deals, 25 fewer than during the same period last year.

No other Atlanta-connected firms made the worldwide completed deals list, although Alston & Bird got a toehold on the bottom of a ranking of announced—as opposed to completed—U.S. deals. The firm came in 23rd of 25 firms on a list of most deals in which either the target or the acquirer was U.S.-based, handling 13 deals—14 fewer than last year. Despite the smaller volume, that ranking represented a leap up the ladder for Alston, which was ranked 41st in the same category in 2009. Jones Day ranked 10th on the same list, with 92 deals completed, nine fewer than last year.

The Thomson Reuters review also examines, among other things, the growth or decline of overall worldwide mergers and acquisitions. According to their analysis, the value of deals in the first half of 2010 totaled $1.1 trillion, a more than 9 percent increase from first half 2009 levels. The number of deals rose nearly 4 percent, with more than 19,000 announced.

Deals involving companies in emerging markets accounted for nearly one-third of the total value of transactions, with the energy and power industry the most active sector. Private equity M&A more than doubled, accounting for about 7 percent of the value of deals done.

Finally, the report looked at the biggest pending worldwide deals so far this year. Number five on that list was the announced union of The Coca-Cola Co. and Coca-Cola Enterprises North America, valued at $13.4 billion. Firms handling that deal are Skadden, Arps, Slate, Meagher & Flom, Cleary Gottlieb Steen & Hamilton and Wilson Sonsini Goodrich & Rosati for Coca-Cola; Cahill Gordon & Reindel for CCE. McKenna Long & Aldridge partners Clay C. Long, F.T. “Tread” Davis Jr. and David Brown are representing a special committee of CCE’s directors.

No Atlanta outside counsel were in on the action when Mirant Corp. and RRI Energy decided to merge, according to an e-mail from Mirant’s general counsel, Julia Houston.

On Sunday, the companies announced their intent to unite in a $1.6 billion stock-swap, tax-free deal to create GenOn Energy.

Mirant, a Southern Co. spinoff which in the past has been represented for various reasons by lawyers from local firms including King & Spalding and Alston & Bird, chose Wachtell, Lipton, Rosen & Katz as its counsel. RRI, based in Houston, was represented by Skadden Arps Slate Meagher & Flom.

A new Thomson Reuters report which analyzes deal activity in the first quarter indicates that although the number and value of deals is rising, only a few Atlanta-connected firms are even claiming a spot on transactional league tables.

First, the (mostly) good news: The value of worldwide mergers and acquisitions activity between Jan. 1 and March 31 rose 21 percent over the same period in 2009, totaling $573.3 billion, according to the report. Deal value still declined about 5 percent, however, between the fourth quarter of 2009, which saw $602.5 billion in deals, and the first quarter of 2010.

The number of announced deals—more than 9,000—rose 4 percent compared with last year.

The busiest firms working on worldwide announced deals include No. 1-ranked Cleary Gottlieb Steen & Hamilton, with 26 deals valued at $114.8 billion. Jones Day is the only locally connected firm on the list, with 95 pending deals valued at $18.2 billion.

Cravath, Swaine & Moore ranked No. 1 on deals completed during the first quarter, handling 12 valued at $84.7 billion. Again, Jones Day was the only locally connected firm, coming in at No. 21 with 95 deals valued at $22.9 billion.

Atlanta-connected firms fared better on lists focusing on work done or pending in the Americas. Alston & Bird, DLA Piper, Jones Day, McKenna Long & Aldridge and Sidley Austin all made lists of firms involved in U.S. or Canadian deals, though none took a top spot in terms of deal value.

In the European rankings, Greenberg Traurig snagged the No. 2 spot among firms handling Spanish deals; DLA Piper, Hunton & Williams, Jones Day, McKenna and Sidley Austin also made the European rankings.

Jones Day made several lists of firms handling Asia-connected deals. The firm, along with DLA Piper and Sidley Austin, also landed on lists of firms handling deals in Japan, Australia and New Zealand.

You can view the full report at Thomson Reuters.

Card-and-party-supply store Swoozie's has been sold at auction for $2 million more than a stalking horse bidder had offered for the bankrupt company.

At an auction held in a conference room at the offices of Swoozie's counsel, Alston & Bird, Northbrook-Ill.-based Hilco Merchant Resources in-house counsel Joseph A. Malfitano tendered the winning bid of $7,425,000 to purchase Atlanta-based Swoozie's.

Hayden Kepner Jr. of Scroggins & Williamson represented the stalking horse, Newton, Mass.-based Hudson Capital Partners, which had posted a starting bid of $5,435,000. The inventory, according to court records, was valued at about $18.4 million.

A stalking horse bidder is one chosen by a bankrupt company from a pool of 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. Attorneys involved in the deal said that stalking horse bidders get outbid roughly 30 to 50 percent of the time.

Kepner said Hudson Capital got a breakup fee of $75,000 since it did not end up buying Swoozie's. He said he was surprised that his client didn't win the day, but he knew competition would be stiff because there were several other bidders—Gordon Brothers Group/Gordon Brothers Retail Partners and Great American Group, in addition to Hilco—all of which are major liquidators.

"There's not a lot of liquidations going on in a lot of retail chains, so you had a lot of competition for this one" simply because liquidators were looking for something to do, he said. "The price was significantly higher than we thought it would go. It's good for the creditors, but it doesn't do the debtor much good."

The company's largest secured creditor, Wells Fargo, is owed more than $3 million, Kepner said.

The winning liquidator, Hilco, on Tuesday launched "Going out of business" sales at 43 Swoozie's stores around the country. Five of those stores are in the Atlanta area. Under the terms of the agreement, Hilco may supplement Swoozie's existing inventory, but 75 percent of the new items must come from Swoozie's usual vendors.

During the auction, Kepner said, the bidders established specific bidding procedures and a bidding order and agreed to make bids in $100,000 increments. After that orderly beginning, he said, an auction becomes "pretty free flowing," with bidders attempting to tailor contract terms to their liking. In this auction, for example, his client wanted to purchase Swoozie's intellectual property—including its name and customer lists—and its lease designation rights. Winning bidder Hilco did not purchase those assets, which the court record indicates will be sold separately.

Kepner said the sale was structured essentially as an agency agreement. Hilco, he said, did not actually buy the inventory because it couldn't do so legally.

"The landlord is going to have all sorts of prohibitions on somebody else coming in and selling things other than the tenant," he said. "So legally they enter into an agency agreement where the liquidator acts as an agent for the tenant to sell the stuff, and they guarantee a certain fee, which conceptually is the same as buying all the inventory at a certain price, but technically they're not taking ownership of it."

If sales get above a certain level, he said, some of the proceeds will be shared with the debtor.

The auction process itself was a calm one, Kepner and Malfitano said, with Swoozie's financial adviser, Clear Thinking Group, running the process.

"There's not somebody who's standing up there doing the patter," Malfitano said. He said the auction got started at about noon and ended around 6 p.m. on March 25. U.S. Bankruptcy Judge C. Ray Mullins approved the sale on Tuesday.

Swoozie's counsel at the auction, Wendy R. Reiss of Alston & Bird, did not return calls seeking comment. The official committee of unsecured creditors was represented by Darryl S. Laddin of Arnall Golden Gregory.

The auction took place only 23 days after Swoozie's filed for Chapter 11 reorganization on March 2. John W. Mills III of Barnes & Thornburg, who did not attend the auction but served as outside counsel to winning bidder Hilco, said people have been asking him why the sale moved so quickly.

"Easter is coming, Mother's Day, Father's Day, high school and college graduations, weddings," he said, noting big sales opportunities for Swoozie's products. "That's what drove the sale and why it was done on this timetable."

Swoozie’s Inc., the bankrupt Atlanta-based purveyor of paper products, party supplies and gifts, has found a stalking horse bidder which could purchase its assets at auction with a starting bid of $5.34 million.

The stalking horse, Newton, Mass.-based Hudson Capital Partners, is one of more than 40 strategic, going-concern and liquidation buyers—including Books-A-Million and Tiger Capital—that Swoozie’s courted in its search for a way out of its financial difficulties.

That’s according to recent filings in Swoozie’s Chapter 11 reorganization case in U.S. Bankruptcy Court for the Northern District of Georgia.

Swoozie’s, which lists debts between $10 million and $50 million and assets of less than $10 million, is represented by Dennis J. Connolly, Wendy R. Reiss, William S. Sugden and Sage M. Sigler at Alston & Bird. Hudson Capital is represented by J. Hayden Kepner Jr. at Scroggins & Williamson. 

Court documents show that Swoozie’s is slated to hold the auction on March 25. Time is of the essence, because U.S. Bankruptcy Judge C. Ray Mullins has approved up to $3.5 million in debtor-in-possession financing from Wells Fargo that matures on April 15. That loan is in default, according to court documents, if a sale hearing is not held by March 29.

Founded in 1999, Swoozie’s grew to 43 stores around the country, but got into trouble after it purchased 13 stationery-and-party-products stores known as Blue Tulip out of bankruptcy about a year ago. Swoozie’s predicted an additional $12.8 million in sales as a result of the acquisition—but actual sales came up more than $4 million short, according to bankruptcy filings. Then, a “seismic shift in the economy” and a delay in closing a $3.1 million loan from Wells Fargo, according to court documents, prompted the company to file for bankruptcy.

Court documents contemplate that other bidders may bump Hudson Capital out of the running in the proposed Section 363 sale. If that happens, an agency agreement provides for a $75,000 break-up fee.

Other lawyers involved in the deal include Darryl S. Laddin and Michael F. Holbein at Arnall Golden Gregory as counsel to the Official Committee of Unsecured Creditors; James S. Rankin Jr. at Parker, Hudson, Rainer & Dobbs for Wells Fargo; and Mark I Duedall at Hunton & Williams for interested parties Gordon Brothers Group and Gordon Brothers Retail Partners.

The case is In re: Swoozie’s Inc., No. 10-66316.

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.”

As Shakespeare noted, the course of true love never did run smooth. The same, it seems, could be said about going-private transactions.

Earlier this month, Allion Healthcare Inc., represented by Alston & Bird partner Steven L. Pottle, agreed to be acquired in a going-private transaction valued at approximately $278 million.

The Melville, N.Y.-based Allion, a provider of specialty pharmacy and disease management services focused on HIV/AIDS patients, is slated to be sold to an affiliate of HIG Capital, a private investment firm with offices throughout the U.S. and Europe, for about $199 million, plus $79 million in assumed debt.

But just two days after that agreement was announced, on Oct. 20, New York law firm Levi & Korsinsky filed a putative shareholders’ class action against Allion in the Supreme Court of Suffolk County, New York. The supreme court is a state trial court.

The action alleges, among other things, that the price to be paid to holders of Allion  common stock is “unfair” because the company is “poised for growth” and its shares are trading at a “huge discount to its intrinsic value.” The purchase price in the sale agreement, $6.60 per share, represents a 30 percent premium over the average price at which the shares traded in the five days preceding the going-private announcement, according to information from Allion. 

The suit also alleges, among other things, that the agreement contains a “no shop” provision prohibiting the members of Allion’s board from soliciting competing proposals.

At least two other law firms and a San Diego-based advocacy group, the Shareholders Foundation, Inc., are investigating the agreement.

Pottle called the suit “baloney.” He said it was a standard, plaintiffs’ lawyers’ class action strike based only on information in a press release, given that Allion has not yet filed its proxy.

He said his partner, securities litigator Scott P. Hilsen, will represent Allion in the suit.

Pottle said he did not expect the litigation to delay closing, calling this type of action “fairly customary in a going-private transaction.”

Closing is expected to occur in the first quarter of 2010, subject to regulatory, antitrust and shareholder approvals. The holders of about 41 percent of Allion’s outstanding shares of common stock have signed agreements with HIG to vote in favor of the merger; the company must garner the approval of the holders of a majority of the outstanding shares in order to close the deal.

Pottle said he helped advise the board and a special committee about the sale and their fiduciary duties; he also negotiated the deal. He said he first connected with Allion when he represented the company’s underwriters, Thomas Weisel Partners Group, in Allion’s initial public offering in 2005, and then in a follow-on offering a year later.

In 2008, he said, he represented Allion in what amounted to a “merger of equals” with Biomed America Inc. The transaction was valued at $99.4 million.

In the current deal, Pottle said senior and mezzanine debt financing already have been committed to fund HIG’s purchase of Allion.

HIG, which has some $7.5 billion in capital under management, was represented by Kirkland & Ellis. Raymond James & Associates, which served as financial adviser and dealt with possible strategic partners, was represented by Morrison & Foerster.

Invesco, Ltd., the Atlanta-based global investment management company, announced plans to acquire Morgan Stanley’s retail asset management business in a deal valued at $1.5 billion.

The transaction, which will include the acquisition of Van Kampen Investments, will be financed with cash and stock providing Morgan Stanley with a 9.4 percent equity interest in Invesco.

Invesco was represented in the transaction by attorneys from Wachtell, Lipton, Rosen & Katz.

An Invesco spokesman said no Atlanta firms or lawyers worked on this deal.

The next time Alston & Bird partner William H. Hughes flips on a light switch in a hotel room in China, where he travels on business, the electricity illuminating his room may come from a clean-coal project he helped set in motion.

In a project that will implement the first commercial use of a technology that allows the production of low-emission coal-based electricity and carbon capture and sequestration, Hughes represented Chinese client Beijing Guoneng Yinghui Clean Energy Engineering Co. in its licensing and engineering services contract with U.S.-based KBR Inc.

The technology, called Transport Integrated Gasification, or TRIG, was developed by Southern Co., KBR Inc. and other partners, including the U.S. Department of Energy, at a DOE facility operated and managed by Southern Co. in Wilsonville, Ala.

The deal involves two power plants. One, a 120-megawatt plant that burns diesel, will be retrofitted to produce gasified coal and will have the capacity to serve 700,000 Chinese homes. The other plant, which will be built on an undeveloped site, will serve some 4 million Chinese homes with its 800 megawatt capacity. The new plant will use Integrated Gasification Combined Cycle, or IGCC, technology to take carbon-containing fuels such as coal or biomass and gasify them.

Once the gas exists, Hughes said, the technology will extract the CO2 from it. “You then can burn the gas to fire a gas-fired turbine and use the waste heat to fire a steam turbine,” Hughes said. “You get very, very efficient use of your fuel because you have these two different cycles of power generation and you can get down to virtually carbon-free emissions if you extract the CO2” and if other flue gases such as sulfur, mercury and nitrogen dioxide are removed.

The plants will be built in Dongguan, a city of 8 million in the Southern Chinese province of Guangdong, which is part of the Pearl River Delta, a well-known manufacturing district.

“It's just filled with factories, most of which have been built in the last 10 or 15 years,” Hughes said, explaining that those factories tend to have individual coal-fired boilers or on-site diesel generators.

“Air pollution really is a serious problem,” said Hughes, who worked on the deal with Atlanta partner David C. Keating and associate T. Timothy Wang, as well as lawyers and consultants from the firm's Washington office. “You go to a manufacturing center like Dongguan and I think the air is similar to what you had in Pittsburgh or Birmingham, Alabama, in the 1950s and '60s. There's just a pall that hangs over the place.”

The area not only needs to clean up its air, he said, it also has an inadequate power supply and needs to ramp up electricity production.

Because of those problems, Hughes said the Chinese government lent its support to the deal. Such support is consistent with a speech President Hu Jintao gave to the United Nations in September, in which he discussed China's commitment to cutting its carbon dioxide emissions per unit of gross domestic product by a “notable margin” by 2020, and its intent to “step up” the country's efforts to establish a green economy. Hughes also pointed out that one of the country's motivators is to develop technology it can export.

He said he flew to China in August to put the deal together, spending four days with 40 to 50 other people in a large meeting room at a hotel, participating in negotiations that took place in a mix of English and Chinese.

One of the major cultural aspects of getting the deal done, he said, was sharing mealtimes with the other participants. He recalled one typical South China country-style dinner at a restaurant in Dongguan where diners were seated at large tables with Lazy Susans in the center. The meal, he said, was delicious and involved lots of seafood and vegetables with the trademark “umami,” or Chinese protein-type flavoring reminiscent of mushrooms or a good steak, and “a whole roast chicken on a plate kind of looking you in the eye as it came around.”

Then, he said, he returned to the United States and, with in-house lawyers for KBR, put everything in writing before his Chinese clients flew over to sign the papers in one of Alston & Bird's conference rooms. The transaction is governed by U.S. law.

The deal, he said, went smoothly thanks in part to the support of the Chinese government. “When the central government decides to do something,” he said, “it typically gets done.”

When auto parts supplier Visteon Corp. filed for Chapter 11 reorganization, the company knew it wouldn't be able to continue to pay the hourly rates charged by its pre-petition patent enforcement counsel, Alston & Bird.

Alston & Bird, for its part, knew that the nearly $300,000 in legal fees and expenses it had received in the 90 days prior to the bankruptcy filing could be deemed an “avoidable transfer” under the Bankruptcy Code, according to court documents—meaning that a court could find that the firm received preferential payment and order recovery of that payment for equitable distribution among other creditors.

So the lawyers and their client struck a rather creative deal.

Alston & Bird agreed to credit Visteon with the $294,355 in legal fees the company already had paid in exchange for Visteon's releasing any claims against all pre-petition fees and expenses. Also, Alston & Bird and Visteon agreed to contingent-fee instead of hourly rate billing for future work enforcing 14 patents related to the company's GPS navigation system, according to court documents.

Neither Alston & Bird's lead partner on the case, Charlotte, N.C.-based William M. Atkinson, nor Visteon's Van Buren Township, Mich.-based senior vice president and general counsel, John Donofrio, returned calls seeking comment.

The Chapter 11 documents, filed in U.S. Bankruptcy Court for the District of Delaware, do not list Alston & Bird lawyers' pre-petition hourly rates. They do say that the firm spent “more than 1,000 hours” assessing Visteon's patent portfolio, discussing enforcement strategies and notifying some companies that they needed to obtain a license under one or more of the patents.

The firm's engagement letter, in the court file, lays out a variety of scenarios in which Alston & Bird's contingent fees would range from 20 percent to 40 percent depending on when in the litigation process the patent enforcement actions were resolved. It also notes that the firm will bear half of its litigation expenses, which will be reimbursed from any recovery. If expenses exceed recovery, the letter says, Alston & Bird will pay them.

Bankruptcy Judge Christopher S. Sontchi approved the “settlement and compromise” and authorized Visteon to employ Alston & Bird as special litigation counsel on Sept. 8, finding that the resolution was in the best interest of the Visteon estates, creditors and all other parties in interest.

Troutman Sanders' bankruptcy group practice leader Jeffrey W. Kelley, who is not involved in the case, said that while contingent fee arrangements are not unusual for special litigation counsel in the bankruptcy context, this deal is creative. “Someone,” he said, “had their thinking cap on.”

The case is In re Visteon Corp., No. 09-11786.